Nadhim Zahawi says ‘confident I acted properly’ as Sunak asks ethics adviser to investigate tax case – live

The statement from Rishi Sunak this morning announcing the inquiry into Nadhim Zahawi’s tax arrangements was taken as meaning that the ethics adviser, Sir Laurie Magnus, would focus primarily on whether or not his tax “error” (see 11.23am) was serious enough to justify his sacking.

But at the Downing Street lobby briefing the PM’s spokesperson said the inquiry could cover other aspects of Sunak’s conduct in relation to this affair which might breach the ministerial code.

In the summer last year, when it was reported that HM Revenue and Customs were investigating his tax arrangements, Zahawi dismissed this as a smear and said that his tax affairs “fully paid and up to date”. The revelation that he only fully settled his tax bill when he was chancellor has raised questions about whether these initial denials were accurate.

Asked at the lobby briefing if the inquiry would look at claims that Zahawi “lied” to the media, the PM’s spokesperson replied:

The adviser is is able to look more widely if they see fit, but I wouldn’t speak on their behalf as to what they will or won’t do.

The ministerial code says ministers should resign if they knowingly mislead parliament. But that does not mean that ministers are safe if they just knowingly mislead journalists, because the code also says they should observe the seven principles of public life (the Nolan principles), one of which says “holders of public office should be truthful”.

Damian Green was forced to resign as first secretary of state in 2017 after an inquiry concluded that, when responding to media questions about a misconduct allegation (in his case, watching porn on his Commons computer a decade earlier), he gave statements to the media that were “inaccurate and misleading”.

Asked if the inquiry could also look at reports that Zahawi used legal threats to try to close down legitimate inquiries about his tax affairs, the spokesperson said the ethics adviser would look at breaches of the ministerial code in the first instance, but that he could also look at other issues that were relevant.

The Nadhim Zahawi and Richard Sharp controversies should both get an airing in the Commons this afternoon, because Angela Rayner, Labour’s deputy leader, has tabled an urgent question, which has been granted, combining both. She is asking for a Cabinet Office minister to make a statement “on his department’s processes for vetting ministerial appointments and managing conflicts of interest”.

We don’t know yet who is replying, but it is likely to be Jeremy Quin, the paymaster general.

The UQ will be at 3.30pm. After it is over, there will be another, tabled by Ed Miliband, the shadow secretary for climate change and net zero, on energy companies forcing families to accept pre-payment meters.

Rishi Sunak was not aware that Nadhim Zahawi, the Conservative party chair, had to pay a penalty when he settled his tax bill with HM Revenue and Customs until this weekend, No 10 admitted at that lobby briefing this morning.

That means he did not know the full details when he defended Zahawi at PMQs last week.

Asked by Labour’s Alex Sobel at PMQs if he was aware of the HMRC investigation into Zahawi’s tax affairs when he made him Tory chair, and put him in his cabinet, Sunak replied: “[Zahawi] has already addressed the matter in full and there is nothing more that I can add.”

This morning, asked if it was true that that Sunak did not know about the penalty paid by Zahawi until this weekend, the PM’s spokesperson said: “That’s my understanding.”

Asked if Sunak was concerned that he has not been told this, the PM’s spokesperson said that he had been told there were “no outstanding issues” in relation to Zahawi’s tax affairs when he appointed him to cabinet. That was part of the normal process, the spokesperson said.

Asked if Sunak had sought to establish the facts with Zahawi before he defended him in the Commons last week, the spokesperson said he would not comment on private conversations.

Asked if Sunak was angry about having been put in a position where he defended Zahawi without being aware of the full facts, the spokesperson said that was not a question he had asked the PM. He went on:

He thinks there are legitimate questions to answer and that’s why he’s asked his [ethics] adviser to establish the facts.

PA Media has released the full text of the message that Richard Sharp, the BBC chairman, has sent to BBC staff this morning announcing an internal inquiry into claims there was a conflict of interest when he was appointed. (See 10.34am.) Since it does not seem to be available online, I will post extensive extracts here.

