Frank Hester shows how ‘mega donors’ buy British democracy

The Conservatives started the political donations arms race. Until it’s stopped, there will be more scandals

The Conservatives’ largest ever donor, Frank Hester, has dominated British political news for the past week. And rightly so.

Hester, among other appalling racist and misogynistic comments, reportedly said in a 2019 meeting that looking at Britain’s first female Black MP, Diane Abbott, made “you just want to hate all Black women”.?

The Guardian has done a tremendous public service in uncovering the scandal.

But Hester is not just a case of one bad apple. Instead his story says something very profound - and deeply worrying - about how big money is corrupting British politics.?

Hester is emblematic of a new breed of ‘mega donor’ that have increasingly come to dominate party funding in Britain.

Having never contributed to British politics before - and voted Green or spoiled his ballot at election time - Hester decided to donate ￡5m to the Tories in May, then he gave another ￡5m through his company.?

Apparently he made another ￡5m donation recently that will soon appear on Electoral Commission data.

￡15 million is a huge sum for British politics. To put this figure into context: the Tories raised ￡18.1million in donations in the whole of 2022. Labour raised ￡10.5million.

So why did Hester suddenly decide to start throwing money at the Conservatives? Was it the party’s consistent 20-point deficit in the polls that attracted the Leeds businessman? Or Rishi Sunak’s even worse approval ratings?

One thing we do know is that Hester’s money comes from his health tech company The Phoenix Partnership (TPP). We also know that much of TPP’s business is government contracts.?

And it’s a very lucrative business.

In the last eight years TPP has won more than ￡400m in NHS and prisons contracts. TPP has made more than ￡100 million in profit and paid out ￡22m in dividends in the last three years. Hester is the sole shareholder.?

What’s less clear is how Hester became a Tory donor. Did he pick up the phone one day and called CCHQ offering ￡5m? Seems unlikely.

It is striking that one of the few people speaking up publicly on Hester’s behalf this week has been Tory peer Lord Marland. A former party treasurer, Marland has played a leading role in Conservative fundraising in previous years.?

British politics has always run largely on private money. And money has bought access and influence. But the nature of political donations in Britain has changed radically in recent years, particularly for the Tories.

The Conservatives lost a lot of its traditional City and business money after Brexit, which hasn’t come back. And the hedge fund donors from the Brexit years are not giving money in the same way.

In their place the Tories have become increasingly reliant on a handful of very rich donors, often who made their fortunes far from the British public eye.?

It’s not just Hester. We have ‘the king of polyester’ Amit Lohia who, seemingly out of the blue, gave ￡2m last year.?

Mohamed Mansour has donated more than ￡5m. Formerly a minister under dictator Hosni Mubarak, Mansour was made a senior Conservative treasurer in December 2022 - although curiously his name is not listed on the Tory party website.

The Conservatives’ named treasurer, Graham Edwards, has given more than ￡5.5 million since 2018.

“You have to ask the question why these people are giving us money,” one Tory minister recently said to me. “And you have to ask why we don’t do more due diligence about who these people are. It’s a really bad look.”

Former Tory chairman Ben Elliot is widely seen as instrumental in expanding the pool of party donors, often working hand-in-glove with his “luxury lifestyle management” business Quintessentially. As the Tory minister told me “Ben was the only person who ever made money by being Conservative chairman.”

This rise of the ‘mega donor’ is not just a Tory phenomenon. Labour’s biggest donor last year was Gary Lubner, the former Autoglass boss, who contributed ￡4.5m. He first started giving to the party in 2022.

Sunak could have put an end to the Hester scandal by returning his money. Why doesn’t he? Because the Tories can’t afford to.

The Conservatives have raised more money than Labour over the past 12 months but, as their accounts show, the party has often run a deficit in recent years. Take away Hester’s ￡15 million and the party would basically be neck-and-neck with Labour.

The grim irony, for Sunak, is that he created this new arms race in political funding.

As I wrote in November, the new changes to election law brought in by the Tories without a parliamentary vote raised the spending limits for the pre-election period from ￡19m to ￡34m.

The new rules also make it easier than ever to funnel dark money into British politics.?

It doesn’t have to be like this. There are plenty of ways to take big money out of politics - and to restore some trust in our democracy.

Political donations should be capped. The naked corruption of rewarding party donors with seats in the House of Lords ended.?

But until a political leader is willing to face down vested interests, we will see even more ‘mega donors’ like Frank Hester, and even more scandals.

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