Humza Yousaf has labelled the Tory party “Islamophobic” as he insisted they return all donations from Tory donor Frank Hester.

Mr Hester – the chief executive of healthcare software firm The Phoenix Partnership (TPP) – is accused of saying Labour MP Diane Abbott made him “hate all black women” and “should be shot”. Downing Street has refused to describe the comments as racist, but opposition politicians have urged the party to return the £10 million said to have been donated by Mr Hester.

Mr Yousaf delivered the comments on a day where the First Minister also hinted at lowering corporation tax.

First Minister of Scotland, Humza Yousaf, delivers a speech at the London School of Economics.

Speaking at an event at the London School of Economics (LSE) on Tuesday, Mr Yousaf said the alleged comments from Mr Hester were “inciting hatred”.

He said: “First and foremost, can I say that I stand in full solidarity with Diane Abbott – she has been a trailblazer for many years. We may have our differences on particular issues, but I stand full square behind and alongside Diane Abbott.

"Those comments from Hester are not just racist, they’re not just sexist, they are inciting hatred, which is completely and utterly unacceptable. And if the Conservative party had any moral principle, then they would return every single penny and tell him where his money should go. That is my honest view.

"There is simply no doubt in my mind that the Conservative party is not just riddled with Islamophobia, but institutionally Islamophobic.

"How could it not be, when you hear the comments from [former home secretary] Suella Braverman, when Lee Anderson, who was a senior member of the Conservative party up to a few days ago, was able to make the comments that he made about [London mayor] Sadiq Khan and not a single senior Conservative, including the Prime Minister, was able to call it Islamophobic?

"And that is, of course, the party who also elected a leader that described Muslim women as ‘bank robbers’ because of the way that they look.”

Ms Braverman has previously said “Islamists” are “in charge”, while Mr Anderson, who defected to Reform UK this week, has said “Islamists” have “got control” of the capital, Mr Khan and Labour leader Sir Keir Starmer.

Mr Sunak’s spokeswoman said: “What is alleged and reported to have been said would clearly have been unacceptable, but we are not going to characterise further alleged comments from source reporting.”

UK energy minister Graham Stuart said on Tuesday that while the remarks were “ridiculous”, he would “hesitate” to describe them as racist.

He told Times Radio: “I’m hesitating to call it that because I don’t like to sit in judgment on these things. It was clearly a ridiculous thing to say, he’s rightly apologised for it, and here’s a man who’s supporting the most diverse Cabinet we’ve ever had under this Conservative Party.

“We’ve got a Hindu Prime Minister and he’s [Mr Hester] our biggest donor, so I don’t think this is a man who is a racist.”

Pressed on whether the Tories should return Mr Hester’s donations, Mr Stuart told Sky News: “We can’t cancel anybody from participation in public life, or indeed donating to parties, because they said something intemperate and wrong in their past.

“It’s not my decision, but I do welcome those who support the Conservative Party.”

Cabinet minister Mel Stride also defended Mr Hester, saying that, while his alleged remarks were “inappropriate”, they were not “gender-based or race-based”.

But Ms Abbott, the first black woman elected to Parliament, said the situation was “frightening”.

“I live in Hackney and do not drive, so I find myself, at weekends, popping on a bus or even walking places more than most MPs,” she said. “I am a single woman and that makes me vulnerable anyway.

“But to hear someone talking like this is worrying … the fact that two MPs have been murdered in recent years makes talk like this all the more alarming. I am currently not a member of the Parliamentary Labour Party, but remain a member of the Labour Party itself, so I am hoping for public support from Keir Starmer.”

Former chancellor Kwasi Kwarteng did break from Conservative ranks, telling Politics Live: “They [the comments] are clearly racist and they are clearly sexist. They were very stupid remarks.”.

It came on a day where Mr Yousaf delivered a speech criticising Brexit, claiming the Scottish Government could have £1.6 billion more to spend on public services if the UK was still in the EU – although the group which conducted the research he quoted has disputed that figure.

Mr Yousaf went on to claim the full fiscal powers of independence and membership of the EU would boost living standards in Scotland.He also appeared to hint at raising corporation tax after being asked by a student about Ireland. Mr Yousaf said: "In terms of taxation, I would point you to a report by The Hunter Foundation that was released a number of months ago, where there was an idea which is at least worthy of exploration, which is looking at, for example, taxation around areas of competitive advantage for Scotland which would include, for example, our renewables sectors.

"We'll chart our own path, we'll carve our own way, but we'll certainly look towards other European countries.”

In a statement released through his firm, Mr Hester said he had rung Ms Abbott on Monday to “apologise directly for the hurt he has caused her”.

The statement said: “Frank Hester accepts that he was rude about Diane Abbot (sic) in a private meeting several years ago, but his criticism had nothing to do with her gender, nor colour of skin. He wishes to make it clear that he regards racism as a poison, which has no place in public life.”

Humza Yousaf says Tory party is 'Islamophobic' and must return all donations from Frank Hester amid corporation tax hints

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