A reported five-figure payoff received by Peter Mandelson as part of his exit package when he was sacked as US ambassador is being reviewed by the Foreign Office, it has been reported.
He was fired over his relationship with the disgraced US financier Jeffrey Epstein, and 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.
After being forced out of his post in September last year, the peer received payment equivalent to three months’ salary, according to reports in The Times.
Lord Mandelson’s salary has not been made public, but calculations by the newspaper suggest his former post would receive a salary in the diplomatic service’s highest band, between £155,000 and £220,000 per annum. This would suggest that Lord Mandelson received an exit payment of between £38,750 and £55,000 before tax and other deductions.
Allies of Sir Keir Starmer said the peer should give the taxpayer-funded handout back or donate it to a victims’ charity.
A Foreign Office spokesperson 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 coordinated by Cabinet Office.
“A review has been instigated in light of further information that has now been revealed and the ongoing police investigation.”
The revelations come after recently released emails from the US Department of Justice appear to show Lord Mandelson leaked sensitive government information to Epstein.
Lord Mandelson was sacked in September last year after a different batch of emails came to light, revealing the peer had continued a relationship with Epstein after he was convicted for soliciting prostitution from a minor.
But the new releases suggest a relationship between the pair that went far deeper than previously suggested. Police were seen searching two homes linked to Lord Mandelson on Friday as they confirmed an investigation into misconduct in public office offences had been launched.
Sir Keir is facing a battle to stay in his job as figures from across the political spectrum called for him to resign over his decision to appoint Lord Mandelson. Both David Lammy and Angela Rayner are reported to have warned him against giving Lord Mandelson the ambassador role over concerns about the peer’s known relationship to Epstein.
Speaking at Prime Minister’s Questions on Wednesday, Sir Keir said Lord Mandelson had “lied repeatedly” about his closeness to the convicted sex offender and accused him of “betraying” the country.
The PM is also facing calls from within Labour ranks to implement a “total overhaul of personnel” in Downing Street, and to admit he made a “catastrophic error of political and moral judgement”, with some calling for his chief of staff Morgan McSweeney to be axed.
Paula Barker, Labour vice-chair of both the standards committee and the privileges committee, criticised Sir Keir’s “questionable” judgement over the saga, adding: “When your chief of staff becomes the story, then often it’s time for them to go.”
Fellow Labour backbencher Karl Turner added: “If McSweeney is still in 10 Downing Street, the PM is up against it.”
Opposition parties have issued calls for the prime minister to resign following the furore. On Saturday, Conservative leader Kemi Badenoch told The Telegraph that she believes Sir Keir Starmer knew about Lord Mandelson’s links to Epstein but “chose not to care”.
The leader of the opposition said: “I was in government for five years. I know how vetting works. I had to fight to get people into jobs.
“If the Conservative Research Department knew Mandelson had continued that friendship [with Epstein], everybody knew. But Starmer chose not to care. He promised to be whiter than white, yet gave us self-righteousness and false piety.”
The Independent has contacted Lord Mandelson for comment.
