Ex-chancellor Philip Hammond says he would not have accepted job if taxes were under investigation
The former chancellor Philip Hammond said he would not have accepted the job if he was being investigated by the tax office.
Asked by Sky News if it was “acceptable” that Nadhim Zahawi paid a penalty to HM Revenue & Customs to settle a tax dispute while in charge of the Treasury, Mr Hammond said: “My own personal view is that I would not want to accept the office of chancellor if I was at that time involved in a live negotiation of an outstanding tax case with HMRC.”
Politics live: Rishi Sunak heads for cabinet away day at Chequers
Mr Zahawi was chancellor in the closing days of the Boris Johnson administration and Mr Hammond said the former prime minister “has questions to answer” about his appointment to the cabinet.
“If he was aware of these issues, then I think the question falls at his door,” he said.
“Why did he appoint somebody to this role who clearly was not in a position to carry out that function?”
Mr Sunak has asked his ethics adviser to investigate whether Mr Zahawi, now the Tory party chairman, breached the ministerial code with the estimated £4.8m HMRC settlement he made while he was chancellor, but it could extend to his previous tax arrangement and whether he lied to the media.
Mr Hammond was chancellor under Theresa May and has previously said Mr Johnson was “not a good prime minister”.
Philip Hammond was chancellor during the Theresa May administration
Asked if Simon Case, the cabinet secretary who advises the PM, should take some blame, Lord Hammond said: “Well, ultimately it’s the prime minister who makes the decision who to appoint, who not to appoint to his cabinet, and what offices they should hold.
“It would have been a very different question if Nadhim Zahawi was being appointed to a different office of state.
“But the chancellor does have responsibility for HMRC, and I think that makes it very difficult for any individual being in a position of effectively negotiating with yourself a tax settlement.”
On Saturday, Mr Zahawi released a statement saying he had paid what HMRC said “was due” after it “disagreed about the exact allocation” of shares in YouGov, the polling company he founded.
The senior Tory MP said this was a “careless and not a deliberate error” and did not confirm if any penalty was also levied. But Sky News understands that as part of the settlement with HMRC – thought to be around £4.8m – the chairman paid a penalty.
‘No penalties for innocent errors’
HMRC chief executive Jim Harra said carelessness “is a concept in tax law” and people aren’t penalised if they make an “innocent error” with their tax affairs.
Appearing before MPs at the Public Accounts Committee, he stressed he was not talking about a specific case but said: “There are no penalties for innocent errors in your tax affairs so if you take reasonable care but nevertheless make a mistake, whilst you would be liable for the tax and for interest if it’s paid late, you would not be liable for a penalty.
“But if your error was as a result of carelessness then legislation says a penalty could apply in those circumstances.”
Mr Sunak has faced calls to sack Mr Zahawi, with Labour leader Sir Keir Starmer branding him “hopelessly weak” for failing to do so.
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Keir Starmer asks Rishi Sunak about Nadhim Zahawi’s tax affairs
The prime minister told PMQs that while it would have been “politically expedient” to fire the cabinet minister, “due process” meant that the investigation into his tax affairs should be allowed to reach its conclusion.
No time scale has been set for the investigation, but Mel Stride, the work and pensions secretary, told ITV’s Peston programme it could be done within 10 days.
Trade minister Andrew Bowie has said Mr Sunak will “of course” sack Mr Zahawi if he has been found to have breached the ministerial code – but on Thursday Downing Street declined to get into hypotheticals and insisted the PM still had confidence in the embattled MP.
Mr Sunak is expected to be joined by Mr Zahawi when the cabinet meets for an away day at the prime minister’s grace-and-favour country house today.
The meeting at Chequers in Buckinghamshire is expected to focus on the government’s priorities for the country, but it has branded a “hideaway day” by the Lib Dems, who have accused the PM of “dodging scrutiny”.
A famine has been declared in Gaza City and the surrounding neighbourhoods.
The Integrated Food Security Phase Classification (IPC) – a globally recognised system for classifying the severity of food insecurity and malnutrition – has confirmed just four famines since it was established in 2004.
These were in Somalia in 2011, and in Sudan in 2017, 2020, and 2024.
The confirmation of famine in Gaza City is the IPC’s first outside of Africa.
“After 22 months of relentless conflict, over half a million people in the Gaza Strip are facing catastrophic conditions characterised by starvation, destitution and death,” the report said, adding that more than a million other people face a severe level of food insecurity.
Israel Gaza map
Over the next month conditions are also expected to worsen, with the famine projected to expand to Deir al-Balah and Khan Younis, the report said.
Nearly a third of the population (641,000 people) are expected to face catastrophic conditions while acute malnutrition is projected to continue getting worse rapidly.
Over the next year, the report said at least 132,000 children will suffer from acute malnutrition – double the organisation’s estimates from May 2024.
