Among the various properties owned by the chancellor of the exchequer Rishi Sunak and his wife Akshata Murty is Kirby Sigston Manor, an expansive Grade II-listed house in a small hamlet in rural North Yorkshire. It comes with sweeping grounds and a beautiful duckpond big enough to have an island. There are also plans for a swimming pool and tennis court for the Sunak family to enjoy on visits to the chancellor’s constituency. On Friday there appeared to be no one home, domiciled or otherwise. In the garden a union jack flapped gently in the wind on its flagpole, but the only sound of activity came from the quacking ducks. Ten miles away in Northallerton, a sturdy, well-heeled and solidly Conservative market town also in Sunak’s Richmond constituency, there was a similar air of calm. While many at Westminster and in the national media frothed at the revelation that Murty was claiming non-domiciled tax status, and therefore was not paying UK taxes on her very considerable overseas earnings, initial impressions on Northallerton’s streets suggested people were overwhelmingly unfussed. And this despite estimates that the UK exchequer, which Murty’s husband happens to oversee, has been £20m lighter over the past seven years than it would have been had his extremely rich wife been registered to pay the tax in this country, where she lives most of the time. “She’s not even in the government,” said Margaret Williams. “She pays tax in her country [India], and she expects to be returning home.” Seldom could a front-page story in most of the papers have had so little impact on a community. “It’s a non-issue,” remarked Steve Tomkinson. “It’s her choice.” It’s as if they were residents of certain quarters of South Kensington in London, where the proportion of non-doms is as high as 20 per cent. “I’m afraid to say it’s the mainstream media,” explained Jo Keighley, who used to work in education. “It’s nothing to do with domicile tax. It’s all politics. We live in an age of constant leaking and disloyalty.”
If opinion in the wider Conservative party, country and media had been equally supportive – and understanding – of the Sunaks’ decisions over tax and residency issues, then the chancellor would still be sitting pretty in the No 10 succession stakes. As it is, last week’s events have capped a disastrous couple of weeks for the chancellor, the worst of his political career by a mile. His chances of becoming the next Tory leader and prime minister have nose-dived, to the point where if a contest were to be held in the next few months, few Conservatives now believe he would be in with a realistic chance. As one senior figure on the backbenches put it, there could not be a worse time for Sunak to have his wealth and tax affairs on all the front pages and news bulletins. “This is an illustration of how quickly political fortunes can change. The problem for him is one of timing. If you think how much he has put taxes up, and that we have a very serious cost of living crisis, it is not good for him to have this going on.” The latest Opinium poll for the Observer today finds that Sunak’s approval rating has dropped to a new low of -15, making him only slightly less unpopular than Boris Johnson, as inflation surges and taxes go up. Just four months ago, Sunak’s approval rating stood at a very healthy +11. Now, however, the worry for Conservative MPs – particularly those with small majorities – is that the shine has gone off not only the prime minister, but his chancellor. Talk of rifts between the two grow by the day, as Johnson pushes to spend more to get the economy moving and Sunak tries to rein him in. From the moment it was revealed, in the middle of last week, that Murty was a non dom and was therefore choosing not to pay UK tax on income from her shareholding – estimated to be worth £690m – in her father’s multibillion-pound Infosys business empire, most Conservative MPs could sense the position was unsustainable.
Only two weeks before, Sunak had refused to lift benefits by the rate of inflation for millions in his widely criticised spring statement, meaning that from 11 April those receiving help from the state will suffer a reduction in their real-terms income that the Joseph Rowntree Trust says amounts to “the greatest fall in the value of the basic rate of unemployment benefit since 1972”. Writing on the Conservative Home website on Friday, the former Tory MP Paul Goodman warned the Sunaks that holding firm and then giving in to pressure would damage them most of all politically. “The very worst thing that can happen is to dig in and then have to give way and I wonder if that is what will happen here,” he wrote. Sunak had appeared in the Sun that morning in defiant mode, accusing those who criticised his wife of peddling “unpleasant smears”. “Rishi: Lay Off My Missus” was the front page headline. Friends of Sunak were quoted anonymously in the media as saying No 10 was briefing against Sunak because he had been distinctly unsupportive of Johnson during Partygate when a leadership contest seemed on the cards. The implication of Sunak’s Sun interview was that because his wife had acted within the law and it was her money, it was no one else’s business and nothing would change. But that evening – as it was also emerging that Sunak had held a US green card for 19 months of his time as chancellor and six years as an MP (meaning he had declared himself as a permanent US resident for tax purposes during that period) – Murty issued a statement. She announced she would pay UK taxes on her overseas income after all, not because she had to, but because she wanted to and because she recognised that not doing so was contrary to the “British sense of fairness”. She would, however, remain a non dom, meaning she would still be able to take advantage of rules that could permit her in future to avoid inheritance tax of more than £275m. If Murty and the chancellor think her change of mind will be the end of the controversy and restore his fortunes quickly, senior figures in the Conservative party are not convinced.
As one former Tory cabinet minister put it, the whole episode had raised questions not so much about their wealth or tax arrangements, but about Sunak’s political savvy. “It is not so much about money, though that is difficult, it is the matter of judgment. That is what colleagues are concerned about, what it says about his judgment. I would say he is certainly damaged.” How was it that someone who wanted to run the country could have allowed his personal affairs and those of his wife to be arranged in a way that one day would, inevitably, come to light? Another Tory MP said that what would worry colleagues with small majorities most was that both the prime minister and chancellor had now lost their shine, and both were under clouds at a time of severe economic difficulty for the country. Sunak’s mishaps and misjudgments had sowed seeds of doubts even before the non-dom furore. While he was credited with introducing the hugely costly furlough scheme early on in the pandemic, which cost a total of around £70bn, “eat out to help out” was seen as a big error in the fight against Covid that encouraged people to socialise before it was really safe to do so. Several of his small PR stunts have backfired since, often because they raised the subject of his wealth. In a pre-budget photo opportunity in July 2020 he was photographed with a “smart mug” costing £180. Then to coincide with last month’s spring statement in which he cut fuel duty he was photographed filling up a Kia Rio only for it to be revealed that the car had been borrowed from a worker at the petrol station and that the Sunaks’ fleet of vehicles consisted of a top-of-the-range Range Rover, a BMW and a very smart Lexus. Shortly after the spring statement, as controversy raged about his refusal to do more for the poorest in the country, it was revealed that the Sunaks would be heading to their luxury apartment in California for an Easter break.
The result of the past week, in particular, is that Sunak is now associated every bit as much with wealth – he himself set up a successful hedge fund before entering politics in which it is believed he may still retain a stake – as Boris Johnson is with lockdown-breaking parties at Downing Street. The opposition parties now have a new, second target to aim at alongside Johnson – the chancellor who refuses to help those on benefits while protecting his own family’s wealth from the tax man. When parliament returns after the Easter break, Labour, the Liberal Democrats and the Scottish National Party will demand transparency over the chancellor’s personal finances at every turn. Back in his own constituency, while most people seem to be Sunak supporters, there are some who are beginning to turn and form the opinion that their MP like Johnson, practises “do as I say, not as I do” politics. One is Phil Eames, who is mayor of Northallerton. “I’m speaking personally, not in an official capacity,” said Eames, “but I think it’s disgusting, hypocritical and out-of-touch. It’s up to leaders to set an example.” There are others too. For Helen, who has a young child and has had to return to work to pay the bills, the point is that as a politician, you must carry the can and show responsible leadership, not feather your own nest. “What your family does reflects on you, whether that’s right or not. When you’re in that kind of position you take on that kind of responsibility,” she said.