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
Trump could meet Putin as early as next week to discuss Ukraine ceasefire – White House official
Donald Trump could meet Vladimir Putin in person as early as next week to discuss a ceasefire in Ukraine, a White House official has said.
They said the meeting would be conditional on the Russian president meeting his Ukrainian counterpart Volodymyr Zelenskyy, Sky News’s US partner network NBC News reported.
It came days before the White House’s deadline for Russia to reach a peace deal with Ukraine or face severe economic penalties, which could also target countries buying its oil.
Asked during a news conference at the White House if the talks would take place, Mr Trump said: “There’s a very good prospect that they will.”
He said it had not been determined where the talks would take place, but added: “We had some very good talks with President Putin today.”
However, he said: “I’ve been disappointed before with this one.”
Asked if Mr Putin made any kind of concession to lead to the development, Mr Trump did not give much away, but added: “We’ve been working on this a long time. There are thousands of young people dying, mostly soldiers, but also, you know, missiles being hit into Kyiv and other places.”
More tariffs ‘could happen’
Mr Trump also said he could announce further tariffs on China similar to the 25% he announced on India over its purchases of Russian oil.
“Could happen,” he said, after saying he expected to announce more secondary sanctions intended to pressure Russia into ending its war with Ukraine.
Earlier, he imposed an additional 25% tariff on Indian goods, on top of a previous 25% tariff, over its continued purchases of Russian oil.
India’s foreign ministry spokesperson said the additional tariffs were “unfair, unjustified and unreasonable”.
Vladimir Putin welcomes Steve Witkoff during a meeting in Moscow. Pic: Sputnik/Reuters
It came after Mr Putin held talks with Mr Trump‘s special envoy Steve Witkoff in Moscow, with the meeting lasting around three hours.
In a post on Truth Social, Mr Trump said Mr Witkoff “had a highly productive meeting” with Mr Putin in which “great progress was made”.
He said he had updated America’s European allies, and they will work towards an end to the Russia-Ukraine war “in the days and weeks to come”.
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Correspondents in Washington and Moscow break down a busy day of diplomacy
‘The war must end’
Mr Zelenskyy later said he and Mr Trump spoke on the phone after the meeting. He said “European leaders also participated in the conversation” and “we discussed what was said in Moscow”.
He added: “Our common position with our partners is absolutely clear: The war must end. We all need lasting and reliable peace. Russia must end the war that it started.”
Mr Zelenskyy later said: “It seems that Russia is now more inclined to agree to a ceasefire.”
He added that the pressure on Moscow “is working”, without elaborating, and stressed it was important to make sure Russia does not “deceive us or the United States” when it comes to “the details” of a potential agreement.
NASA is accelerating plans to put a nuclear reactor on the moon, and they claim it could happen by 2030.
In a directive – a written or oral instruction issued by the US government – to NASA staff earlier this month, Sean Duffy, US transport secretary and the new interim administrator of the space agency, said it should be ready to launch a 100 kilowatt nuclear reactor in five years.
Plans to get a reactor on the lunar surface are not new. The NASA website states the space agency is working on the Fission Surface Power Project to create a system capable of generating at least 40 kilowatts of power – but that is less than half of what Mr Duffy has now proposed.
He also stressed the importance of America’s space agency deploying the technology before China and Russia.
“To properly advance this critical technology, to be able to support a future lunar economy, high power energy generation on Mars, and to strengthen our national security in space, it is imperative the agency move quickly,” the directive, which was first reported on by Politico, states.
Sean Duffy says NASA should be ready to launch a 100 kilowatt nuclear reactor in five years. Pic: Reuters
A nuclear reactor on the moon would be considered a key step towards building a permanent base for humans to live on the lunar surface.
But Mr Duffy warned that the first country to deploy a reactor “could potentially declare a keep-out zone” which he said could significantly inhibit NASA’s Artemis mission – the lunar exploration programme which aims to land astronauts back on the moon in 2027.
When quizzed about the plan on 5 August, he told reporters: “We’re in a race to the moon, in a race with China to the moon. And to have a base on the moon, we need energy.”
Why use a nuclear reactor?
Unlike solar power, which is used on the International Space Station, a small nuclear reactor can operate continuously, Dr Sungwoo Lim, a senior lecturer in space applications, exploration and instrumentation at the University of Surrey told Sky News.
This is critical for infrastructure on the moon, which spends two weeks in complete darkness as it slowly orbits the Earth.
Nuclear reactors therefore diminish the need for sunlight, and can be used to power life support, communications and other critical science instruments, even in darkness.
An artist impression of a nuclear reactor on the moon. Pic: NASA
“In practice, this means astronauts could use a reactor to establish sustainable bases and extend exploration to places where solar energy is impractical,” Dr Lim adds, including in the moon’s permanently shadowed region, where scientists believe ice water exists.
Professor Mike Fitzpatrick, an expert in nuclear technology at Coventry University, adds that the proposal of a 100 kilowatt nuclear reactor, is relatively small compared to most that are built on Earth.
To put it in real terms, it takes around three kilowatts to power the kettle in your home.
But Prof Fitzpatrick says a smaller reactor could pose as “demonstrator technology”, something small and compact that makes it easier to transport it to the moon.
“Then you can have a whole array of them,” he says.
So, what’s the catch?
While scientists agree that nuclear energy seems like the necessary way to make progress on the moon, Prof Fitzpatrick says questions still remain about safety.
“Shipping the fuel to the moon is relatively safe, because at that point it is not particularly toxic, it is the highly reactive fission products that become the issue,” he says.
“What’s going to be the strategy for long-term storage and disposal on the moon after these plants have operated for certain periods of time? The sooner those conversations are had, and you have international consensus, the less likely it is you’ll get future friction.”
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Four astronauts launch to ISS after delay
Dr Lim also questioned Mr Duffy’s timescale of 2030, saying meeting the target depends heavily on the space agency’s budget.
NASA’s future funding is currently unknown after Donald Trump’s 2026 budget request sought a cut of $6bn (£4.5bn) and the termination of dozens of science programs and missions.
Over 2,000 agency employees are also set to voluntarily leave NASA in the coming months under the Trump administration’s “deferred resignation” programme.
Is this the new space race?
Last year, Russia’s space agency Roscosmos said it was planning to build a lunar nuclear reactor alongside China’s National Space Administration by 2035, in order to power the International Lunar Research Station (ILRS).
The collaboration was never formally announced by China but the joint plan was included in a presentation by Chinese officials in April this year, which outlined the 2028 Chang’e-8 lunar mission which aims to lay the groundwork for the ILRS.
“Duffy explicitly described it as a competition,” says Dr Lim, adding that the move towards lunar exploration signals a renewed moon or space race among major parties like China, Russia, India and the US to claim strategic lunar territory and technology.
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However, Rossana Deplano a professor of international space law at the University of Leicester, says there is a lot of misunderstanding around “keep out” or safety zones, which Mr Duffy’s directive mentions.
“Safety zones are explicitly recognised in the Artemis Accords,” she says.
“They are a notification and consultation zone to be declared in advance in order to avoid harmful interference.
“They must be temporary in nature and do not establish state jurisdiction, e.g. they cannot be enforced.”
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