Nadhim Zahawi tax row: Rishi Sunak’s integrity is taking a hit as he prolongs the pain over Tory party chairman
There is plenty of bemusement, irritation and anger in some quarters of the Conservative Party as to why Nadhim Zahawi is still in post.
Revelations that the party chairman reportedly paid nearly £5m to HM Revenue and Customs (HMRC) to settle a tax dispute, and pay a penalty over around £27m of wealth on which he did not initially pay tax is, for some MPs, a closed case rather than something that needs further investigation.
As one minister pointed out to me on Wednesday, what really mattered here was not the conflict of interest of Mr Zahawi being the chancellor while he was in dispute with the HMRC or what the PM knew when.
What matters here is the naked optics of a cabinet minister receiving around £27m that he didn’t initially pay tax on when people were struggling to make ends meet.
So while the prime minister on Wednesday spoke of following “due process” in determining whether the cabinet minister had broken the ministerial code, the public is more likely to have decided Mr Zahawi had not followed due process of paying his taxes – as they have to do every year – and drawn their own conclusions.
For his part, Mr Zahawi is clear that it was a “careless” error, the tax he owed was paid and the matter settled.
But the sight of Sir Keir Starmer taking easy shots at the prime minister for not asking Mr Zahawi to stand aside over the whole affair was hard for some to stomach.
Many MPs have concluded the party chairman is going to have to stand down over this affair anyway, and the investigation into the matter by the PM’s independent ethics advisor is only drawing out the pain.
“Many people in the party think that the situation is unsustainable and will only end one way,” is how one senior party figure put it to me on Wednesday.
“The point here is that the public sees a minister with £27m who didn’t pay his tax.”
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Rishi Sunak answers Zahawi question at PMQs
There are myriad explanations as to why Mr Sunak hasn’t sacked Mr Zahawi.
His team argues that the prime minister promised to do things properly and “there is a process to follow”.
He is also in a bit of a bind given that he neither sacked nor suspended Deputy Prime Minister Dominic Raab over the eight bullying allegations he is now under investigation over, so it would have been hard to treat Mr Zahawi differently.
There is also chatter that he doesn’t have the authority just to sack the party chairman without a fight or backlash, and instead has to do it following a procedure.
But the situation is causing problems.
Read more:
No 10 confirms Rishi Sunak has never paid tax penalty
What did Nadhim Zahawi do?
Nadhim Zahawi arrives at the Conservative Party head office
‘Job too big’ for Sunak
Sir Keir used it to reiterate his “weak prime minister” attack line on Wednesday and then went further to suggest that the combination of internal scandals and the problems in the NHS is evidence that the “job is too big” for Mr Sunak.
For a prime minister who has styled himself as a competent technocrat getting on with delivering, this is a very uncomfortable jibe that he will not want to stick.
It also calls into question the prime minister himself, both over his promise to lead a government of integrity and his own tax affairs.
Sir Keir was at it again on Wednesday, goading the prime minister over last year’s revelations that his wife Akshata Murty had in the past avoided tax in the UK by claiming non-dom status.
“We all know why [the PM’s] reluctant to ask his chairman about family affairs and tax avoidance,” remarked Sir Keir to the clear discomfort of the man sitting opposite him in the chamber.
Sir Keir Starmer has used the Zahawi row to say Mr Sunak is incompetent
Conflict over tax affairs
One former senior minister told me they think it’s difficult for the PM to sack someone over tax affairs when his family had its own tax scandal last year and thinks Number 10 is keeping Mr Zahawi in place as a “human shield” to avoid the attention shifting to the PM’s tax affairs.
But the questions are now being directed to Mr Sunak’s door after he was forced to confirm publicly that he had never paid a penalty to the taxman over his own tax affairs.
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For the PM’s part, he might well believe the inquiry by his independent ethics advisor is the right way to handle the situation. But his approach means he is also having to field the political blows and burn through his own political capital over a scandal that many in his party think will end with Mr Zahawi having to resign anyway.
