Disgraced Peter Mandelson demanded over £500,000 payout from taxpayers | Politics | News
Peter Mandelson has demanded payment of more than £500,000 after he was shamefully dismissed as US ambassador. While Sir Keir Starmer’s government refused to pay such a large sum, it gave the former Labor politician £75,000.
The totals are revealed in newly released files showing details of Lord Mandelson’s appointment and dismissal as US ambassador, which the Government was forced to release. The peer was told to leave Washington after it became clear the financier remained close to sex offender Jeffrey Epstein even after his first conviction. A note from Constable Alice McCullough confirms “an agreement to pay the £75,000 settlement within seven days of the agreed date of termination”.
The payment included £40,329.50 in lieu of notice pay and special severance pay of £34,670.50; The first £30,000 was exempt from income tax.
The memo dated 13 October 2025, understood to have been sent to Lord Mandelson’s lawyers, stated: “It is in the interests of both parties to conclude this as quickly as possible and we have therefore proposed a termination date of 16 October 2025, ensuring payment is made by 17 October 2025 at the latest.”
And a separate internal memo from the civil servant states: “It’s worth noting that he opened negotiations by demanding that we pay his contract (over £500k) if there was any fallback. Mark did well to get this deal down to such a low level with minimal problems.”
Cabinet Minister Darren Jones said Lord Mandelson’s claim for severance pay of more than £500,000 was “inappropriate and unacceptable”.
The Chief Secretary to the Prime Minister’s Office told MPs: “I am sure that honorable and respected members of the House will read with interest in these documents how Peter Mandelson behaved after leaving the embassy.
“As the severance pay documents show, Peter Mandelson initially demanded not just two or even three times the final payment, but more than six times.
“Although he withdrew from Washington because he had lost the Prime Minister’s confidence, the Government found this clearly inappropriate and unacceptable.
“The agreement was apparently to avoid higher costs involving a protracted legal claim in the employment tribunal.”
Mr Jones has previously said: “Peter Mandelson should never have been given the privilege of representing this country and I reiterate on behalf of the House that the Prime Minister deeply regrets taking his word for it and that it was a mistake to do so.”
The documents revealed Lord Mandelson also suggested using Nigel Farage to improve Britain’s ties with the Trump administration.
In a due diligence report sent to the Prime Minister ahead of Lord Mandelson’s appointment as ambassador to Washington, the colleague was quoted as saying of Mr Farage: “You can’t ignore him, he is an elected Member of Parliament.
“He’s a public figure. He’s a beachhead for both President Trump and Elon Musk and others… The national interest is being served in all kinds of weird and wonderful ways.”
Sir Keir decided to sack Lord Mandelson after emails published by Bloomberg “revealed the depth and extent of a relationship with Epstein of which he was not previously aware when he decided to appoint Mandelson”, according to private office memo No 10 published on Wednesday.
The memo said that at a meeting on 11 September, the Prime Minister “addressed his concern about the judgments and views expressed in the cache of emails published by Bloomberg, and that Mandelson’s responses to FCDO PUS (permanent undersecretary of State, Commonwealth and Development Office) Olly Robbins about the emails did not give him confidence that there would be no further explanation and that there would be no serious upset within the PLP.”
He added: “The emails revealed the depth and scope of a relationship that Epstein was not previously aware of when he decided to appoint Mandelson.
“On this basis he offered to ask Mandelson to resign from his post at HMA Washington.”
The note also said: “The Chief Whip highlighted the serious unease among the PLP.
“The Prime Minister made clear his strong concern for Epstein’s victims and the importance of the Government’s work to tackle violence against women and girls.”
The note later stated that Mr. Robbins “spoke to Mandelson on the phone towards the end of the meeting to inform him about the Prime Minister’s decision and the next steps” and “it was noted that the Palace was informed about the decision during the meeting.”