This matter, although it took place before I joined the BBC, is a distraction for the organisation, which I regret. I’m really sorry about it all.

Prior to my appointment [as BBC chairman], I introduced an old friend of mine – and distant cousin of the then prime minister – Sam Blythe [sic], to the cabinet secretary, as Sam wanted to support Boris Johnson.

I was not involved in making a loan, or arranging a guarantee, and I did not arrange any financing. What I did do was to seek an introduction of Sam Blythe to the relevant official in government.

Sam Blythe, who I have known for more than 40 years, lives in London and having become aware of the financial pressures on the then prime minister, and being a successful entrepreneur, he told me he wanted to explore whether he could assist.

He spoke to me because he trusts me and wanted to check with me what the right way to go about this could be.

I told him that this was a sensitive area in any event, particularly so as Sam is a Canadian, and that he should seek to have the Cabinet Office involved and have the cabinet secretary advise on appropriateness and indeed whether any financial support Sam might wish to provide was possible. Accordingly Sam asked me whether I would connect him with the cabinet secretary.

At the time I was working in Downing Street as a special economic adviser to the Treasury during the pandemic, and I had submitted my application to be chairman of the BBC.

I went to see the cabinet secretary and explained who Sam was, and that as a cousin of the then prime minister he wanted to help him if possible.

I also reminded the cabinet secretary that I had submitted my application for the position of BBC chairman.

We both agreed that to avoid any conflict that I should have nothing further to do with the matter. At that point there was no detail on the proposed arrangements and I had no knowledge of whether any assistance was possible, or could be agreed.

Since that meeting I have had no involvement whatsoever with any process. Even now, I don’t know any more than is reported in the media about a loan or reported guarantee.

I am now aware that the Cabinet Office have a note of this meeting, and that this included advice to the Prime Minister that I should not be involved, to avoid any conflict or appearance of conflict with my BBC application.

The Cabinet Office have confirmed that the recruitment process was followed appropriately and that I was appointed on merit, in a process which was independently monitored.

UPDATE: Variety has published the Sharp statement in full here.

Rishi Sunak has also said that the fact that he was fined last week for not wearing a seatbelt should not mean that people cannot trust him to obey the law.

In his first public comment on the fine, which was issued on Friday, Sunak said:

Yes, I regret not wearing a seatbelt. It was a mistake and that is why I apologised straight away.

Asked whether the public could trust him as PM to follow the “laws of the land” following his fine, Sunak replied:

Of course I do.

In this instance, I made a mistake which I regret deeply and that’s why I apologised straight away.

Rishi Sunak has defended the appointment of Richard Sharp as BBC chairman. Asked about the claims that Sharp did not disclose a potential conflict of interest when he was appointed by Boris Johnson, Sunak told reporters during a visit to a hospital in Northamptonshire:

This appointment was obviously made by one of my predecessors before I became prime minister.

The appointments process itself for appointing the BBC chairman is a rigorous process, it is independent, there are two stages to it, it is transparent and published online.

Mr Sharp’s appointment went through that full process.

Here is Nadhim Zahawi’s full statement in response to the announcement of the inquiry by No 10’s ethics adviser. He says that he will not be commenting further on the affair in public while the inquiry is underway and that he will be carrying on as Conservative chair in the meantime.

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.

In order to ensure the independence of this process, you will understand that it would be inappropriate to discuss this issue any further, as I continue my duties as chairman of the Conservative and Unionist party.

Nadhim Zahawi, the Conservative party chair, has welcomed the decision by Rishi Sunak to ask the No 10 ethics adviser to investigate his case. “I am confident I acted properly throughout,” Zahawi said.

Zahawi seems to be using a narrow definition of “properly”. In the statement he issued yesterday, he accepted that his original decision not to pay the tax that HM Revenue and Customs subsequently concluded he should have paid was down to a careless error. He said:

Following discussions with HMRC, they agreed that my father was entitled to founder shares in YouGov, though they disagreed about the exact allocation. They concluded that this was a ‘careless and not deliberate’ error.

