Peter Mandelson was offered a severance payment of £75,000 after initially asking the Foreign Office for more than £500,000 upon his dismissal as US ambassador, newly released Cabinet Office documents reveal. The former peer was forced to resign last autumn after fresh details emerged about his long friendship with the convicted sex offender Jeffrey Epstein.
Officials involved in the settlement said they did "well to get this settlement down this low with minimal fuss", according to the documents. The initial tranche covers Mandelson's vetting for the ambassadorial role and discussions around his dismissal, and was released after a Conservative humble address motion that the government did not oppose. A police investigation delayed publication, while one exchange – including three questions Keir Starmer put directly to Mandelson about his Epstein friendship – was blocked.
The files show that Jonathan Powell, the prime minister's national security adviser, raised concerns about Mandelson's reputation during the appointment process with Morgan McSweeney, then chief of staff, who said "the issues had been addressed". A due diligence report prepared for Starmer detailed Mandelson's relationship with Epstein, noting it continued after Epstein was jailed in 2008, and that Mandelson reportedly stayed in Epstein's house in June 2009. The report also listed Mandelson's suggestion of using Nigel Farage to smooth relations with Donald Trump as a reputational risk.
According to the documents, Mandelson threatened to sue the Foreign Office for unfair dismissal unless a settlement was reached. The department's HR head, Mark Power, said an employment KC had cast doubt on the "reasonableness of the PM's decision" to sack him. Power warned of urgency, saying there was a potential that Mandelson would go public with his claims absent a positive indication.
The chief secretary to the Treasury, James Murray, signed off on the £75,000 payment, which included a special severance deal of £34,670.50. Officials noted that Mandelson "opened negotiations asking us to pay out his contract (over £500k)", with the full amount requested totalling £547,000. Five days after his sacking in September, Mandelson emailed Power to say he expected his return to the UK to be treated with "maximum dignity and minimum media intrusion".
The released documents are the first of tens of thousands of files expected to contain information from the time of the appointment and dismissal, including newspaper reports on Mandelson's ties to Epstein.
