The Foreign Office is re-evaluating a substantial exit payment awarded to Lord Peter Mandelson after his dismissal as US ambassador, following revelations linked to the infamous Epstein files. The payment, reportedly between £38,750 and £55,000, has sparked calls for Mandelson to return the funds, with political figures questioning its appropriateness in light of the circumstances surrounding his sacking.
Mandelson’s Financial Settlement
Lord Mandelson’s exit from his role as US ambassador, which occurred in September 2025, resulted in a payout equivalent to three months’ salary. While the exact figure remains undisclosed, it is believed to be among the highest in the diplomatic service, with annual earnings estimated between £155,000 and £220,000. A spokesperson for the Foreign Office confirmed that his termination adhered to legal advice and standard HR processes.
Welfare Secretary Pat McFadden has publicly urged Mandelson to consider donating the payout to charities supporting abuse victims, asserting that the public would not view the acceptance of such funds favourably. “I feel betrayed by the man I used to work for,” McFadden remarked, highlighting the discontent among former colleagues.
Political Fallout for Starmer
The fallout from the Mandelson controversy has placed significant strain on Sir Keir Starmer’s leadership. A recent poll conducted by Opinium revealed that 55% of voters believe Starmer should resign, with only 23% expressing support for his continued leadership. The Labour deputy leader, Lucy Powell, warned that the upcoming by-election in Gorton and Denton could serve as a critical test for Starmer, as the Mandelson issue is expected to resurface during campaigning.
Starmer’s handling of the crisis has drawn scrutiny, with some Labour MPs openly expressing their frustrations. The whispers of discontent suggest that the party’s future may hinge on Starmer’s ability to navigate this turbulent period effectively.
Demands for Investigation
The political uproar has also prompted calls for a formal investigation into Mandelson’s actions while in office. Liberal Democrat deputy leader Daisy Cooper has urged the Financial Conduct Authority to examine allegations of insider trading related to Mandelson’s interactions with Epstein. Cooper emphasised that any misuse of confidential information for personal gain must result in accountability.
The scandal has illustrated a growing unease within the party, as members grapple with the implications of Mandelson’s connections to Epstein and the potential fallout for Labour’s public image.
Why it Matters
The repercussions of Lord Mandelson’s dismissal and the subsequent financial settlement are not merely administrative; they highlight a significant crisis within the Labour Party. As public confidence in leadership wanes, and with critical elections on the horizon, the ability of Sir Keir Starmer to restore trust and stability is in jeopardy. The unfolding situation underscores the need for transparency and accountability in political finances, especially when they involve figures with controversial backgrounds. The coming weeks will be crucial in determining both the future of Mandelson and the trajectory of Starmer’s leadership.
