Nadhim Zahawi saga is blow to Rishi Sunak’s bid to rebuild trust

<span>Photograph: Dan Kitwood/Getty Images</span>
Photograph: Dan Kitwood/Getty Images

Rishi Sunak was in his sprawling constituency home in North Yorkshire when just after 7am on Sunday he received the report by Sir Laurie Magnus, his new ethics adviser, on whether Nadhim Zahawi had broken the ministerial code over his tax affairs.

The four-page document was damning, finding that the Tory party chair had breached the code on seven occasions, including by failing to declare the HMRC investigation into his finances and subsequent £5m settlement including a penalty, even though they could have given rise to conflicts of interests.

Magnus’s inquiry, which took six days to complete, also found that Zahawi had failed to be “as open as possible with parliament and the public” when he dismissed media reports last July about the HMRC investigation as “inaccurate”, “unfair” and “clearly smears”.

Magnus, appointed in December after a six-month delay in filling the post, concluded that Zahawi had “shown insufficient regard for the general principles of the ministerial code, under the requirements in particular … to be honest, open and an exemplary leader through his own behaviour”.

Sunak, who vowed to lead a government of “integrity, professionalism and accountability at every level” when he took over at No 10 last year, had little option but to sack Zahawi. Within the hour, and after informing aides, he had telephoned him to tell him he was gone from the cabinet, and set the wheels in motion for the Downing Street announcement at 9am.

When it came to it, the prime minister acted swiftly. However, there was little in the report from his ethics adviser that he and his senior officials could not have discovered with a few hours’ work a fortnight ago, when the HMRC settlement first emerged.

Instead, he has faced days of damaging headlines about the multimillionaire cabinet minister avoiding paying tax – and pressure from angry Tory MPs who have been quietly questioning his judgment in keeping Zahawi in post, even if he did want to do it by the book.

“I think he must have been kicking himself all week that he decided to refer this to an investigation rather than going with a decision straight away,” the former Tory cabinet minister Michael Portillo suggested.

David Cameron’s former director of communications Sir Craig Oliver said: “Rishi Sunak knew nothing this morning that he didn’t know a week ago – he will be lamenting feeling unable to stand up to some backbenchers.”

Sunak’s own integrity has also come under question. He initially told the Commons that Zahawi had “already addressed this matter in full”, then a week later, after the Guardian reported that Zahawi had paid a penalty, he said “no issues” had been raised about Zahawi’s tax affairs when he appointed him to cabinet.

The prime minister – who has now lost two cabinet ministers in his first 100 days in office – will want nothing more than to put the whole damaging affair behind him. Yet he still faces scrutiny about what he knew and when, after reports that he was warned by officials of the reputational risk of Zahawi’s appointment – claims denied by No 10.

The same set of questions will inevitably arise again when the internal investigation into the Dominic Raab bullying allegations concludes in the coming weeks. There are few in the Tory party who think Raab will survive in cabinet, meaning yet more political authority lost for Sunak.

The Tory brand risks being tarnished further during the Commons privileges committee investigations into whether Boris Johnson lied to parliament over the Partygate affair, which kicks off within weeks, with the whole sorry saga of what took place in No 10 while the rest of country was in lockdown once again laid bare.

Trying to rebuild the Conservative party’s integrity, and more broadly public faith in politics, was always going to be an uphill struggle for Sunak in the wake of the Johnson era, during which political conventions were turned on their heads and a much more lenient approach appeared to be applied to the rules.

While there is an acknowledgment among many Conservative MPs that he was right to try to restore the party’s battered reputation, there is also deep frustration from allies that so much of the oxygen of his early days in office has been sucked up by dealing with a series of ministerial scandals.

Related: How we got here: events leading up to Nadhim Zahawi’s sacking for breaching ministerial code

The various probity rows have impeded Sunak’s attempts to move the conversation on to how he plans to get a grip on the country’s finances, and then put it on a path to a better future. They have also been an unwelcome distraction for ministers trying to deal with big issues such as the NHS crisis and public sector strikes.

At a time when so many people are struggling to make ends meet, the spectacle of Zahawi, a former chancellor, avoiding paying millions of pounds of tax is particularly damaging for the government. His lack of apology or any sense of contrition in his resignation letter makes matters worse.

Sunak’s allies know he has been dealt a tough hand and insist he will press on with making the government accountable while demonstrating his own integrity in office. But even they know that the window to win back public trust is narrowing.