A minister has refused to say if the Conservatives should return money to one of its biggest donors, after reports Frank Hester said former Labour MP Diane Abbott made him “want to hate all black women”.

The allegations about the chief executive of The Phoenix Partnership – who donated £10m to the Tories last year – emerged in the Guardian on Monday, with the newspaper also claiming he said Ms Abbott “should be shot”.

In a statement posted on X, Mr Hester admitted he had made “rude” comments about Ms Abbott, for which he was “deeply sorry”, but said they had “nothing to do with her gender nor colour of skin”.

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Energy minister Graham Stuart heavily criticised the reported remarks, telling Sky News they were “clearly reprehensible”, “truly awful”, and Mr Hester was “absolutely right to apologise”.

However, asked whether the Conservatives should return his donation, he said: “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.”

Mr Stuart added: “It’s not my decision. But I do welcome those who support the Conservative Party to ensure that we have Rishi Sunak, of course, our first Hindu prime minister, [in office].”

Pushed over whether he welcomed donations from the likes of Mr Hester, the minister said: “I’m saying that I welcome those who contribute, and I’m not here to sit in judgement on one remark.”

But he also insisted he was “not remotely tempted to try and defend” the alleged comments from the donor.

Liberal Democrat chief whip Wendy Chamberlain said Mr Stuart’s appearance was “simply jaw-dropping”, adding: “The Conservative Party has flat out refused to return these donations despite these comments being inexcusable. How low can you go?

“Rishi Sunak can bunker down and hide in Downing Street as long as he wants but every day he doesn’t return this money is another damning blow to the Conservative Party’s credibility.”

Electoral Commission records show Mr Hester donated £10m to the Tories last year, including a £5m donation to Rishi Sunak that came from him personally and another £5m that came from his healthcare software firm in November.

Chair of the Labour Party, Anneliese Dodds, called on the Conservatives to return the money “without delay”, adding: “Rishi Sunak has claimed that ‘words matter’, and he must know that holding on to that money would suggest the Conservatives condone these disturbing comments. Sunak must return every penny.”

Sky News has contacted Ms Abbott for a response.