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0 Just what, international observers may be forgiven for asking, is going on in Britain — a country that once prided itself on the quality of its governance? Every day seems to bring new crises and labour strife in essential public services. The government of a recently installed prime minister, Rishi Sunak, who promised “integrity, professionalism and accountability” is embroiled in controversies involving the financial affairs of both a former chancellor and his predecessor as premier. For the sake not just of his party but of the country, Sunak needs to take decisive action to get on to the front foot.
The prime minister on Monday asked his independent ethics adviser to investigate the tax affairs of Nadhim Zahawi, the party chair who for two months last year was chancellor of the exchequer. The move followed revelations that Zahawi had settled a dispute with the UK tax authority after a “careless and not deliberate error” over his tax treatment, and paid a penalty as part of a settlement reported to be almost £5mn. The chancellor at the time threatened to sue a newspaper that was preparing to report last July that his tax affairs were under investigation.
The commissioner of public appointments will meanwhile review whether the appointment of Richard Sharp as BBC chair in 2021 was made in line with the governance code. The BBC board is also to look into any potential conflicts of interest after Sharp, a former Goldman Sachs banker, was reported to have been involved in arranging a guarantor for an £800,000 loan to Boris Johnson in 2020, shortly before the then prime minister recommended his appointment to the role. Sharp denies wrongdoing and says he did no more than make an indirect introduction.
Sunak may claim referring Zahawi to the ethics adviser is the correct procedure. But he would serve himself and the government far better by removing Zahawi and rapidly drawing a line under the issue. He could rightly argue that the tax affair, even if it was an error, makes untenable Zahawi’s role as party chair — a large part of which involves being a media frontman for colleagues.
The prime minister should also have got ahead of events and ordered an independent ethics probe of Sharp’s appointment, rather than leave it to the public appointments commissioner to announce a review — which the Labour opposition had called for. There are questions here, too, over the role of cabinet secretary Simon Case, to whom Sharp is said to have brought the suggestion that Sam Blyth, a distant relative of Johnson, could underwrite an £800,000 credit facility.
The twin ethics crises are dangerous for the government, and for public faith in the political system. They will bolster voter impressions that senior Tories inhabit a different reality and consider themselves above normal rules, after the “partygate” gatherings that broke lockdown rules — and helped to cost Johnson his job. That is especially damaging when many families are battling with a vicious cost of living squeeze. Many will struggle to comprehend the notion of a “careless” error involving £5mn in tax payments (and Zahawi’s explanation hardly inspires confidence in someone who once held the public purse strings).
There are echoes of the dying days of John Major’s 1990s Conservative government. Then, as now, a party in power for more than a dozen years was running out of ideas and in thrall to a noisy rightwing fringe, its reputation for sound management trashed by a market crisis. Major struggled to maintain discipline amid repeated episodes of what became known as Tory “sleaze”. Unless Sunak can stamp his authority and deliver the new start he pledged, his tenure will be a good deal shorter than the six and a half years managed by Major.