This is what Rishi Sunak told reporters this morning about his decision to ask his new ethics adviser, Sir Laurie Magnus, to investigate Nadhim Zahawi’s tax settlement with HM Revenue and Customs. Sunak said:

Integrity and accountability is really important to me and clearly in this case there are questions that need answering …

That’s why the independent adviser has been asked to fully investigate this matter and provide advice to me on Nadhim Zahawi’s compliance with the ministerial code, and on the basis of that we’ll decide on the appropriate next steps.

Asked whether Zahawi should not stand down during the investigation, Sunak said: “As is longstanding practice, he will continue to play the role he does.”

On the subject of the questions that need answering, the Observer published a good list at the weekend.

Boris Johnson has dismissed claims that there was anything improper in his appointment of Richard Sharp as BBC chairman as “absolute nonsense”.

Doorstepped by reporters this morning, and asked if he would welcome an inquiry into the claims that Sharp should have declared that he was helping Johnson obtain a loan guarantee shortly before he was appointed by Johnson to be chairman of the BBC, Johnson said:

This is a load of complete nonsense, absolute nonsense.

Let me just tell you – Richard Sharp is a good and a 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.

Johnson did not answer any further questions.

His comment does not address the issue at the heart of the story. The question is not whether or not Sharp knew the details of Johnson’s personal finances; the claim is that his involvement in helping Johnson obtain a loan guarantee could be seen as creating a conflict of interest that was not declared at the time the appointment was approved.

Rishi Sunak has asked his new ethics adviser to investigate Nadhim Zahawi’s tax settlement with HM Revenue and Customs, PA Media reports. It has just snapped this.

Rishi Sunak has asked his independent ethics adviser to look into the Nadhim Zahawi case, as “clearly in this case there are questions that need answering”.

Richard Sharp, the BBC chairman, has announced that an internal inquiry will investigate allegations that he did not declare a conflict of interest when he was appointed to the job by Boris Johnson.

The allegations arose following a report in the Sunday Times yesterday saying that, at around the time he was applying for the BBC post, Sharp helped Johnson secure a £800,000 loan guarantee by putting the person willing to guarantee the loan facility in touch with Simon Case, the cabinet secretary, who needed to approve it.

In his statement, Sharp said:

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. Although the appointment of the BBC chairman is solely a matter for the government … I want to ensure that all the appropriate guidelines have been followed within the BBC since I have joined.

The nominations committee of the BBC board has responsibility for regularly reviewing board members conflicts of interest and I have agreed with the board’s senior independent director, Sir Nicholas Serota, that the committee shall assess this when it next meets, reporting to the board, and in the interests of transparency publish the conclusions.

Sharp said he had agreed “with the board’s senior independent director that the committee shall look at this when it next meets and, in the interests of transparency, publish the conclusions”.

Yesterday the Sunday Times quoted Sharp as saying that he did not declare his involvement at the time he was being appointed because there was no conflict of interest. Sharp told the paper:

There is not a conflict when I simply connected, at his request, [Sam Blyth, who did offer the loan guarantee] with the cabinet secretary and had no further involvement whatsoever.

In an article for the Guardian, Gordon Brown, the former Labour PM, says that the Conservatives are exploring introducing charging into the NHS, in a move that would formalise “two-tier healthcare”. Referring to an article the Sajid Javid, the former health secretary, published in the Times on Saturday, Brown says:

Sajid Javid, a former chancellor and health secretary, has written approvingly of the £20 fee that some European countries charge for visits to the GP. He labels Ireland’s €75 (£66) bill for attending an A&E without a GP’s referral as merely “nominal”, as if it’s so modest that a higher charge would be more appropriate. And he calls for a national debate on the contribution private financing can make to healthcare.

But the direction in which the Conservatives are travelling is already clear. The sick would pay for being sick and charging would force, as has happened with GP and hospital fees in France, the better-off sections of the population to take out private insurance – inevitably creating, in its wake, a two-tier healthcare system.

Javid’s intervention in favour of what he calls “nothing short of a 1948-style moment” is no accident. The prime minister, Rishi Sunak, who has used private healthcare, once came up with a proposal for new charges: £10 for patients who miss GP and hospital appointments. And so once again, as they did in opposition at the turn of this century, with Alternative Prescriptions, Conservatives are testing the water for a different kind of NHS.

