From ‘Dishi Rishi’ to ‘Posh Tory’, a dip in Sunak’s political fortunes

The optics are not good for British chancellor though his wife’s tax affairs are legal



Reuters
Reuters

By Prasun Sonwalkar

Published: Sun 10 Apr 2022, 10:47 PM

Two bits of wisdom by two prime ministers have stood the test of time in British political history. There have been 55 prime ministers, but only a few stand out for their actions and words.

Harold Macmillan, who held office between 1957 and 1963, when asked what he feared most as prime minister, replied “Events, my dear boy, events”. Harold Wilson (1964-1970) left behind a dictum that is often cited during times of political excitement in Westminster: “A week is a long time in politics”. But both held office in a different era, and their words of wisdom may need some revision in the 21st century.

As chancellor Rishi Sunak found out last week, it is optics, not events, that a prime minister-aspirant needs to be careful about in an age defined by real-time political cut-and-thrust over social media, when even a day can be a long time in politics. It was just a few weeks ago when he was widely seen as ‘Dishy Rishi’, one who could do no wrong, when it was only a matter of time before he takes over as prime minister from the beleaguered Boris Johnson grappling with the fallout of parties in Downing Street. As of today, Sunak’s political stock could not be lower, and his position as Johnson’s clear replacement is no longer obvious.

The chancellor’s job makes it difficult for anyone to be popular, but Sunak, who had a meteoric rise in the Conservative party since he was first elected in 2015, won wide praise for putting in place multi-billion pound subsidies and innovative support during the Covid-19 pandemic.

Financial realities soon hit home, and his latest mini-Budget piled more pressure on families already struggling with rising energy and other costs. By last Wednesday, when a controversial rise in National Insurance rates took effect, his ratings had fallen, and plunged further when reports on the same day said his wife Akshata Murthy, an Indian citizen worth hundreds of millions of pounds, was using a facility called ‘non-dom’ status to pay less taxes in Britain.

A perfectly legal facility in existence since 1799, ‘non-dom’ stands for ‘non-domicile’, a term used for a UK resident whose permanent home, or domicile, is outside the UK. A non-dom only pays UK tax on money earned in the UK but does not have to pay any tax to the UK on money made elsewhere in the world (unless they pay that money into a UK bank account).

For wealthy individuals, this presents the opportunity for significant – and perfectly legal – savings, if they choose a lower-tax country for their domicile. Murthy’s status as a non-dom rests on the fact that her father N R Narayana Murthy, founder of Infosys, is Indian, and she was born and grew up in India. She has a small share in the company and earns dividends in millions of pounds, on which she does not pay UK tax, since she is classified as a non-dom. Experts are quick to point out that using the non-dom facility is a matter of choice, an individual can always choose not to opt for it and pay full UK taxes on income earned world-wide.

Murthy’s tax affairs are all as per law, but the optics are not good: a prosperous chancellor, whose also-prosperous wife uses a facility to avoid paying taxes, has been putting up National Insurance rates, taxes and other financial curbs on millions of Britons already struggling with price rise.

The British news media and the opposition soon pounced on Sunak, Murthy, their past, their wealth, their donations, their status as US green card holders, Murthy allegedly benefiting from Infosys having an office in Russia at a time when Sunak was imposing sanctions, and so forth. Sunak, who has been credited with running a slick PR operation, found himself struggling to defend his political capital, despairing at the attacks against his wife.

The screaming headlines and reports of Sunak and Murthy’s wealth fit into the narrative of Labour and others that Sunak is just another ‘Posh Tory’, who doesn’t know what the ordinary British family goes through. Sunak believes he and his family are the subjects of a smear campaign, with subtle hints from his allies that his neighbour in Downing Street, who he tried to replace a few weeks ago, is behind it all.

Many recall how Sunak kept a distance just weeks ago when Johnson was facing fire and ire over the parties in Downing Street, how he positioned himself as the alternative much before a leadership challenge was mounted against Johnson. Pundits note that timing is of the essence in politics, and Sunak erred by not quitting at the time and triggering developments that could have eventually installed him as the first non-white/Indian-origin prime minister.

A clear political beneficiary of Sunak’s current troubles is Johnson, but both Sunak’s office and Number 10 have denied that Downing Street is behind the leaks and briefings against him. For the moment, Sunak, faced with ratings shooting south and a dwindling number of supporters in the cabinet and among party MPs, seems to have blown his chance to be the prime minister.

And Johnson appears firmly in the saddle in the foreseeable future for two reasons: dealing with the Russian invasion of Ukraine and the clear disintegration of Sunak’s reputation as an alternative – all of which reminds many of another bit of political wisdom, by the enigmatic Enoch Powell: “All political lives, unless they are cut off in midstream at a happy juncture, end in failure, because that is the nature of politics and of human affairs.”

The writer is a senior journalist based in London


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