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Prime Minister Rishi Sunak has ruled out calling a general election in May, dashing the hopes of opposition MPs who believed there could be a new UK government by the summer.

Sunak told ITV news “there won’t be an election” on May 2, the same day as local and mayoral elections, drawing a line under months of speculation that the prime minister had a spring poll in his sights.

Some Tory MPs argued Sunak would be better off going to the polls in May, fearing that the prime minister could face a possible leadership challenge if the party does badly in the local elections.

But the prime minister’s allies said Sunak stood by his earlier assertion that his “working assumption” was that an election would be held in the second half of the year, October or November are seen as the most likely months.

The decision to formally rule out a May election has allowed Sunak to finally schedule a meeting of a European summit, which he was supposed to be hosting in the first part of this year.

Diplomatic sources confirmed the meeting of the European Political Community, a broad grouping first proposed by Emmanuel Macron, president of France, would take place somewhere in the UK in July.

Sunak wants the meeting, which brings together EU countries along with other European nations such as Britain and Turkey, to focus on migration.

Other countries were becoming frustrated with Sunak’s delay in scheduling the meeting. “By July some of the Nordic countries will already be on their summer holidays,” said one European diplomat.

The developments came after Sir Keir Starmer, Labour leader, accused Sunak of “failing” the country by “clinging on” to donations from Frank Hester following reports the Tories had received £5mn more than previously declared from the businessman.

Tortoise Media on Thursday reported the Conservatives received a further £5mn from Hester, the donor at the centre of a race dispute which has embroiled the party this week. Downing Street did not deny the money had been given.

A Conservative spokesperson said: “Declarable donations will be published by the electoral commission in the usual way.”

The party has been under pressure to return money from Hester this week after reports that he said Diane Abbott MP “should be shot” and made him “want to hate all Black women” during a meeting in 2019.

Sunak’s spokesperson initially refused to condone the comments as “racist” until trade secretary Kemi Badenoch weighed in to say that is how she would characterise them. The prime minister subsequently told parliament that the comments were “wrong” and “racist”.

Speaking on LBC radio, Starmer said there was “only one answer to returning that money”. “It’s a test for Rishi Sunak. He’s failing that test,” he said, adding that it “raises serious questions about what his real motivation is in clinging on to that money”.

Starmer has himself come under scrutiny this week over failing to come to a decision about whether Abbott, who was a Labour MP for more than 20 years, would have the whip restored. It was removed last year after she suggested Jewish people experience prejudice rather than racism.

Abbott stood more than 30 times to speak in the Commons on Wednesday, as MPs traded barbs about the racist comments but was never picked by the Speaker Lindsay Hoyle.

Remarks by Dale Vince, the Labour megadonor who is expected to give Starmer’s party an additional £5mn before polling day, have also come under fire.

Last year, Vince told Times Radio that “one man’s terrorist is another man’s freedom fighter” in a discussion about Hamas, though he added that he did not support the group’s recent actions.

Angela Rayner, Labour’s deputy leader, on Thursday condemned his comments as “appalling” and said he should “reflect” on them, after Tories urged Labour to return his donations to date.

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