Brown says charging would be inefficient and unfair, but he also says the NHS does need a new funding settlement. He says:

As a former chancellor, I have said for some time that the NHS refinancing that Labour achieved in 2002 – a 6.3% real terms annual rise between 2000 and 2010 – had to be revisited every decade. This hasn’t happened under the Conservatives, and the consequences are visible to all of us. But the pressures the NHS faces make the case for comprehensive funding through national insurance even stronger; and show why this is to be preferred to either European-style social insurance, or private insurance.

Sharon Graham, the Unite general secretary, made a similar claim in an interview on the Today programme this morning. She criticised Rishi Sunak for not getting involved in talks to end the health strikes, and she said she was now “seriously thinking” that there was a “more sinister” reason for the Tories not wanting to see the dispute settled. She said:

I believe that [the Conservatives] have an agenda in terms of privatising the NHS. Sajid Javid’s comments over the weekend weren’t done whoopsie daisy, they were very deliberate. They were flagged to see how it flew. I am very, very concerned now that they have another agenda.

Asked what evidence there was that the Tories wanted to privatise the NHS, Graham said:

I was around when Jeremy Hunt was the health secretary, and he wanted the NHS in the American trade deal part. And what we’re seeing now is such an act of self harm, I cannot understand why the prime minister does not come to the table … and gets this deal done.

Good morning. Since the end of the second world war, UK governments have generally been brought down by economic/financial crises (1970, 1974, 1979, 2010) or sleaze/ethics crises (1964, 1997). The current Conservative government is on course to fail on both.

Ambulance staff are on strike again over pay. And Nadhim Zahawi, the Conservative party chair, is under pressure to resign over revelations that he paid a penalty to settle a tax dispute while he was in cabinet.

Here is my colleague Peter Walker’s overnight night story about the pressure he is facing.

Here is an explainer from my colleague Archie Bland.

This is from Archie’s daily First Edition briefing. You can sign up to get it as an email here.

And here are the developments on this story this morning.

• Zahawi reached his settlement with HM Revenue and Customs, and paid the penalty he owed, while he was chancellor, it has been confirmed.

• Craig Oliver, head of communications at No 10 when David Cameron was prime minister, has described Zahawi as “in serious trouble” and “hanging by a thread”. In an interview with the Today programme, Oliver said:

I think that [Zahawi] is in serious trouble. You cannot be Conservative party chairman and not go out and face the media. So at some stage he’s going to have to go out and have a very, very difficult interview.

The problem, I think, at the moment is, it doesn’t all add up. Why did you take the job of chancellor when you were clearly in dispute with the HMRC? He has yet to come out with an answer that is satisfying or feels comfortable on that point.

It’s dealing with sums of money which are astronomical to the average voter and it feels deeply uncomfortable.

And I suspect that prime minister’s questions this week is to be very awkward for Rishi Sunak but also the first time that Nadhim Zahawi has to face the media is going to be incredibly awkward too.

So I think that at the moment he’s hanging on by a thread.

Here is the agenda for the day.

Morning: Rishi Sunak is expected to record a pooled TV interview while on a health visit.

11.30am: Downing Street holds a lobby briefing.

11.30am: Nicola Sturgeon, Scotland’s first minister, holds a press conference.

3pm: Bertie Ahern, the former taoiseach (Irish PM), gives evidence to the Commons Northern Ireland affairs committee on the institutions created by the Good Friday agreement.

4pm: Dehenna Davison, the levelling up minister, gives evidence to the levelling up committee on levelling up funding.

4pm: Sarah Healey, permanent secretary, at the Department for Digital, Culture, Media and Sport, gives evidence to the Commons public accounts committee.

I’ll try to monitor the comments below the line (BTL) but it is impossible to read them all. If you have a direct question, do include “Andrew” in it somewhere and I’m more likely to find it. I do try to answer questions, and if they are of general interest I will post the question and reply above the line (ATL), although I can’t promise to do this for everyone.

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