Rishi Sunak dismissed calls to sack Nadhim Zahawi today in brutal clashes with Keir Starmer at PMQs.
With the Tory chair having decided to stay away from the Commons chamber, Mr Sunak admitted that he had decided to trigger a standards probe after ‘more information’ came to light about his multi-million pound tax settlement.
The Labour leader branded him ‘hopelessly weak’ and made a thinly-veiled jibe at his stature, asking whether the job was ‘too big’ for him.
But Mr Sunak shot back that he was not taking the ‘politically expedient’ course by cutting Mr Zahawi loose – saying instead he deserved ‘due process’.
The premier also confirmed that no problems with Mr Zahawi’s tax affairs had been flagged by the civil service when he was appointed to his current role.
Mr Zahawi has insisted he has no intention of quitting and welcomed the prospect of an investigation by the PM’s independent adviser.
A Labour MP claimed that he had asked her to let him through a secure door at Parliament earlier in the week because he had lost his pass – although it is unclear whether that was the reason for his absence this afternoon.
Meanwhile, there are growing questions about the role of the civil service, with claims that successive PMs were not notified about the nature of Mr Zahawi’s dispute with the taxman.
Rishi Sunak is bracing to be grilled by Keir Starmer over what he knew about the Tory chair’s dealings with HMRC, and when
Mr Zahawi has insisted he has no intention of quitting and welcomed the prospect of an investigation by the PM’s independent adviser
Sir Keir asked: ‘Does the Prime Minister agree that any politician who seeks to avoid the taxes they owe in this country is not fit to be in charge of taxpayer money?’
Mr Sunak replied: ‘I am pleased to make my position on this matter completely clear to the House. The issues in question occurred before I was Prime Minister.
‘With regard to the appointment of the minister without portfolio, the usual appointments process was followed, no issues were raised with me when he was appointed to his current role, and since I commented on this matter last week, more information has come forward.
‘That is why I have asked the independent adviser to look into the matter.
‘I obviously can’t prejudge the outcome of that but it is right that we fully investigate this matter and establish all the facts.’
Sir Keir said ‘anybody watching would think it’s fairly obvious that someone who seeks to avoid tax can’t also be in charge of tax’, but swiped that the PM ‘can’t bring himself to say that or even acknowledge the question’.
However, Mr Sunak retorted: ‘Of course the politically expedient thing to do would be for me to have said this matter must be resolved by Wednesday at noon, but I believe in proper due process.’
He accused Labour of ‘simple political opportunism’ for urging him to appoint an ethics advisor then wanting a decision before the adviser had investigated the case.
Sir Keir promoted gasps in the chamber as he made an apparent dig at Mr Sunak;s height.
‘We all know why the Prime Minister was reluctant to ask his party chair questions about family finances and tax avoidance,’ he said.
‘But his failure to sack him when the whole country can see what’s going on shows how hopelessly weak he is – a prime minister overseeing chaos, overwhelmed at every turn.
‘He can’t say when ambulances will get to heart attack victims again. He can’t say when the prisons system will keep streets safe again. He can’t even deal with tax avoiders in his own Cabinet.
‘Is he starting to wonder if this job is just too big for him?’
The row has been fuelling unrest on Conservative benches with a grim poll showing Mr Sunak’s personal ratings have tumbled over the past week.
Former minister Caroline Nokes has said that Mr Zahawi should stand aside from his role while the standards inquiry takes place.
Ex-Cabinet minister David Gauke said this morning that it is ‘hard to see’ how he survives.
Asked on BBC Radio 4’s Today programme if he would resign if he were Mr Zahawi, Mr Gauke said: ‘I think I would be very tempted to and if I was the prime minister I think I would be keen to encourage it.
‘I think it is going to be very uncomfortable for Rishi Sunak at 12 o’clock today if Nadhim Zahawi is still in place.’
No 10 said new ethics adviser Sir Laurie Magnus will focus on Mr Zahawi’s ministerial declarations, but it could extend to his prior tax arrangement.
The row erupted with reports that Mr Zahawi agreed to pay a ‘penalty’ of more than £1 million as part of a £5million tax settlement with HM Revenue and Customs .
Allies of Mr Zahawi do not dispute that he was fined over the huge tax bill, but insist he had been ‘careless’ over his financial affairs rather than deliberately seeking to dodge tax. Mr Zahawi has said he is ‘confident I acted properly throughout’.
The tax settlement related to a stake in the polling firm YouGov, which he founded before entering politics.
It was agreed during his brief stint as Chancellor last year – when he was in charge of the country’s tax system.
There are claims that the dispute resulted in Mr Zahawi being denied a knighthood in the New Year’s Honours list.
A grim poll showed Mr Sunak’s personal ratings have tumbled over the past week, with Labour 22 points ahead
However, No10 said yesterday that Mr Sunak had not been informed of the row when he appointed Mr Zahawi as Conservative Party chairman in October.
Ms Truss appointed Mr Zahawi as Cabinet Office minister in September without his tax affairs being flagged, according to The Times report.
In October, he was a contender alongside Jeremy Hunt to become Chancellor but again officials apparently did not raise concerns.
When Mr Sunak became PM later that month, he was also not informed about Mr Zahawi’s recent tax settlement.
The lack of warning has sparked questions over the role of Cabinet Secretary Simon Case.
One source told The Times that Mr Case was not aware of the situation because he had not been told by HMRC.
Another said that the proprietary and ethics team which scrutinises ministerial appointments was unable to deal with the situation in the face of a string of scandals within the government.