Sunak orders investigation into Zahawi tax row

1. Conservative Party Chairman Nadhim Zahawi is facing calls to resign following a row over his tax affairs
2. Prime Minister Rishi Sunak has asked his independent ethics adviser to investigate, saying there are "questions that need answering"
3. Labour leader Sir Keir Starmer says Zahawi's position is "untenable" and he should be sacked today
4. The BBC has confirmed that Zahawi paid a penalty to HMRC while he was chancellor, over unpaid tax, with the total settlement understood to be worth around £5m
5. The inquiry will look into whether Zahawi breached the ministerial code - he has welcomed it and says he looks forward to "explaining the facts"
6. Sunak is also facing a separate controversy over the appointment of BBC chairman Richard Sharp and his links with then PM Boris Johnson
7. The process of hiring Sharp is to be reviewed by the Commissioner of Public Appointments following claims he helped Johnson secure a loan

'Untenable for Zahawi to stay in post,' says Labour MP

BBC

Labour MP Sir Chris Bryant says it's going to be "pretty untenable" for Nadhim Zahawi to stay in post after the investigations around his tax affairs.

"Most people in this country will be going 'is this [happening] all over again?'" he tells the BBC.

"The prime minister getting another fine, ministers being accused of being dodgy with their finances, another minister being accused of bullying, investigations here, there and everywhere.

"Shouldn't Nadhim Zahawi have told the prime minister when he appointed him as chair of the Conservative party that this story was going to break eventually?" he asks.

'Zahawi needs to come completely clean' - Former Tory MP

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Dominic Grieve, a former Conservative MP who was attorney general for England and Wales from 2010 to 2014, says Nadhim Zahawi needs to come "completely clean" about what's happened with his tax affairs and "explain why, if he's made a mistake, he isn't some way more culpable".

He says the longer this issue is dragged out the bigger reputational damage it will cause to the Tory party.

Grieve tells BBC Radio 4's World At One programme the PM was right to go to his independent ethics adviser to look into the disclosures made about Zahawi's tax affairs - but "to simply hide behind going to the ethics adviser of government, it's just not good enough".

"The question as to whether somebody's tax affairs have become sufficiently badly handled that they are proper people to remain in government is something which is dependent on facts, it doesn't need the ethics adviser to tell you that."

Who is Nadhim Zahawi?

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Here’s a quick look at the life of the Tory party chairman:

• Zahawi was born in Iraq to a Kurdish family. They fled the country for the UK in the early years of the Saddam Hussein regime
• After studying chemical engineering at University College London, he went into business and in 2000 co-founded polling company YouGov
• He has represented the constituency of Stratford-on-Avon since 2010
• He became well-known during the coronavirus pandemic as the minister who oversaw the first vaccine rollout - a project widely judged to have been a success
• In September 2021 he became the education secretary in a cabinet reshuffle
• He replaced Rishi Sunak as chancellor, in July 2022, after Sunak resigned and called on Boris Johnson to stand down as PM
• Zahawi ran for the Tory leadership following Johnson’s downfall, but was eliminated early on
• He remained as chancellor for only nine weeks before Liz Truss’s eventual victory in the contest
• Truss gave him a number of junior ministerial roles. After she was ousted as PM amid economic turmoil, and replaced by Sunak, Zahawi was made party chairman in October 2022

Mixed views on whether Zahawi should be sacked

Callers to BBC Radio 5 Live have given mixed views in a discussion about whether or not Nadhim Zahawi should be sacked as the Conservative Party chairman.

Speaking to Nicky Campbell, Kelly in Wimbledon said both Zahawi and Prime Minister Rishi Sunak should "step down from their roles". He added: “As a nation, we’ve lost our pride. We don’t care anymore.”

Chris in Bognor Regis described the government as untrustworthy.

Referring to a variety of scandals, he said: “The fact we’ve had parties, tax affairs, porn in parliament and then the seatbelt from last week. This is going to stay with us into the next election as to whether we trust the people in power.”

Reuters

But, there were also been callers who defended Zahawi - including Sunil from Cambridge who encouraged people to move on.

He said: “I would rather spend more time and energy going into the cost of living crisis as opposed to Nadhim Zahawi tax returns.”

Another listener named Daphne agreed: “We have far, far more important issues to be dealing with”.

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What’s been happening?

