Keir Starmer’s election war chest has been given an extraordinary boost after one of the biggest New Labour-era donors returned to the party fold with a £2m donation, the Observer can reveal. David Sainsbury, who was consistently one of the largest donors under the last Labour government before withdrawing his support, has now renewed his backing with his first multimillion-pound donation since 2016. In a development claimed by Starmer’s allies as a sign of rising support within the business world, Lord Sainsbury, the former chairman of the Sainsbury’s supermarket chain, said he had been attracted back to Labour by its leader’s desire to “reunite the country around an agenda of economic growth and social justice”. The news comes as insiders say that the party is now “debt- and deficit-free” after facing significant bills for legal action, redundancies and falling membership revenue that left it plunging into the red at the start of last year. It also signals that the race to raise funds before the next election has already begun. With concerns that funding from Labour’s affiliated unions could drop after the days of Jeremy Corbyn’s leadership, the party has been on a concerted charm offensive to attract back the kind of business and individual donations that it received under Tony Blair and Gordon Brown. Its efforts intensified during last year’s Labour conference and are now said to be bearing fruit. Sainsbury, who served as science minister under Blair, said he did not want the ability to raise cash to be a big factor in the forthcoming election. The Tories traditionally raise huge sums from finance and business figures. “I believe that Keir Starmer has the leadership skills and ability to deal with the economic difficulties we currently face,” he said in a statement. “He also wants to reunite the country around an agenda of economic growth and social justice, which is one I strongly support. “I am, therefore, helping the Labour party financially, as I don’t think democratic elections should be decided by which party is able to raise the most money, and because I want to see Keir Starmer become prime minister as soon as possible.” Starmer’s allies have been claiming for some time that he is attracting back former party supporters from the business world, as well as winning new ones. Donations from companies and wealthy individuals to Labour stood at less than £400,000 in 2020. In the first nine months of 2022 alone, the figure stood at more than £2.7m. That does not include the latest £2m gift.
In a sign he was preparing a return, Sainsbury, who was made a Labour peer in 1997, quietly made a small donation last year to support the work of the shadow chancellor, Rachel Reeves. Fran Perrin, his daughter, also gave the party a £500,000 donation in 2022. Sainsbury’s return follows the defection of multimillionaire Conservative donor Gareth Quarry, who has given Labour £100,000 and promised more. Quarry announced he had left the Conservatives during Liz Truss’s leadership, declaring that she and her then chancellor, Kwasi Kwarteng, were “zealots” following a policy of “GCSE economics”. Sainsbury’s last large donation to Labour was in 2016, when he gave the party more than £2m. However, he gave the same amount to the Liberal Democrats, and the funding to both parties was ringfenced for their doomed efforts campaigning to keep Britain inside the European Union. Before that, his last large donation to Labour’s central party funding pot was in 2010. More recently, he gave a huge £8m donation – the biggest ever from an individual – to the Lib Dems before the 2019 election. At the time, the Lib Dems were fighting on a fiercely anti-Brexit platform. While a boost for Starmer, the news will cause controversy on the party’s left. John McDonnell, the shadow chancellor under Corbyn, has previously suggested that the peer should be expelled for his support of the Lib Dems. Sainsbury also formerly funded the Progress group, associated with the Labour right, and gave a small donation to a Tory MP in 2018. His championing and bankrolling of pro-EU groups could also be used by the Tories to attack Labour. He said he had backed the remain campaign because he believed strongly “that coming out of Europe will be damaging to our economy and society, and dangerously so if we come out of the common market”. The size of his latest gift signals that the race to raise funds before the next election, probably to be held next autumn, is well under way. Former Conservative chairman Nadhim Zahawi had been battling hard to raise cash for his party before he was fired by Rishi Sunak after a breach of the ministerial code over his tax affairs. Donations to the Tories actually fell by 40% in the third quarter of last year – the last quarter for which figures are available. The party was also overtaken by Labour over the period. According to figures from the Electoral Commission, the Conservatives raised just under £3m from July to September, compared with £5.4m in the previous quarter. Donations to Labour jumped by nearly a quarter to £4.7m – understood to be the highest quarterly figure for six years. A Labour spokesperson said: “Donors are coming back to Labour because they can see we are a changed party that is serious about getting into government and building a fairer, greener, more dynamic Britain. We are very grateful for all support, large or small, as we gear up to fight the next general election. Thanks to Keir Starmer’s leadership, the Labour party is in a strong and positive financial position, having experienced significant growth in income throughout 2022, leaving us debt and deficit-free.”