Sir Tom Hunter, Scotland’s richest man, has called for an overhaul of Britain’s system of political donations and said he wished he had not donated to Labour in the past.

The entrepreneur, who is one of Britain’s biggest philanthropists, said political parties should not have to depend on rich men for their survival. The billionaire, who gave £100,000 ($198,572) to Labour in 2001, said: “With hindsight I wouldn’t have done it.”

His comments come as Labour struggles to shake off questions around donations made to several ministers including Harriet Harman, Alan Johnson and Wendy Alexander.

Peter Hain, former work and pensions minister, stepped down last week after the Electoral Commission brought in the police to look into donations made to his campaign to become deputy leader of the party.

“It is self-evident that the manner and means to funding political parties requires a radical overhaul,” Sir Tom told the FT. “Democratic parties should not depend, even in part, upon their abilities to attract wealthy donors in order to campaign for what they believe in.

Big money

Political parties have raised about £253.5m since 2001, with £107m being donated to the Tories and £103m to Labour. About 35 per cent of all donations have been made by individuals, about a quarter by trade unions, and about 18 per cent by companies. Six individuals have given a single donation of £1m or more, while a third of all individual donations to parties have been made by just 34 people.

“By overhauling the funding system I’d like to think we can get back to debating the issues that are important rather than wasting time, money and energy analysing the rights and wrongs of who gave what to whom.”

Sir Tom is one of a growing number of businessmen concerned about the potential damage to their reputations of making donations. Sir Sigmund Sternberg, a businessman and key Labour donor, agreed the system no longer worked and was fundamentally flawed. “It’s got to be strictly state contributions,” he said.

The government initiated all-party talks over funding last year, supervised by Sir Hayden Philips, the former civil servant, but discussions broke down in October. Some surveys have suggested growing public support for a cap on donations.

Kevin McGrath, a wealthy Labour donor who is on the board of Queen’s Park Rangers football club, said: “When you have some large donors to the Labour party who have no history of support for the Labour party you have to question why”.

Scandals have included the donation of £1m to Labour by Bernie Ecclestone, the motor racing tycoon, and the funnelling of more than £650,0000 to the party by David Abrahams, a north east entrepreneur, through proxies.

Separately, the Metropolitan police last year investigated allegations of honours being awarded in return for donations – and interviewed Tony Blair among others – but pressed no charges.