Sir Keir Starmer has suggested the job of prime minister is “too big” for a “hopelessly weak” Rishi Sunak as he attacked him for failing to sack Nadhim Zahawi.

At PMQs, the Labour leader asked if “any politician who seeks to avoid taxes they owe in the country is not fit to be in charge” of the UK finances – a reference to Mr Zahawi settling a seven-figure sum with HMRC, including a penalty, while he was chancellor.

“We all know why the prime minister was reluctant to ask his party chair questions about family finances and tax avoidance,” Sir Keir said – an apparent dig at the PM’s own tax affairs previously coming under scrutiny.

Politics live: Some Tories say ‘game over’ for Zahawi

“But his failure to sack him when the whole country can see what’s going on shows how hopelessly weak he is – a prime minister overseeing chaos, overwhelmed at every turn.”

Referencing problems with public services, Sir Keir added: “He can’t say when ambulances will get to heart attack victims again. He can’t say when the prisons system will keep streets safe again. He can’t even deal with tax avoiders in his own cabinet.

“Is he starting to wonder if this job is just too big for him?”

Mr Sunak accused Sir Keir of being a “hypocrite” for seeking to get him to sack his colleague rather than abide by the due process of the parliamentary investigation into Mr Zahawi’s tax affairs, which he said Labour had called for.

The PM said: “Of course, the politically expedient thing to do would be for me to have said that this matter must be resolved by Wednesday at noon.

“But I believe in proper due process.”

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Mr Sunak added that he did not know about the investigation into Mr Zahawi’s taxes when he appointed him to his cabinet in October.

On Sir Keir’s attack line he said: “It’s simple political opportunism and everyone can see through it.”

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Political editor Beth Rigby analyses PMQs.

Questions have swirled around Mr Zahawi’s tax affairs since the summer when claims emerged that he was being investigated by the Serious Fraud Office, the National Crime Agency and HM Revenue & Customs, accusations he deemed a “smear”.

The issue made headlines 10 days ago after The Sun on Sunday published an article claiming he had paid a seven-figure sum to the tax office to settle a dispute over the sale of his YouGov shares.

After a week of saying nothing more than his taxes “were and are fully up to date and are paid in the UK” – and publicly receiving the backing of Mr Sunak in last week’s PMQs – Mr Zahawi released a statement saying he had paid what HMRC said “was due” after it “disagreed about the exact allocation” of the shares.

The Tory chairman said this was a “careless and not a deliberate error” and did not confirm if any penalty was also levied. But Sky News understands that as part of the settlement with HMRC – thought to be around £4.8m – the chairman paid a penalty.

Zahawi ‘100% not resigning’

Mr Sunak has now asked his ethics adviser to carry out an inquiry into whether Mr Zahawi breached the ministerial code, and the investigation could extend into his prior tax arrangements and whether he lied to the media.

Speaking after PMQs, a Downing Street spokesperson said Mr Sunak still has full confidence in the senior Tory MP, who will be travelling to Chequers tomorrow for cabinet meetings.

They would not confirm if Mr Sunak would sack Mr Zahawi if he is found to have lied, saying they would not get into hypotheticals.

A source close to the former chancellor has told Sky’s political editor Beth Rigby he “100% is not resigning”.

In a statement on Monday, following the PM’s announcement of an investigation into the matter, Mr Zahawi said: “I am confident I acted properly throughout and look forward to answering any and all specific questions in a formal setting to Sir Laurie.”