Epstein files fallout: Peter Mandelson’s five-figure payoff after sacking as US ambassador under review

The political storm surrounding Prime Minister Keir Starmer intensified on Sunday after it emerged that Lord Peter Mandelson received a five-figure, taxpayer-funded exit payment following his dismissal as Britain’s ambassador to the United States. This payment is now being reviewed following the latest revelations in the Epstein files.

According to The Times, Mandelson was granted a severance package equivalent to three months’ salary after being removed from the post in September last year, just seven months into the role.





While his exact salary has not been officially disclosed, the US ambassadorship sits in the Foreign Office’s top pay band, between £155,000 and £220,000 a year, indicating that the payout likely ranged between £38,750 and £55,000 before tax, firmly placing it in the high five-figure bracket.

The disclosure has intensified pressure on Starmer, whose decision to appoint Mandelson despite his past association with convicted sex offender Jeffrey Epstein has sparked outrage within Labour ranks and beyond.

The Foreign Office confirmed that Mandelson’s employment was terminated “in accordance with legal advice” and standard civil service HR procedures, but said the payout is now under review “in light of further information that has come to light”.

Lord Mandelson has also been accused of sharing market-sensitive information with Epstein in the aftermath of the 2008 global financial crisis. Police investigating allegations of misconduct in public office have concluded searches of two of his properties, in Camden, north London, and in Wiltshire.

The Metropolitan Police said inquiries are ongoing, though he has not been arrested. Mandelson’s position is that he has not acted in any way criminally and was not motivated by financial gain.

Epstein files deepen crisis

The controversy follows the latest tranche of documents released by the US Department of Justice related to Epstein. The files reportedly indicate that Epstein made three payments of USD 25,000 each to Mandelson in 2003 and 2004. Emails contained in the release also suggest Mandelson shared confidential government information during his time as business secretary, including advance notice of a €500 billion EU bailout in 2010. Mandelson maintains he has not acted criminally and was not motivated by financial gain.

The political fallout has been swift. Work and pensions secretary Pat McFadden suggested Mandelson should return the money or donate it to a charity supporting victims of violence against women and girls. Opposition figures described the payout as a “disgusting betrayal” and demanded it be recovered.

Starmer under fire

Starmer, meanwhile, faces growing unrest within his party. Senior MPs and peers have warned that the scandal could fatally undermine his leadership unless there is a dramatic reset in Downing Street. His chief of staff Morgan McSweeney, who backed Mandelson’s appointment, is reportedly under intense pressure amid speculation he could step down.

Downing Street insists rumours of an imminent leadership challenge are unfounded. However, with a crucial by-election looming and fresh polling indicating public dissatisfaction, the Epstein-linked row shows little sign of subsiding, leaving Starmer fighting for political survival.