Inside Politics: Taxing times

Hello there, I’m Matt Mathers and welcome to The Independent’s Inside Politics newsletter.

Buckle up for what looks set to be another taxing week for Rishi Sunak and the government.

Sorry, I couldn’t resist – sometimes the jokes write themselves.

Seriously though, let’s get this show on the road. We’ve got a few belters for you this morning.

Commons action gets underway with work and pensions questions at 2.30pm, followed by any urgent questions or statements. Next up is scrutiny of the Northern Ireland Budget Bill. After that Labour MP Matt Western has an adjournment debate on the complaints mechanism for housing association tenants.

On Wednesday, it will be three months since Rishi Sunak stood outside No 10 Downing Street for the first time as prime minister, vowing to lead a government with “integrity, professionalism and accountability at every level.”

That line from Sunak’s speech is once again causing problems for the PM, following his second fine for being caught in a moving car without a seatbelt and the continuing questions surrounding the tax affairs of Nadhim Zahawi, the cabinet minister and Conservative Party chairman.

After initially trying to kill the story stone dead, Zahawi admitted over the weekend that he made a multimillion-pound payment to HMRC over a tax dispute, which the MP says was the result of a “careless error”.

The Independent first revealed Zahawi’s tax arrangements were being investigated in July last year during the Tory Party leadership campaign. There are fresh reports this morning saying that the payment (said to be in the region of £5m) included a penalty, all but confirming the row involved unpaid tax.

Can YouGov co-founder Zahawi cling on as Tory chairman and cabinet minister without portfolio? Inside Politics is not aware of any polling data on the subject but MPs – even on his own side – suspect not. One former Tory minister told The Independent that Zahawi’s position was now “untenable”.

The Stratford-on-Avon MP has had enough jobs over the past few years to make the likes of George Osborne blush, but it is during his short-lived stint as chancellor when the settlement was made, according to the BBC, which now makes this scandal especially dangerous for Zahawi.

It also creates yet another headache for Sunak, who will no doubt be tackled by Labour leader Keir Starmer on the issue at Prime Minister’s Questions – not to mention his ministers being repeatedly grilled about it in the media until then, as James Cleverly found out yesterday.

An ally of Zahawi’s said earlier that the former chancellor “absolutely” will not be quitting in the face of growing pressure over his settlement. Lucy Powell, out on the broadcast round for Labour, said his position is “untenable” and that Sunak should sack him. It seems the PM has a big decision to make before Wednesday.

open image in gallery

Unlock unlimited, ad-free reading on the website and in The Independent app when you subscribe – plus, benefit from our welcome offer when you join today.

So much has happened over the past few months that Boris Johnson’s premiership can feel like several lifetimes ago.

But while the ‘Big Dog’ may be out of the top job he is never far from the headlines, creating a few problems for himself and the current No 10 occupant along the way.

Johnson, who made a visit to Ukraine (despite warnings from senior military figures not to do so) days after Sunak confirmed that the UK would send more military aide to Kyiv, continues to face questions about securing an £800,000 credit line from a cousin while PM.

Richard Sharp, the BBC chairman, has now been dragged into the affair, after it was reported that he helped Johnson secure the loan facility before being appointed to his role in early 2021.

Sharp, Johnson and the government all deny any wrongdoing – but Labour has asked the parliamentary standards watchdog for an inquiry.

The party has suggested that Johnson could have breached the code of conduct for MPs “through failing to appropriately declare the arrangement” on his Parliamentary register of interests.

Commenting on the case earlier, Labour’s Powell, the shadow culture secretary, said the allegation that Sharp helped Johnson was a “very serious” one that needs to be investigated.

“I have written to him because there are some very serious allegations here and real deep concerns about the recruitment process of this very important role in terms of being the chair of the BBC Trust (who is) there to uphold the impartiality and independence of the BBC, something that we hear regularly from this government that they feel isn’t upheld,” she told Radio 4.

“Yet we find that the guy who was appointed to this job was at the same time helping to advise the then prime minister on a murky, grubby arrangement deal with his messy finances.”

James Cleverly, foreign secretary, when asked if Zahawi will still be in his job by Wednesday.

“What else am I going to say other than yes? Because he’s a very, very effective minister.”

Pippa Crerar, Guardian politics editor, on Cleverly’s claim that he “doesn’t know” if Zahawi was investigated while chancellor.

“I think the government is going to have to do a bit better than this…”

Inside Politics first appeared in our daily morning email. You can sign up via this link.