Political parties must learn to say no to donations from rich benefactors

Openness is the first defence against corruption. In a liberal democracy, people should be free to give money to political causes that they support. That means there is a danger that rich people will seek to use donations to secure advantages from parties in government. Which is why laws requiring the disclosure of donations are so necessary.

It is surprising, looking back, that it was not until the Political Parties, Elections and Referendums Act 2000 that parties were required to publish the amounts of donations they received and the names of donors. Before then, the Conservative Party – the main recipient of large private donations – thought it was fine to accept donations in secret, including from abroad.

It is equally surprising that when the Labour government brought in this law, it left a loophole, in that loans did not have to be declared – and it took advantage of this loophole in raising money for its 2005 election campaign. Neither main party has a monopoly of virtue on this subject.

It has to be said, however, that it is the Conservative Party that is currently more wanting in virtue. We report today, for example, that the party has accepted £1.6m in donations from Malik Karim since 2014, and that his company, Fenchurch Advisory, has had contracts with the publicly owned Post Office since 2018.

We accept that the contracts were awarded in accordance with public procurement rules, and that there is no connection with Mr Karim’s political donations, or with his role as Tory party treasurer in 2021 and 2022.

However, it would be better, and it would avoid any risk of a perceived conflict of interest, if the Tory party were to refuse to accept donations from people whose businesses hold public-sector contracts. Openness is the first line of defence, but the second line of defence is acting on the information that is revealed.

This would also apply to Frank Hester, the Conservative Party’s largest donor. Apart from the controversy over his alleged comment, which the prime minister accepted was racist, that Diane Abbott made him “want to hate all Black women”, Mr Hester’s company, the Phoenix Partnership, has substantial contracts with the Department of Health and Social Care. For either or both of those reasons, the Tories should return Mr Hester’s donations.

So far, Rishi Sunak has refused to do so. No doubt Conservative Party officials would say privately that, if they were to take such a purist attitude towards donations, there would be very few that they could accept – most “high net worth individuals”, as fundraisers call them, having made money at some point from public-sector contracts.

Their awkwardness is increased in respect of Mr Hester, not just because of the unpleasantness of his alleged comment about Ms Abbott but because the sums involved are so large. He has donated £10m already in recent years, and it has been reported, and not denied, that a further £5m is on the way.

Unfortunately for the Tory party, the sums of money are irrelevant to the propriety or otherwise of accepting them. If it is wrong to accept donations because of the appearance of a possible conflict of interest, then those donations should not be accepted, no matter how large or small they are.

If this would mean having to run a general election campaign on a shoestring, then so be it. According to Full Fact, during the 2019 campaign, Labour received £5.4m in donations, with £5m of that coming from trade unions. The Conservatives, meanwhile, registered £19.3m.

If we had fewer Tory leaflets or Facebook ads or helicopter trips for party dignitaries, we the voters would take that in our stride. If that means handing an advantage to the Labour Party, then the remedy lies in the Tory party’s own hands – and it should seek to raise more in small donations from more supporters.

The health of our democracy would be improved not just by openness but by parties acting in such a way that – when donations are reported – their motives cannot be doubted.