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The Foreign Office is reviewing a payout of up to £40,000 to Lord Peter Mandelson after he was sacked as UK ambassador to the US last year, as the scandal over the peer’s links to Jeffrey Epstein deepens.
The review into the payout, confirmed by the Whitehall department, comes after Prime Minister Sir Keir Starmer apologised for giving Mandelson the top diplomatic role despite knowing he had continued his friendship with Epstein after the financier was jailed for child sex crimes.
It comes as government ministers and advisers are preparing to hand over to parliament WhatsApp messages, texts and email exchanges with Mandelson relating to his appointment as UK envoy to the US.
Mandelson was sacked as Britain’s ambassador to Washington in September last year after emails published by the US Department of Justice showed the former cabinet minister offered support to Epstein in 2008, shortly before he pleaded guilty to a charge of soliciting prostitution from minors.
Mandelson passed market-sensitive UK government information to Epstein while he was business secretary and de facto deputy prime minister under Gordon Brown in 2009 and 2010, according to separate emails released by the DoJ last weekend.
On Friday, the Metropolitan Police raided two of Mandelson’s homes as part of a criminal investigation into possible misconduct in public office.
Starmer, who is seeking to appease angry Labour MPs, vowed to “engage constructively” with parliament’s intelligence and security committee on the release of files linked to the peer’s appointment.
In a letter to the committee on Friday, the prime minister said it was “important that documents are made available to parliament as soon as possible”. Government officials estimate that up to 100,000 documents may have to be published.
Starmer believes some of the exchanges relating to Mandelson’s vetting for the US job will support his claim that the former ambassador “lied” about his relationship with Epstein, who died in a New York jail cell in 2019 while awaiting trial on sex trafficking charges.
But other messages sent between Mandelson and Starmer’s team could be much more problematic. Morgan McSweeney, Starmer’s under-fire chief of staff, supported Mandelson for the job and was in close communication with him during his time in the US capital last year.
Some of Mandelson’s private exchanges could particularly strain the UK’s relations with Donald Trump, if they cast the US president in a bad light.
Mandelson’s pay as UK envoy to the US has not yet been published, but the role would normally come with an annual salary of between £155,000 and £220,000.
Asked about the payout to Mandelson, first reported by the Sunday Times, work and pensions secretary Pat McFadden said on Sunday that he “probably should . . . either give it back or give it to a charity, perhaps one involving violence against women and girls”.
“Taking a pay-off in these circumstances, I don’t think the public will think much of that,” McFadden told Sky News.
Dame Priti Patel, Conservative shadow foreign secretary, said a taxpayer-funded payout for Mandelson was “a disgusting betrayal of Epstein’s victims”.
“Once again, it raises very serious questions about the prime minister’s judgment,” she said. “The government must ensure Mandelson’s golden goodbye is recovered in full.”
Mandelson, who has quit the House of Lords but retains his title, has not commented since police said they were investigating him.
A spokesperson for the peer did not immediately respond to a request for comment on Sunday.
When he was sacked as UK ambassador to the US, Mandelson told embassy staff that he “continue[d] to feel utterly awful about my association with Epstein 20 years ago and the plight of his victims”.
The Foreign, Commonwealth and Development Office 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 co-ordinated by Cabinet Office. A review has been instigated in light of further information that has now been revealed and the ongoing police investigation.”