Israel says no famine in Gaza
Volker Turk, the UN Human Rights chief, said the famine is the direct result of actions taken by the Israeli government.
“It is a war crime to use starvation as method of warfare, and the resulting deaths may also amount to the war crime of wilful killing,” he said.
COGAT, the Israeli military agency that coordinates aid, has rejected the findings.
Israel’s foreign ministry said there is no famine in Gaza: “Over 100,000 trucks of aid have entered Gaza since the start of the war, and in recent weeks a massive influx of aid has flooded the Strip with staple foods and caused a sharp decline in food prices, which have plummeted in the markets.”
Another UN chief made a desperate plea to Israel’s prime minister to declare a ceasefire in the wake of the famine announcement.
Tom Fletcher, UN under-secretary general for humanitarian affairs, said famine could have been prevented in the strip if there hadn’t been a “systematic obstruction” of aid deliveries.
“My ask, my plea, my demand to Prime Minister Netanyahu and anyone who can reach him. Enough. Ceasefire. Open the crossings, north and south, all of them,” he said.
The IPC had previously warned famine was imminent in parts of Gaza, but had stopped short of a formal declaration.
Palestinians struggle to get aid at a community kitchen in Gaza City. Pic: AP
The latest report on Gaza from the UN Office for the Coordination of Humanitarian Affairs (OCHA) says there were almost 13,000 new admissions of children for acute malnutrition recorded in July.
The latest numbers from the Gaza health ministry are 251 dead as a result of famine and malnutrition, including 108 children.
But Israel has previously accused Hamas of inflating these figures, saying that most of the children who died had pre-existing health conditions.
The Ukrainian suspected of coordinating attacks on the Nord Stream pipelines had served in Ukraine’s Secret Service and in the Ukrainian Army’s special forces, Sky News understand.
Serhii K., 49, was arrested in northern Italy on Thursday following the issuance of a European arrest warrant by German prosecutors.
It is not known whether he was still serving at the time of the pipeline attack in 2022 and Ukraine’s government has always denied any involvement in the explosions.
According to sources close to the case, the suspect has been found in a three-star bungalow hotel named La Pescaccia in San Clemente, in the province of Rimini.
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Man arrested over Nord Stream attacks
When military officers from Italy’s Carabinieri investigative and operational units raided his bedroom, he didn’t try to resist the arrest.
The hotel’s employees have been questioned, but no further evidence or any weapons were found, the sources added.
Serhii arrived on Italy’s Adriatic coast earlier this week, and the purpose of his trip was a holiday. He was found with his two children and his wife.
At least one of the four people within his family had a travel ticket issued in Poland. He crossed the Italian border with his car with a Ukrainian license plate last Tuesday.
He was travelling with his passport, and he used his real identity to check into the hotel, triggering an emergency alert on a police server, we have been told.
A satellite image shows gas from the Nord Stream pipeline bubbling up in the Baltic Sea. File pic: Roscosmos via Reuters
After the arrest, he was taken to the Rimini police station before being moved to a prison in Bologna, the regional capital, on Friday.
Deputy Bologna Prosecutor Licia Scagliarini has granted the German judicial authorities’ requests for Serhii’s surrender, but Sky News understands the man told the appeal court that he doesn’t consent to being handed over to Germany.
He also denied the charges and said he was in Ukraine during the Nord Stream sabotage. He added that he is currently in Italy for family reasons.
While leaving the court, he was seen making a typical Ukrainian nationalist ‘trident’ gesture to the reporters.
The next hearing is scheduled for 3 September, when the Bologna appeal court is set to decide whether Serhii will be extradited to Germany or not. He will remain in jail until then.
In Germany, he will face charges of collusion to cause an explosion, anti-constitutional sabotage and the destruction of structures.
German prosecutors believe he was part of a group of people who planted devices on the pipelines near the Danish island of Bornholm in September 2022.
Serhii and his accomplices are believed to have set off from Rostock on Germany’s north-eastern coast in a sailing yacht to carry out the attack.
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The explosions severely damaged three pipelines transporting gas from Russia to Europe. It represented a significant escalation in the Ukraine conflict and worsening of the continent’s energy supply crisis.
According to a US intelligence report leaked in 2023, a pro-Ukraine group was behind the attack. Yet, no group has ever claimed responsibility.
Spare pipes for the Nord Stream 2 gas pipeline. File pic: Reuters/Fabian Bimmer
Sky News understands Genoa’s Prosecutor’s Office in northern Italy has requested their colleagues in Bologna to share the information related to Serhii.
Anti-terrorism prosecutors are investigating another alleged sabotage linked to the Russian shadow fleet oil tanker Seajewel, which sank off the port of Savona last February.
On Thursday, they asked an investigative police unit to figure out whether there is a link between that episode and the Nord Stream attacks.
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