“When this sort of thing happens, there’s only one outcome and it’s just a matter of when,” one former cabinet minister told me this week.
A PM then prolonging the pain for him, his chairman and his party, as his reputation for integrity and competence takes another hit.
World
Up to a million Palestinians could be ‘permanently relocated’ to war-torn Libya under US plans
Up to a million Palestinians could be permanently relocated from devastated Gaza to war-torn Libya under plans being worked on by Donald Trump’s administration, NBC News reports.
The idea has been discussed with Libya’s leadership, sources told Sky’s US partner network, and would potentially see billions of dollars in frozen Libyan funds released.
The North African country remains divided in two – nearly 14 years after the overthrow of dictator Muammar Gaddafi sparked a civil war – with two rival governments fighting for control.
It comes as Israel continues a campaign of airstrikes on Gaza, with 93 people killed and hundreds injured on Friday, according to local medics.
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Sky’s team saw bodies arrive at Gaza’s Indonesian Hospital
No final agreement on any Libya plans have been reached, sources told NBC News, and US government agencies did not respond to requests for comment from the news outlet.
Previous suggestions to resettle Palestinians from Gaza – voluntarily or otherwise – have provoked international outcry, particularly from Arab states who likely will play a role in rebuilding the enclave after any permanent ceasefire deal.
And Libya is far from a safe nation, according to the US State Department’s own travel advice, which says Americans should not travel to the country “due to crime, terrorism, unexploded landmines, civil unrest, kidnapping, and armed conflict”.
President Trump, speaking on the final day of his Middle East trip, said he was looking to resolve a range of global crises, including Gaza.
“We’re looking at Gaza,” he said. “And we’ve got to get that taken care of. A lot of people are starving. A lot of people are – there’s a lot of bad things going on.”
An Israeli tank nears the border with Gaza. Pic: Reuters
There had been hopes that his tour of the region could increase the chances of a ceasefire deal or prompt Israel to lift its blockade of Gaza that is preventing humanitarian aid from getting in.
But instead Israel has continued to launch airstrikes on the territory, killing more than 250 people in the last two days, according to Hamas-run health authorities.
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The Israeli military, which had dropped leaflets on the northern town of Beit Lahia ordering residents to leave, said their airforce had struck more than 150 military targets across Gaza in recent days.
This week, Israel said it had bombed the European Hospital because it was home to an underground Hamas base, but Sky News analysis has cast doubt on its evidence.
Israeli officials said the latest strikes were a prelude to a larger military campaign in Gaza aimed at pressuring Hamas to release hostages.
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Trump wraps up Middle East tour
Read more:
How Israel has escalated Gaza bombing campaign
Trump risks becoming impatient and losing interest in Gaza
Ahmed Abu Riziq, founder of the Gaza Great Minds Foundation, which seeks to give children access to education in Gaza, said “the hell doors opened” in the last few days.
Speaking to Sky News from Gaza City, he said: “Myself with my family, we had to flee today from some certain areas in northern Gaza City… people are running in the streets. They don’t know where to go or where to sleep at night. So it’s really catastrophic.”
“No food is entering Gaza,” he added, saying that people are dying from hunger.
Prime Minister Benjamin Netanyahu said this month that Israel plans to seize all of Gaza and hold it indefinitely.
Tom Fletcher, head of the UN office for the coordination of humanitarian affairs, warned the Security Council this week it must “act now” to “prevent genocide” – a claim Israel vehemently denies.
Russia and Ukraine failed to agree to a ceasefire in their first direct talks since 2022 – as European leaders called Moscow’s approach “unacceptable” after the discussions lasted less than two hours and Vladimir Putin stayed away.
The meeting in Istanbul, Turkey, was set up at short notice on President Putin‘s behest, but he declined a challenge from Volodymyr Zelenskyy to meet him in person and instead sent relatively junior representatives.
A source in the Ukrainian team told Sky News that Russia had threatened “eternal war” during the talks.
