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Knives out for Dishy Rishi as he is 'captured by the Treasury' on tax

·4-min read
Rishi Sunak arrives at the Commons on Wednesday for Prime Minister's Questions
Rishi Sunak arrives at the Commons on Wednesday for Prime Minister's Questions

Until now, he has been the pandemic wunderkind who can do no wrong, doling out furlough cash and helping businesses to "bounce back" from coronavirus.

Yet the Government’s rising star appears to have started to lose some of his sparkle after being forced to defend himself on Twitter following criticism of the Government's “lamentable” Covid loan scheme.

Observers could be forgiven for wondering whether the knives are out for Rishi Sunak amid what has arguably been the worst week of the 41-year-old’s Chancellorship.

As the Oxford-educated former investment banker prepares to mark his second anniversary as the head of the Treasury next month, headlines are starting to suggest there is something fishy about “Dishy Rishi”.

It was only a matter of time before the father-of-two’s deficit-denying spending and unpopular National Insurance Contributions rise caught up with him, but the sudden resignation of Lord Agnew has exposed weaknesses in the Chancellor's record sooner than expected.

The dramatic departure of the Treasury minister on Monday over the Government’s decision to write off £4.3bn in fraudulent Covid loans forced Mr Sunak onto the defensive on Wednesday.

Speaking in the House of Lords earlier in the week, the peer called the oversight of the scheme “nothing less than woeful” and accused officials of “schoolboy errors” on multiple fronts in what some have interpreted as a jibe at youthful Mr Sunak personally.

He also accused the government of “arrogance, indolence and ignorance” in its attitude to tackling fraud estimated to cost £29bn a year.

Lord Agnew
Lord Agnew

After the issue was raised at Prime Minister’s Questions, Mr Sunak mounted a rearguard action on Twitter, vowing to go after those "who took advantage" of the scheme, and insisting: "No, I'm not ignoring it and I'm definitely not 'writing it off'.

"Clearly criminals have sought to exploit our support schemes,” he conceded, “We’re going to do everything we can to get that money back and go after those who took advantage of the pandemic.”

He pointed to a £100m investment in a Taxpayer Protection Taskforce, suggesting £2.2bn in potential fraud had been recovered from Bounce Back Loans along with £743m of overclaimed furlough grants.

He also sought to remind people to “remember the context of the time,” adding: “Businesses on the brink of collapse needed support quickly.”

Yet with the public facing a looming cost of living crisis, any sense of squandered taxpayer cash has only served to compound criticisms of Government profligacy.

Only this week, the Institute of Fiscal Studies questioned the timing of the proposed 1.25pc Health and Social Care levy, pointing out that lower than expected borrowing means there is fiscal headroom to move it to next year.

Mr Sunak has sought to distance himself from the NICs hike, reportedly describing it to colleagues as “the Prime Minister’s tax”, according to the Sunday newspapers.

A day later, Boris Johnson cannily refused eight times to confirm that it will be introduced amid fears over the impact of the increase in the energy price cap, which will add hundreds of pounds a year to domestic heating bills.

Yet it is clear who many Tory backbenchers blame for the policy.

As one veteran MP put it: “It’s all very well Rishi blaming Boris and banging on about confiscating his credit card, but he’s the Chancellor. Some people think he’s just another one who has been captured by the Treasury.”

It is not an accusation that the self-styled Thatcherite is likely to take lightly, not least when he and his main leadership rival Liz Truss are fighting to be seen as the low-tax alternative to big spending Mr Johnson.

The Chancellor cannot have failed to notice that the Treasury Select Committee, chaired by Michael Gove ally Mel Stride, is about to twist the knife even further by bringing out a report questioning Mr Sunak’s low tax credentials.

It comes after another potential leadership rival, the Business Secretary, Kwasi Kwarteng, was reported to have warned the Chancellor against going through with the proposed £17bn levy in April, estimated to cost the average worker an extra £255 a year.

Mr Sunak said on Tuesday that the Treasury has a responsibility "to future generations to get Britain's debt under control".

However, with the knives clearly out for the man tipped to replace Mr Johnson, he would arguably be wise to show a little more concern for his own political future.

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