THE Foreign Office is reviewing a financial settlement paid to Lord Peter Mandelson after his removal as the UK’s ambassador to the US, following police searches of two properties linked to the former minister and growing pressure from within government for the money to be returned.
Foreign Office sources said the review was triggered by fresh disclosures in the Epstein files and the launch of a Metropolitan Police investigation into alleged misconduct in public office, media reports said. Officers searched addresses in London and Wiltshire on Friday (6). Mandelson has not been arrested.
The Labour peer is believed to have received an exit payment equivalent to three months’ salary after he was dismissed from the post in September, a sum estimated at around £40,000 to £55,000. Government sources confirmed a settlement was made but said the exact amount would be disclosed to Parliament.
Late on Saturday (7), Downing Street sources called on Mandelson to either repay the money or donate it to a charity supporting victims of sexual abuse. That call was echoed on Sunday (8) by Work and Pensions secretary Pat McFadden.
“I think Peter should reflect on that and either return it or give it to an appropriate charity,” McFadden told the BBC.
A Foreign Office spokesperson said Mandelson’s employment “was terminated in accordance with legal advice and the terms and conditions of his employment”, adding that “normal civil service HR processes were followed”.
Further details will be provided to Parliament as part of the government’s response to a motion passed recently ordering the release of files and electronic communications linked to Mandelson’s appointment.
Mandelson was appointed ambassador to Washington in December 2024 but was removed less than a year later after Downing Street said new information had emerged about the depth of his relationship with the late US financier Jeffrey Epstein, a convicted sex offender.
While Mandelson’s past association with Epstein was known at the time of his appointment, officials later said they were not aware of evidence showing he remained in close contact with Epstein after his 2008 conviction, including sending supportive emails as Epstein faced charges.
The latest batch of US court documents, released in January, included emails from the period when Mandelson served in Gordon Brown’s cabinet. One email suggested Mandelson gave Epstein advance notice of a €500bn EU bailout package during the eurozone crisis in 2010. Another referred to a 2009 memo by a senior government adviser discussing the sale of public assets to raise funds.
The Metropolitan Police confirmed earlier this week that it is investigating Mandelson, 72, over allegations of misconduct in public office. Deputy assistant commissioner Hayley Sewart said the inquiry would take time.
“This will be a complex investigation requiring a significant amount of further evidence gathering and analysis,” she said. “He has not been arrested and enquiries are ongoing.”
Mandelson has not commented publicly but the BBC understands he denies any criminal wrongdoing and said he was not motivated by financial gain.
The case has intensified pressure on prime minister Keir Starmer, who has apologised to Epstein’s victims for appointing Mandelson but has said he will not resign over the issue.
Starmer said that Mandelson repeatedly misled officials during the vetting process and that he was unaware of what he described as the “depth and darkness” of the relationship.
Mandelson stepped down from the House of Lords earlier this week and faces the prospect of being formally stripped of his peerage. Global Counsel, the consultancy firm he co-founded, has also cut all remaining ties with him.
Several Labour MPs have called for accountability within Downing Street, with some urging Starmer to dismiss his chief of staff, Morgan McSweeney, who backed Mandelson’s appointment.
Documents relating to Mandelson’s appointment and dismissal are expected to be published following a vote in Parliament, with Starmer urging the committee overseeing their release to act with “urgency and transparency”.
(with inputs from agencies)