They said the Russians were not ready to talk about technical details of a ceasefire and were waiting for superiors to approve them.
Latest updates on Istanbul talks
Turkish foreign minister Hakan Fidan chairs a meeting between Ukrainian and Russian negotiators in Istanbul. Pic: Reuters
Both countries said they had agreed to trade 1,000 prisoners of war each in what would be the biggest such exchange yet of the conflict.
But Kyiv wants the West to impose tighter sanctions unless Moscow accepts a proposal from Donald Trump for a 30-day ceasefire.
President Zelenskyy said after the meeting that he had spoken to Mr Trump by phone – alongside Sir Keir Starmer and the leaders of France, Germany and Poland – who all met in Albania on Friday.
In a post on X, he said Ukraine was “ready to take the fastest possible steps to bring real peace” and that “tough sanctions must follow” if Russia continues to resist a month-long truce.
The Ukrainian delegation. Pic: Reuters
The Russian delegation. Pic: Reuters
Frustration over Russia‘s perceived stalling in holding serious negotiations was also clear from the European leaders gathered in Tirana.
“The Russian position is clearly unacceptable, and not for the first time,” said Sir Keir.
“So as a result of that meeting with President Zelenskyy and that call with President Trump we are now closely aligning our responses and will continue to do so.”
Read more:
Istanbul talks symbolically important – but revealed stark reality
Don’t get your hopes up of talks Trump-Putin talks anytime soon
The talks were held in Dolmabache Palace in Istanbul. Pic: AP
The UK prime minister said the no-show by Russia’s leader was “more evidence that Putin is not serious about peace” and has “been dragging his heels”.
NATO secretary-general Mark Rutte, who was also in Albania, said President Putin had made a “big mistake” by sending low-level delegates to Istanbul.
A list of representatives ahead of the meeting listed presidential aide Vladimir Medinsky, deputy foreign minister Galuzin Mikhail Yuryevich and deputy defence chief Alexander Fomin.
Ukraine’s delegation was led by defence minister Rustem Umerov.
President Zelenskyy had called the Russian team “a theatre prop” ahead of the summit in the Dolmabahce Palace.
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Ukrainian ‘despair’ over missing civilians
However, Turkey’s foreign minister heralded it as “an important day for world peace” and said Russia and Ukraine had agreed to swap 1,000 POWs each as a “confidence-building measure”.
Hakan Fidan shared a picture of the delegations and said they had “agreed to share with the other side in writing the conditions that would make it possible to reach a ceasefire”.
Russia’s Vladimir Medinsky said his team had “taken note” of the Ukrainian request for direct talks between Mr Putin and Mr Zelenskyy.
“We have agreed that each side will present its vision of a possible future ceasefire and spell it out in detail,” said Mr Medinsky.
Hopes ahead of the meeting were low after Mr Trump and his secretary of state, Marco Rubio, played down the prospect of meaningful progress.
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Trump on meeting Putin: ‘As soon as we can set it up’
The US president told reporters on Air Force One on Thursday “nothing’s going to happen until Putin and I get together”, while Mr Rubio said a “breakthrough” was unlikely until the US and Russian presidents meet.
No date for such a meeting has been proposed, but Mr Trump has said it will happen “as soon as we can set it up”.
Kremlin spokesman Dmitry Peskov told reporters that top-level talks were “certainly needed” but arranging it would take time.
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Russian foreign minister Sergei Lavrov was a notable absentee, despite attending Ukraine-focused talks with the US in Saudi Arabia in February.
Russia has so far failed to agree to a 30-day unconditional ceasefire – proposed by European leaders who have threatened Moscow with “massive” sanctions if it doesn’t sign up. The US also supports the plan.
The Kremlin has ambitions to keep swathes of Ukrainian land as part of any long-term truce, an idea that Kyiv firmly rejects.
Russia also wants an end to Ukraine’s NATO ambitions and a promise it will stay neutral.
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