Zahawi may not only be embarrassing for Sunak, but damaging


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Good morning. Nadhim Zahawi’s political career is dead and Arsenal’s title challenge is alive. That’s my read on the weekend’s big developments, at least. Some more developed thoughts on Zahawi’s future and what it all means in today’s note.

Inside Politics is edited by Georgina Quach. Follow Stephen on Twitter @stephenkb and please send gossip, thoughts and feedback to [email protected]

The sound of settling

“Screwed.” That’s what one former Conservative minister makes of Nadhim Zahawi’s prospects in office, per Robert Wright and Jim Pickard. The Tory party chair is facing mounting pressure to explain the details of the reportedly seven-figure settlement he reached with HMRC, and whether there was a penalty element.

Zahawi said in his statement on Saturday that his father had been given “founder shares” in YouGov [co-founded by Zahawi] in return for advice and some capital, but that HMRC disagreed about the exact allocation. “They concluded that this was a ‘careless and not deliberate error’,” he added.

For a couple of reasons, I think there is essentially no prospect that Zahawi’s cabinet career will make it to the end of the month. The first is that a big part of the role of the party chair is to be the politician who does the most difficult media rounds, and tours the airwaves when everyone else is elsewhere, not to be the cause of the most difficult media rounds (here was foreign secretary James Cleverly on Sky).

The second is that January is about the worst possible month imaginable, politically speaking, for a politician’s tax affairs to be in the news. With the self-assessment deadline approaching — 31 January — many people will be settling their tax bills over the coming days and weeks.

One of the biggest assets a government has is the perception that, whatever you might think of it, it is at least a serious proposition. That Rishi Sunak has been fined for not wearing a seatbelt, for instance, is in and of itself a trivial story. But when added to the story of the former chancellor’s tax error, it risks creating a general impression that it is a ridiculous government full of hapless, careless people. Zahawi’s line that HMRC found he made “a careless and not deliberate” error is fine as it goes — except I think on the whole people would rather their governments were deliberate and careful, rather than careless and accident-prone.

So all in all I think Zahawi’s cabinet career is not long for this world. The bigger question is not “can Zahawi survive?” but “how much damage will this do to Sunak?”

Don’t forget that Sunak remains the government’s best political asset: he is still more popular than the party, and his personal ratings are far closer to Keir Starmer’s than the government is on most issues.

The danger to him over this row is threefold. The first is that Labour is going to be pushing the “what and when did the prime minister know?” button pretty hard. In his first speech, Sunak promised he would have “integrity, professionalism and accountability at every level of the government I lead” (always a pretty stupid promise in my view, but that’s a matter for another time). So he is doubly exposed to anything that makes him look shifty.

Added to that, a row over tax allows Labour to play what the opposition regards as its best anti-Sunak lines. The story is about tax, which means it can relitigate all those old attack lines about Sunak and non-doms. That Zahawi — who only opted to endorse Sunak as leader having first exhausted the options of himself, Liz Truss and Boris Johnson — has ended up with the role of party chair, usually a post given to an ultra-loyalist, is a good example of Sunak’s political weakness, another argument Labour likes to make about Sunak.

Whether Zahawi’s remaining time at the cabinet table can be measured in hours or months, his exit surely can’t be avoided: and it risks being painful and embarrassing for the prime minister.

Now try this

I had a wonderful weekend (not just because Arsenal beat Manchester United, but it helps). One of the weekend’s real pleasures is a luxurious breakfast and the FT Weekend paper.

My highlights this week included Rebecca Watson on Hanif Kureishi, John Thornhill’s fascinating FTMag piece on the rules governing nuclear launches and the man campaigning to change them, and Miles Ellingham’s engagingly debauched take on the FT’s Fantasy Dinner Party. It features TFL commissioner Andy Lord (and a very good morning to all our readers over at Transport for London), the goddess Athena and mescaline.

Top stories today

  • ‘Subsidy arms race’ | Britain must launch a new green strategy to prevent business investment from haemorrhaging to the US as a result of Joe Biden’s huge green stimulus package, CBI director-general Tony Danker has urged.

  • Sharp questioning | Yesterday Labour called for a probe into allegations that the BBC chair helped Boris Johnson secure a private loan shortly before the then UK prime minister recommended his appointment.

  • CBI speech to attack PM | Rishi Sunak will be accused today by Tony Danker of adding legislative “chaos” to the faltering UK economy, amid increasing signs that corporate Britain is disenchanted with government policy.

  • Ambulance strike | Ambulance workers in England and Wales will walk out today, in the latest industrial action to hit the NHS as staff demand higher pay amid the cost of living crisis.

  • Local councils under pressure | With inflation eating into the real value of public spending, funding from Westminster is getting tighter for some English councils. Even as ministers in London promise to “level up” areas across England, some local governments are cutting budgets.

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