If you’re just joining us, here’s the latest on the row over Tory chairman Nadhim Zahawi’s tax affairs:

• PM Rishi Sunak has ordered his ethics adviser, Sir Laurie Magnus, to investigate whether Zahawi has breached the rulebook on ministerial behaviour
• Zahawi has pledged to cooperate with the investigation, and says he’s confident he “acted properly throughout”
• Opposition parties have continued to call on the prime minister to sack him as Tory chairman, with Labour leader Sir Keir Starmer calling his position “untenable”
• Separately, BBC chairman Richard Sharp says the broadcaster’s board will review any potential conflicts of interest he may have amid scrutiny over his links with Boris Johnson
• Both issues could come up in Parliament later. Labour has been granted a debate on official processes for ministerial appointments and conflicts of interest

Green Party joins condemnation of government

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The prime minister's decision to defer to his ethics adviser on the controversy surrounding Nadhim Zahawi's tax affairs is "another desperate, insulting attempt to avoid doing the right thing", says Green MP Caroline Lucas.

"Sunak doesn’t need an ethics adviser to tell him the obvious," Lucas tweets, before accusing the PM of "hiding" and hoping that people will move on.

Lib Dems question Sunak's judgement

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Lib Dem deputy leader Daisy Cooper says the PM should do the "decent thing"

Some more reaction to bring you - this time from the Liberal Democrats, who have also called for Nadhim Zahawi to go.

Deputy leader Daisy Cooper also questioned the prime minister's judgment.

"The gear-change from ‘nothing to see here’ to ordering a major ethics investigation in just a few days, puts Sunak’s own judgment in the spotlight once again," she said.

"If Sunak won’t do the decent thing and sack Zahawi, the least he can do is suspend him for the duration of the investigation."

WATCH: Sunak says there are questions that need answering

As we've been reporting, the prime minister has asked his ethics adviser Sir Laurie Magnus to assess whether Nadhim Zahawi breached the ministerial code with his HMRC settlement.

Rishi Sunak says there are questions which need answering.

Sunak on Zahawi: There are questions that need answering

Johnson denies any impropriety in dealings with BBC chairman

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Let's stick with that story about the appointment of the current BBC chairman, Richard Sharp - a process which the government insists was "rigorous".

It's been reported that Sharp helped Boris Johnson secure a loan, weeks before the then-PM recommended Sharp for the role.

Sharp said he was "not involved in making a loan, or arranging a guarantee, and I did not arrange any financing".

And for his part, Boris Johnson has described claims of any impropriety as "a load of complete nonsense".

He told Sky News earlier: "Let me just tell you, Richard Sharp is a good and wise man but he knows absolutely nothing about my personal finances - I can tell you that for 100% ding dang sure.

"This is just another example of the BBC disappearing up its own fundament."

Labour voices concerns over recruitment of BBC chairman

PA Media

More now on a separate controversy mentioned in our last post.

It's been reported that BBC chairman Richard Sharp helped Boris Johnson secure a loan guarantee weeks before the then-PM recommended Sharp for his current job.

Both men deny any conflict of interest, and the government insists that Sharp was appointed via a “rigorous” selection process.

But Labour’s shadow culture secretary Lucy Powell told the BBC earlier today that she had written to the commissioner for public appointments, saying these were “serious allegations”.

The role of BBC chairman is appointed by the monarch on the advice of the government and seen as independent.

This morning, Sharp said he wanted to ensure "all the appropriate guidelines" had been followed. He added that he had asked an internal panel to review any potential conflicts of interest.

In an email to staff, he wrote: "We have many challenges at the BBC and I know that distractions such as this are not welcome. Our work at the BBC is rooted in trust.”

Three recent headaches for the PM

Reuters

As our political editor Chris Mason wrote in his latest blog, the prime minister has been dogged by multiple controversies over the last few days.

Zahawi’s tax dispute

Nadhim Zahawi faces calls to resign after it emerged that he paid a penalty to HMRC over unpaid tax while he was chancellor.

The PM has asked his independent ethics adviser to investigate, because there are "questions that need answering".

BBC chairman

Chris says the next issue comes from the “exhaust fumes of the Boris Johnson era”. Claims have emerged that shortly before being given the job of BBC chairman, Richard Sharp helped Johnson - who was then prime minister - to secure a loan guarantee agreement.

The government insists all the correct processes were followed, and both men deny any conflicts of interest. Sharp says he “did not arrange any financing” and has asked an internal BBC panel to look into his actions.

A seatbelt fine

The PM was also recently fined by Lancashire Police for not wearing a seatbelt in a moving car while filming a social media video. No 10 says Sunak has apologised and will pay up.

Zahawi inquiry buys time - for now

Nick Eardley

Chief political correspondent

Nadhim Zahawi was facing a deluge of questions this morning about how much he’d paid as a penalty to HMRC, and whether what's now emerged matches up with some of his previous comments.

