7 April 2022

Sunak’s family finances are far from the Chancellor’s biggest problem


Hell hath no fury like the Government’s opponents in the throes of a ‘Hypocrisy!’ scandal.

In this case it’s not even a politician who is under the spotlight, but Rishi Sunak’s  wife, Akshata Murthy. The first thing to say is that Mrs Murthy’s ‘non-dom’ isn’t actually news, in the sense of being unknown. Private Eye reported it more than a year ago and the Chancellor declared it in his MPs’ interests back in 2018.

Among those who have a view on the issue, I’d guess there are three broad camps:

First, the straightforward view that the whole concept of non-domiciled status is wrong, that it’s a tool of the very rich to avoid paying what they owe and they should be paying tax like the rest of us. That’s very much the line being pursued by Keir Starmer, who accuses Sunak of ‘hypocrisy’ while also saying he has ‘questions to answer’ – always a good non-committal holding position.

The second camp is what you might call the ‘pragmatists’, who argue that the non-dom rules have been around for 200 years to deal with a particular issue of people who earn income overseas paying tax where that income is earned. Getting rid of non-dom status would only deter people with overseas business interests from coming to the UK, making us all poorer in the process.

Finally, there’s more of a ‘balancer’ view: that the non-dom rules are a necessary accommodation with a globalised economy, but that it’s probably not a very good idea for senior members of the Government, or their families, to be seen to be taking advantage of them.

Of course, most people reading this story won’t know the ins and outs of non-dom status, but will feel instinctively aggrieved at the idea that the rich seem to have a tax code all of their own.

The government line is very much that it’s unfair to go after ministers’ family members – and Sunak has jokingly suggested he feels something of Will Smith’s uxorious umbrage when he sees attacks on his wife (without the fisticuffs, of course).

Some might sympathise with that argument, but there’s still a fairly obvious question of political judgement here. It should have been pretty clear that the papers might get hold of this information and splash it as a ‘one rule for them!’ piece, exactly as we’ve seen this morning. After all, the same thing happened with both Lord Ashcroft and Zac Goldsmith, so it’s not exactly a new genre of story (Goldsmith has now given up his non-dom status, for what it’s worth).

Nor can Sunak really complain that the story misses out the nuances of the British tax code, given that he is ultimately in charge of it. Politicians benefit from messaging that is simplistic and emotive all the time, so they can’t really complain when the shoe is on the other foot.

The opposition parties, naturally, juxtapose Mrs Murthy’s tax arrangements and wealth with the fact her husband has just jacked up taxes on working people with yesterday’s national insurance rise.

But it’s the latter charge that is far more important in the grand scheme of things. As I’ve written before on CapX, the British people really don’t mind being ruled by the very wealthy – our most popular Prime Minister ever was literally born in a palace. They do mind when their politicians, regardless of background, bring in policies that leave them worse off.

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John Ashmore is Editor of CapX.