Nadhim Zahawi: the former chancellor with a ‘careless’ tax problem

A Conservative peer has joined a growing list of voices urging Nadhim Zahawi to consider “standing aside” while Parliament’s watchdog investigates his tax affairs.

Lord Hayward told Sky News that “we don’t know what the timescales are for the inquiry” into the Tory party chair’s finances, “and I think that’s key”.

Hayward is the latest in a string of senior Tory figures to call for Zahawi to quit after the former chancellor admitted paying a penalty over “errors” in his tax affairs that were deemed “careless but not deliberate” by HM Revenue and Customs (HMRC).

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Zahawi and his allies insist that there was no deliberate wrongdoing, but speculation is rife about whether he can survive this latest “political pickle” to hit the Conservatives, said the BBC’s Chris Mason.

Baghdad to Downing Street

Born in Baghdad to Kurdish parents, Zahawi came to the UK at the age of nine, after his family fled Saddam Hussein’s Iraqi regime in the 1970s. Unable to speak English when he arrived, Zahawi has spoken of the prejudice and bullying that he faced at school.

After training as a chemical engineer at University College London, he worked for a time in the oil industry, and co-founded pollsters YouGov. A self-made millionaire, Zahawi is “one of the UK’s richest MPs”, said The Guardian’s Peter Walker. He entered Parliament in 2010 as the MP for Stratford-on-Avon, which remains his constituency, and backed Brexit during the 2016 referendum.

Political rise

Zahawi began climbing the political ladder after being appointed to a junior ministerial role in the Department for Education in 2018. He bagged his first cabinet role, as education secretary, in September 2021 – more than a decade after becoming an MP.

Less than ten months after joining the cabinet, however, he replaced Rishi Sunak as chancellor of the Exchequer, one of the great offices of state. “Zahawi’s rise is at the same time epically slow and amazingly fast,” tweeted The Times’s associate political editor Henry Zeffman following the appointment.

According to The Guardian’s Walker, the “key” to Zahawi’s rise was his “stint” from 2020 to 2021 as undersecretary of state in the health department – otherwise referred to as the minister for vaccines – during which he gained “huge credit” for the UK’s rapid rollout of Covid-19 jabs.

When a cabinet reshuffle became “inevitable”, Zahawi was viewed as “a solid minister and good media performer, albeit someone whose reputation was inevitably helped by succeeding the hapless Gavin Williamson”, Walker continued.

Zahawi defended Boris Johnson throughout Partygate, making regular appearances on the broadcast rounds after the scandal broke. But within 48 hours of becoming chancellor, Zahawi posted a letter on Twitter claiming he had urged his “old friend” to “leave with dignity”.

Zahawi was replaced as chancellor by Kwasi Kwarteng in September but remained in the Cabinet under Liz Truss and Sunak, most recently as minister without portfolio and chair of the Conservative Party.

The tax furore

Zahawi has been back in the headlines after admitting last week that he settled a tax dispute with HMRC while chancellor in 2022, paying a penalty of around £5m. Sunak asked his ethics adviser to investigate further, but former Tory minister Caroline Nokes was among those urging Zahawi to “step aside” for the greater good of the party.

In a statement, Zahawi said his error was “not deliberate” and had been settled so he “could focus on my life as a public servant”.

Criticism has rumbled on, however, with a former Tory vice-chair reportedly telling The Telegraph that “something doesn’t seem right”. The unnamed insider, said to have also served in the cabinet, added: “I just think it might be better if he stepped aside until the issue is resolved.”

Another former cabinet minister described the situation as “terminal”. A third that said Zahawi had “been fatally wounded by this”, adding: “It looks like very sadly it will be a question of when, not if.”

As the party scrambles to contain the fallout from the scandal, attention has turned to how much the prime minister and his predecessor Truss knew about Zahawi’s fine for tax avoidance.

According to The Times, neither Truss nor Sunak were given any warnings about his tax affairs – a failure that “has raised questions about the role played by the cabinet secretary, Simon Case, who has overall responsibility for advising the prime minister on ethical issues”.

Will Zahawi go?

Sunak’s ethics adviser Laurie Magnus is set to investigate Zahawi’s tax settlement, after the PM said there were “clearly questions that need answering”.

Zahawi said he looks forward “to answering any and all specific questions in a formal setting to Sir Laurie”, but has refrained from saying anything else while the inquiry is carried out “in order to ensure the independence of this process”.

Downing Street insists it wants the investigation to occur “swiftly”. A senior figure told the BBC’s Mason that it could be “done within a week”.

“There is no doubting the appetite among Conservative MPs to get this sorted one way or the other,” Mason said, “and quickly, so the focus can turn to something, anything, else.”