Labour HQ was shocked and delighted to discover the party had raised £4m during the first two weeks of the election campaign, while the beleaguered Tories managed just £290,000.
But according to a Labour donor who used to raise funds for the party, the adage “when power shifts, so too does the money” rings true.
“Fundraising is a reflection of a very few committed people who are rich and then there is a bigger group of people who become very much more amenable to fundraising when it looks like you might win,” he said.
“Whether it’s because they want to back a winner or because the party has got the public mood is always difficult to say.”
Donations of more than £11,180 – a sum that recently increased from £7,500 – must be reported to and published by the Electoral Commission and the turnaround in Labour’s fortunes with large financial backers could not be more stark. Over the decade until Keir Starmer became leader, Labour had lost more than 95% of its big private donors, according to party sources involved in raising cash.
Some business figures had lost interest when the party was no longer in power, others faded away during the Ed Miliband era, and then a real exodus occurred during the Jeremy Corbyn years.
The real blow came in 2019 when the longstanding Labour funder David Sainsbury, of the supermarket dynasty, gave £8m to Jo Swinson’s Liberal Democrats. “That was a low point,” recalls one person involved in raising cash for the party.
But in the last four years, not only have private donations come trickling back, but Starmer’s party has had an influx of “mega-donors” – people giving hundreds of thousands, if not millions, of pounds each time.
The cash has been flowing so readily that private donations now outstrip funding from the trade unions. Lord Sainsbury returned to the Labour fold, joined by his daughter Francesca Perrin, along with the Autoglass founder Gary Lubner. Some, such as the Ecotricity founder Dale Vince, remained loyal to the party throughout, but he was in a small minority.
There are also signs that sentiment among business donors is shifting from the Tories to Labour: Richard Walker, the Iceland chair, has already switched his support to Starmer’s party. Philip Harris, the Carpetright founder who has given £1m to the Tories, told the Times he was switching his allegiance this week.
Over the year until the end of the first quarter, the Tories have still significantly outgunned Labour, bringing in £44m, with Labour drawing £24.6m, excluding public funds.
However, the total looks much closer when the £15m contribution of the Tory mega-donor Frank Hester is stripped out. And the parties raised an almost equal amount in the first three months of the year.
Key to the party’s fundraising effort, championed by the Labour peer Waheed Ali, has been presenting it as credible to business. Starmer and his shadow chancellor, Rachel Reeves, who took on the job in 2021, have painstakingly courted business, going to breakfasts, functions and conferences.
Party sources said this was more about restoring Labour’s reputation for economic credibility than overtly wooing donors, but the effort put into spending time with businesspeople certainly helped.
The party’s tactics, though, have never been quite so brazen as the Conservatives when it comes to passing round the begging bowl, one former fundraiser for Labour said.
“We have always been rather tentative about raising money, whereas they have always basically been saying to their donors if you don’t give us money then these awful socialists will get into power. There’s always a coincidence of self-interest and the need to give,” they said.
Danny Luhde-Thompson, a tech investor and first-time donor to Labour, has given £580,000 since November and said he approached the party, rather than being tapped up.
“I think it is time for a change,” he said. “I have been watching on the sidelines for a while thinking about who I should be involved with to support the future of the country.
“It is clear to me that it is time for a change, and that change is the Labour party. I think that Keir Starmer is the right person to lead a new government.”
Another Labour donor, Gareth Quarry, a businessman who made his money in the legal recruitment sector, said he switched from donating to the Conservatives without being wooed – and he has little contact with senior Labour figures apart from attending a few speeches and big receptions at conference.
Quarry, who has given £100,000 to Labour since 2022, said the difference between the Tories and Labour in terms of donor treatment was “absolutely marked”.
“The Tories have basically a hierarchy of donor groups with different names, each run by very senior party members, many of whom are in the House of Lords and have got there precisely for giving money and raising money from other donors,” he said.
“You are allocated a minder … mine was all over me like a rash even when there weren’t elections, saying: ‘Oh, we want more money.’”
He added: “It’s a real hierarchy where people give money and they expect something in return. That didn’t sit happily with me. I didn’t get or ask for anything in return. I went to a few lunches and dinners to find out what was happening with Brexit as I was a passionate remainer.
“Labour by contrast have never asked me for money. Nor have they ever said ‘Thanks for giving money, that now gives you access to X.’ My wife and I had given six figures before we ever had anything to do with shadow cabinet ministers.”
Quarry said he was reassured by Labour’s “sensible” stance on business led by Reeves and that he hoped a Labour government would bring a “reset, God willing, amongst other things, in our relationship with Europe, and the wider world when they realise that they have got a government that is not going to tear up international agreements when it suits their purpose”.
Another donor, Charlie Falconer, the Labour peer and former lord chancellor and justice secretary under Tony Blair, said he thought the increase in private donations had happened in tandem with a rising confidence in the party among business leaders.
“The reliance on union donors has gone down and the reliance on private donors has gone up,” he said. “The increase in private donations indicates the greater ease that business feels with Labour and also the fact that business does frequently want to give to Labour but in years gone by have not felt comfortable with what might happen. They do feel comfortable at this point.”
However, an increase in private donations brings a greater risk of scandal. Despite Labour’s cautious approach to vetting its new donors and less aggressive approach to asking for money, there will always be cash-rich people seeking influence in politics.
“That’s what we’ve got to be so careful about,” said one Labour official. “No one wants to be anywhere near a first scandal.”
