Tories fear by-election disaster if Zahawi quits as an MP

Nadhim Zahawi sacked by PM Rishi Sunak

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The ex-Tory party chairman was facing cross-party calls to stand down as an MP after the Prime Minister’s ethics adviser Sir Laurie Magnus concluded Mr Zahawi had committed seven breaches of the Code over his tax affairs.

Mr Zahawi, 55, had faced damaging reports that he had settled an estimated £4.8million bill with HM Revenue and Customs while he was chancellor, including paying a penalty.

In a letter to the Prime Minister, Mr Zahawi promised his full support from the backbenches but pointedly did not address the tax issue – and instead complained about the way the issue had been covered by the media.

Labour and the Liberal Democrats have called for Mr Zahawi, who has been MP for Stratford-upon-Avon since 2010, to quit his seat. If Mr Zahawi does quit it would be a nightmare scenario for the Tories who remain around 20 points behind in the polls, with his 19,000 majority likely to be under threat in a by-election fought on ethical standards.

In a letter published yesterday following Sir Laurie’s inquiry, Mr Sunak told Mr Zahawi that he believed he had committed a “serious breach of the Ministerial Code”.

Mr Sunak said: “As a result, I have informed you of my decision to remove you from your position in His Majesty’s Government.”

But MPs for Labour and the Liberal Democrats criticised the Prime Minister for taking so long to make the decision and called for Mr Zahawi to stand down from Parliament.

Labour’s Chris Bryant said Mr Zahawi’s tax dispute feels like a “deliberate act of deception”. He added: “I think voters will find it very hard to understand why he’s sticking around”.

A number of people in Stratford have called for their MP’s resignation over the last week.

There are local elections in Stratford in May, and the Liberal Democrats have made it clear that Stratford District Council is at the top of their target list in the Midlands.

Former minister Michael Portillo said Mr Sunak “looks weak” after taking several days to sack Mr Zahawi.

Mr Portillo said the fiasco represented a “terrific blow against the Government” and that Mr Sunak “had an opportunity to get rid of him earlier” following the revelation Mr Zahawi paid a penalty to HMRC.

He added: “It pains me to say this, but I think on the whole it makes Rishi look weak.

“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.”

Tory MP Robin Walker, who chairs the education select committee, said it was right that Sunak had fired Zahawi but added that it was “concerning” it took so long for the details of Zahawi’s tax affairs to come to light.

Mr Sunak resisted calls to sack his party colleague immediately and instead stressed the need for “due process”.

Pressure on Mr Zahawi grew when HMRC boss Jim Harra last week told MPs there are “no penalties for innocent errors in your tax affairs”.

In a letter to the Prime Minister yesterday, Mr Zahawi said he was concerned “about the conduct from some of the fourth estate in recent weeks”, in a reference to the media.

In comments which appear to indicate that the former chancellor holds out little prospect of returning to office in the years to come, he said: “You can be assured of my support from the backbenches in the coming years. Your five priorities are the right priorities, and I will do whatever I can to help you deliver them.”

The row surrounding Mr Zahawi had centred on a tax bill over the sale of shares in YouGov – the polling firm he founded – worth an estimated £27million and which were held by Balshore Investments, a company registered offshore in Gibraltar and linked to Mr Zahawi’s family.

Mr Zahawi said that HMRC concluded there had been a “careless and not deliberate” error in the way the founders’ shares, which he had allocated to his father, had been treated.

He had also insisted he was “confident” he had “acted properly throughout”.

Sir Laurie’s four-page report, dated January 29, said the technical details of the HMRC investigation were outside his scope.

Instead, he considered Mr Zahawi’s “handling of the matter in light of his responsibilities as a minister”.

Levelling Up Secretary Michael Gove toured broadcast studios on behalf of the Government as the sacking became public.

Mr Gove rejected calls for Mr Zahawi’s departure from politics, saying that he should “absolutely not” quit as an MP.

Former Cabinet minister Jacob Rees-Mogg was quick to float Boris Johnson as a possible replacement.

He said: “He has all the right attributes for a party chairman. He is charismatic, he rallies the troops. He’s a sort of fully loaded Conservative. So I think that type of personality would be a very good one for a party.”

The Tories lost a huge majority in Tiverton and Honiton to the Liberal Democrats during a by-election in June last year. Rishi Sunak also suffered defeat in his first electoral test in December when Conservatives slumped to just 22.4 percent of the vote in the City of Chester by-election where Labour held the seat.

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