By ordering this investigation, Rishi Sunak has probably bought the Tory chairman a bit of time.

It gives ministers the cover of saying: "We need to see what happens with the investigation, let’s leave it to the independent adviser."

My hunch is that Zahawi probably does have a bit of time just now - but there’s also the possibility that more comes out.

If that keeps happening, it’s more and more of an embarrassment for the prime minister and will add more pressure.

Labour granted urgent question

Controversies faced by the government are expected to be raised later today in Parliament, after Labour's deputy leader Angela Rayner was granted an urgent question.

This will be heard at about 15:30 GMT on the Cabinet Office's "processes for vetting ministerial appointments and managing conflicts of interest".

Zahawi has to go - Sturgeon

BBC

Scotland’s First Minister Nicola Sturgeon has said Nadhim Zahawi’s position is “untenable” as Tory Party chairman.

Sturgeon called on Zahawi to resign and said: “It seems to be the case... that while he was chancellor he settled a seven-figure tax bill with HMRC which included a very significant penalty.

“That means, as far as I can see, that there must have been something untoward about his tax affairs to a very large tune, in terms of the amount of money involved.

“I think somebody who is a government minister in that position, I just think their position is untenable."

She said if Zahawi did not resign then the prime minister should remove him from office.

Zahawi has said that his back payment of tax and a penalty was the result of carelessness rather than any deliberate attempt to avoid tax.

Our Scotland political editor Glenn Campbell tells us that Nicola Sturgeon has promised to publish her own tax return at the end of this financial year, having reneged on a commitment to do so annually back in 2016.

Sturgeon has said her salary is her only source of income.

Investigation could look into Zahawi's tax arrangements - No 10

A few additional comments from Downing Street now, as the prime minister's official spokesman has been taking questions from reporters.

• "Additional facts" over the weekend have led to the ethics investigation into Nadhim Zahawi's tax affairs
• Rishi Sunak is previously not understood to have known that Zahawi had paid a penalty to HMRC
• The investigation will be completed "as quickly as possible"
• Sir Laurie Magnus, who will lead the investigation, will focus on ministerial declarations and whether these breached the ministerial code
• But, it could extend to whether Zahawi's tax arrangements were appropriate

We reported in the last post that the PM retains confidence in Zahawi, according to his spokesman.

BreakingSunak retains confidence in Zahawi, says spokesman

We're getting the latest lines now from the regular Downing Street press briefing.

Rishi Sunak retains confidence in Nadhim Zahawi as Tory chairman and hopes the investigation concludes as quickly as possible, the PM's spokesman says.

"He retains the prime minister's confidence. That's why he continues in the role, as is standard practice."

But he said Sunak could disagree with the report's conclusions as to whether Zahawi or not broke the ministerial code.

"The prime minister remains the final arbiter of the code," the spokesman says.

WATCH: Zahawi should be sacked today - Starmer

Starmer calls on Sunak to sack Zahawi now

Labour leader Sir Keir Starmer describes Nadhim Zahawi's position as "untenable" and says he should be sacked as Conservative Party chairman today.

Starmer also calls into question Rishi Sunak's leadership and judgement.

Row focuses on tax avoidance allegations

EPA

The company at the centre of the row is Balshore Investments, which is registered offshore in Gibraltar. Zahawi has faced questions over whether he tried to avoid paying UK tax by using Balshore to hold shares in YouGov - the polling company he co-founded in 2000.

He denied doing so.

Over the weekend, the BBC confirmed that Zahawi did pay a penalty to HMRC - as part of a settlement over unpaid tax.

The BBC understands the dispute was resolved while Zahawi served as chancellor last year, and that the total paid was in the region of about £5m, as previously reported by The Guardian.

Zahawi has insisted his tax affairs were up to date by the time he was appointed chairman of the Conservative Party in October.

Investigation to look at whether Zahawi broke ministerial code

The investigation into Nadhim Zahawi is expected to focus specifically on whether he broke the ministerial code with last year's tax settlement to HMRC, paid while he was chancellor.

In a nutshell, the code is a document which sets out what is expected of government ministers and the "rules" they should observe as they go about their jobs.

Zahawi welcomes PM's investigation

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Nadhim Zahawi has responded to the prime minister's investigation announcement.

In a statement, the Tory chairman says: "I welcome the prime minister's referral of this matter to the independent adviser on ministerial standards. I look forward to explaining the facts of this issue to Sir Laurie Magnus and his team.

"I am confident I acted properly throughout and look forward to answering any and all specific questions in a formal setting to Sir Laurie."

Zahawi adds it would be inappropriate to discuss the issue any further.