UK Politics

Labour donor John Mills calls critics 'hypocritical'

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Media captionThere will not be any political donors if critics take a "hypocritical stance" says John Mills

A Labour donor who gave the party £1.65m in shares has dubbed his critics in the press and Parliament hypocrites.

The businessman John Mills said attacks on his donation were unfair and unreasonable, and accused the press of blowing the affair out of proportion.

His donation came under scrutiny after he was quoted saying he had given shares, rather than cash, because it was "much the most tax-efficient way".

The Tories criticised the move and said Labour was avoiding £700,000 in tax.

David Cameron has accused Labour of giving tax avoidance advice to donors, and Chancellor George Osborne wrote to Labour's leader Ed Miliband to ask whether the party advised Mr Mills how to avoid tax on the donation.

In an interview with the BBC, Mr Mills said: "If everybody's going to take this terribly hypocritical stance, which I think they did when anybody makes a reasonably sized donation, then you're not going to finish up with any more donors."

'Blown-up'

Asked who he thought had behaved hypocritically, he said: "I think apart from anything else some of the people in both the press and the House of Commons have taken a fairly hypocritical stance on this."

He added: "The Labour Party is paying tax on the money that comes into it, so I think this has been a hugely blown-up affair."

The businessman said he had gained no personal tax benefit from the arrangement, and the donation was made in shares to provide Labour with a steady flow of funds.

His own company - the shopping channel JML - paid £1.5m in corporation tax last week, he said.

The Labour leader made the same argument when he was asked about the story last month, and said his party would pay tax on the dividends from the shares.

In his interview, Mr Mills added: "It didn't benefit the Labour Party in any tax respect because the Labour party has to pay income tax or corporation tax, whatever it pays, on the flow of tax as it comes in.

"So I think this whole issue was blown out of all sense of proportion."

He added: "The press made a huge hoo-ha about all this. I think some of the comments made were very unfair and very hypocritical and very unhelpful."

'Permissible'

A Labour spokesman said the party had made it "consistently clear" it would be paying tax on the donation.

"This donation was made in a normal permissible way used by charities and other political parties," he said.

"John Mills decided to give this donation as shares to ensure that the Labour Party had a steady and reliable stream of income in the run-up to the election."

Pressed on whose decision it was to make the donation in shares, Mr Mills said he did not have enough spare money to make a cash donation worth £1.65m and the conclusion came out of discussions with the party on the most effective way of ensuring a steady flow of support for Labour.

Mr Mills is campaigning for Labour to support a referendum on Britain's future in the European Union.

The businessman said he had personally urged Mr Miliband to change the party's policy recently, but would not use his financial influence to try to change the leader's mind.

"I think it's one thing to lobby inside the party and try to put forward arguments that are persuasive and to get the party to change its views," he said. "I think it's quite another to say that unless you do this I'm going to stop donating. I think that's not an appropriate thing for donors to do."

He said he believed about half the shadow cabinet had reservations about Labour's position of opposing a commitment now to holding a referendum in 2017.

A senior Labour source said there was no prospect of the party changing its position on the matter.

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