Mandelson faces demands to hand back payoff after sacking over Epstein link

Lord Peter Mandelson faced demands to hand back the payoff he received after being sacked as ambassador to the US, a sum which could run into the tens of thousands.

The peer was sacked over his relationship with paedophile financier Jeffrey Epstein, but anger in Westminster has intensified after the latest release of documents which indicated he leaked information to his friend while he was a government minister.

Allies of Prime Minister Sir Keir Starmer said the peer should give the taxpayer-funded handout back or donate it to a victims’ charity.

The Foreign Office said a review had been launched “in light of further information that has now been revealed”.

The taxpayer-funded payoff he received after being dismissed in September last year could be as high as £55,000 before tax and deductions, the Sunday Times reported.

Sir Keir Starmer has been left fighting for his future amid questions over his judgment in appointing Lord Mandelson to the role.

Full details about Lord Mandelson’s payoff, after being thrown out after just seven months in the Washington role, will be disclosed to Parliament after MPs backed a call for disclosure of papers relating to his time in the Government.

But the Sunday Times suggested the figure could be between £38,750 and £55,000, based on Lord Mandelson being paid at the highest rate in the diplomatic service, an annual salary of between £155,000 and £220,000, and qualifying for a three-month payoff.

A No 10 source told the Press Association: “Given what we know now, Mandelson should either pay the money back or give it to a charity to support victims.”

Earlier this week Health Secretary Wes Streeting, a potential successor to Sir Keir but someone who was friendly with Lord Mandelson before his downfall, said the peer should “certainly” hand back the money.

A Foreign Office spokesman said: “Peter Mandelson’s civil service employment was terminated in September 2025 in accordance with legal advice and the terms and conditions of his employment.

“As we have consistently said to Parliament, normal civil service HR processes were followed.

“Further information will be provided to Parliament as part of the Government response to the motion passed last week which is being co-ordinated by Cabinet Office.

“A review has been instigated in light of further information that has now been revealed and the ongoing police investigation.”

The Metropolitan Police said its investigation into Lord Mandelson, 72, over alleged misconduct in public office would “take some time” after officers finished searching his homes in London and Wiltshire.

“This will be a complex investigation requiring a significant amount of further evidence gathering and analysis,” Metropolitan Police Deputy Assistant Commissioner Hayley Sewart said.

Lord Mandelson was appointed ambassador while David Lammy was foreign secretary.

The Sunday Telegraph, citing friends of the Deputy Prime Minister, suggested he had not been in favour of giving him the prized Washington job, but allies of Sir Keir and Mr Lammy played down any suggestion of a rift between them.

A spokesman for the Deputy Prime Minister said: “The Deputy Prime Minister is focused on the job in hand and fully supports the Prime Minister as he gets on with delivering for the British people.”

The damage caused to Sir Keir’s position by the Mandelson row has fuelled speculation about a possible leadership contest, and allies of Mr Streeting and former deputy prime minister Angela Rayner, who quit the Government after underpaying stamp duty, engaged in briefing wars over the weekend.

A friend of Ms Rayner quoted in the Sunday Telegraph said MPs who were “frothing at the mouth” at the chance to install Mr Streeting as leader were “mad because he has been damaged by association with Mandy”.

But allies of Mr Streeting criticised Ms Rayner’s “little helpers”, with a  source quoted as saying: “They are doing this to try to distract from her own tax scandal. The Labour Party is pretty sick of the toxic briefing culture in No 10 and will not want to bring in something even more nasty.”

A poll by Opinium indicated that more than half, 55%, of British voters thought Sir Keir should quit as Labour leader, with just 23% saying he should remain.

Sir Keir’s net approval rate fell three points in a fortnight to minus 44, with 61% of those surveyed saying they disapproved of him and just 17% saying they approved.

Opinium surveyed 2,054 adults between Wednesday and Friday.

Labour grandee Lord Blunkett told the Mirror: “The only way to avoid a challenge to the leadership is to ‘get your act together’; demonstrate success and start winning people back to the vital cause of seeing off the far-right and delivering improvement to the people we care for.”

Former prime minister Gordon Brown said the situation facing Sir Keir Starmer was “serious” and suggested he had been “too slow to do the right things” to clean up politics in the wake of the Peter Mandelson row.

On the BBC’s Today programme Mr Brown backed Sir Keir as a “man of integrity” who had been “betrayed” by Lord Mandelson.

Mr Brown, who gave Lord Mandelson the job of business secretary and put him in the House of Lords, said he felt “shocked, sad, angry, betrayed, let down”, when he saw the messages released by the US Department of Justice which suggested the then Cabinet minister was passing sensitive information about the response to the global financial crash to Epstein.