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Why is Rishi Sunak’s wife’s tax status news today? After all, Private Eye broke the story of her non-dom tax status over a year ago, and “news” suggests information that’s “new” – but this is not.
The answer lies in comparing the Chancellor’s circumstances then and now. Then, much of the country was in lockdown. The furlough scheme was a year old. Sunak’s taxing, borrowing and spending programme was congenial to the Left (though it didn’t want to credit him for it) and tolerable to the Right (most of which originally recognised that the pandemic was the economic equivalent of a heart attack for which emergency treatment was required).
A majority of our Tory members’ panel had backed his recent Budget and he was second in our monthly Cabinet League Table. True, his popularity with the public had been declining since the first days of the pandemic, according to YouGov, but his rating was still positive.
Now he is assailed from every quarter, as he seeks to lower the debt and deficit in the medium-term, and tax and borrow in the short. The Left wants him to spend more, and Labour has him in its sights. The Right wants him to tax less, and the Daily Telegraph, the paper still most read by Tory activists, is giving him an especially hard time. He’s in the relegation zone of our Cabinet Table and his YouGov rating has fallen through the floor.
To this list of deserting allies, sullen voters and outright enemies must be added the Chancellor’s internal Tory foes. These include not only the supporters of other potential Conservative leaders, but those of the one already in place – at least if today’s papers are to be believed.
It’s no secret that Boris Johnson’s high spending instincts are at odds with the lower spending ones of his Chancellor. So it was with the latter’s predecessor, Sajid Javid. But he had been defeated by Johnson in a leadership election. Sunak has not fought a contest and is a potential successor. Theirs is not exactly a Tony Blair-Gordon Brown relationship but it’s closer to one than to the David Cameron-George Osborne partnership.
And some of the briefing this morning has a faint smack of the New Labour era. To cut a long story short, people declaring themselves to be allies of the Chancellor are claiming that allies of the Prime Minister are working to damage Sunak, and have refloated the old story about the non-dom tax status of his wife, Akshata Murty.
The Chancellor blames Labour in an interview with the Sun, saying that “to smear my wife to get at me is awful” – thus repeating the view he recently expressed in the wake of another story critical of her. “You know, I think it’s totally fine for people to take shots at me. It’s fair game,” he said recently. “Actually, it’s very upsetting and, I think, wrong for people to try and come at my wife.”
Sunak appears to be suggesting that Murty’s tax affairs are none of anyone else’s business. But such a line of argument wouldn’t be viable – since he himself made the Cabinet Office aware of his wife’s tax status as part of his declaration of interests when he first became a Minister in 2018.
What of Murty’s non-dom status itself? From the point of view of Murty as a daughter and businesswoman, her decision to remain an Indian citizen and to become a non-dom is understandable. For she may wish to return to India as a citizen later to be with her parents – hence the citizenship decision. And she won’t want to pay tax on her Indian wealth both in the UK and in India – hence the non-dom decision.
However, Murty isn’t only a daughter (and a businesswoman). She is also a spouse – in her case, of the Chancellor of the Exchequer. And the stark fact is that the floating voter in the Duck and Drake in Dudley won’t have a clue what non-dom status is.
What he said a few years ago at the time of the MPs’ expenses scandal, and a few months ago in the wake of the Number Ten party revelations, will be said all over again: it’s one law for them, and another law for us. To such people, it follows as the night the day that politicians’ spouses should pay UK tax on all their earnings. Wherever these are from – especially at a time of the biggest squeeze on incomes in modern times.
Now you would have thought that Sunak would have seen this slow train coming a long time ago. And claims of conflicts of interest if he seeks to change the non-dom rules. And that the image of him supporting a foreign billionaire who won’t pay her taxes is exactly that which his opponents want to project on him.
The only way I can read his own words in the Sun – let’s put aside the swirl of briefing elsewhere for a moment – is either that he doesn’t see that he’s playing into his enemies’ hands, or else that he’s so supportive of his wife’s decision that he’s willing to take the hit. But he should be in no doubt: the view of the sober backbenchers who I’ve spoken to is that, either way, the position is unsustainable.
If he understands that he’s playing his opponents’ game, but is determined to support his wife, the logical end-point of the journey is resignation. If he doesn’t take the point, he is trapped in a classic Minister’s dilemma. Give way, and you’re weak. Dig in, and you’re stubborn.
And the pressure will grow – especially since we are unlikely to have heard the last of Murty’s financial affairs. The worst option of all, surely, is to dig in…and then give way. As I write, this seems to be the destination to which the Chancellor is most likely to travel (though much can change very fast). If so, I can think of nothing that would delight his enemies more.
Though I was among the critics of his Spring Statement, believing that he was trying to appease the unappeasable on tax, I’m certainly not among Sunak’s Tory opponents. I like him, and can imagine him as a future Conservative leader, communicating his case to voters in his fluent way.
I don’t believe that private education is a problem for voters. Were it so, Tony Blair, David Cameron and Boris Johnson would never have entered Downing Street. Nor do I think that they care how wealthy a politician’s spouse may be, or if he once worked in a hedge fund. The mass of the electorate is sensible enough to take people as they find them.
Indeed, the Chancellor’s life story is one of migrant origins, aspiration, brains, hard work and modesty – rather than the one of stupendous wealth, connections, privilege, rigidity and out-of-touchness that his critics seek to portray. But when push comes to shove, does he really get politics?
We know that he believes in Treasury orthodoxy and wants a productivity plan. But what does he think about Net Zero? Small boats? Levelling up? What is the case that he wants to communicate? F.Scott Fitzgerald once wrote that the rich “are very different from you and me”. Has Sunak become sufficiently different not to grasp the bleak reality of his present position?
If he does, he will give way. Which means that Murty will pay up. That’s politics for you: intrusive, casually cruel, unfair – and the trade for which the Chancellor volunteered.