Ministers Face Accusations of Breaching Ministerial Code Over Mandelson Payoff
Government ministers stand accused of violating the ministerial code by authorising a controversial £75,000 severance payment to Lord Peter Mandelson. Official documents released this week have exposed the extraordinary golden goodbye handed to the peer, despite his dismissal in disgrace concerning his relationship with convicted sex offender Jeffrey Epstein.
Downing Street's Defence and Conservative Outrage
Downing Street moved swiftly on Thursday to defend the decision to make the previously secret payment, while simultaneously insisting that Lord Mandelson should now return the funds or donate them to charity. However, Conservative MPs have condemned the payout as a clear breach of Treasury regulations governing the proper use of public money, with suggestions it may also constitute a violation of the ministerial code itself.
Tory frontbencher Neil O'Brien characterised the payment as 'hush money', alleging it appeared designed to prevent Lord Mandelson from causing further embarrassment to Labour leader Keir Starmer. 'It's there in black and white,' Mr O'Brien stated. 'He was going to reveal stuff, so they gave him £75,000 of taxpayers money to keep his mouth shut.'
Contractual Entitlements Versus Gross Misconduct
Lord Mandelson's contractual arrangements entitled him to three months' notice worth £40,330. However, he additionally received a 'special severance payment' valued at a further £34,670. Crucially, his contract explicitly stated he could be dismissed with zero compensation in cases of 'gross misconduct'. Despite sacking Lord Mandelson over his friendship with Jeffrey Epstein, Keir Starmer's administration still authorised the £75,000 taxpayer-funded payoff.
Officials justified the decision by revealing Lord Mandelson had been demanding the remainder of his four-year contract be bought out at a staggering cost of £547,000, threatening potential legal action. Documents indicate officials were particularly concerned that a public dispute with the high-profile peer could generate damaging publicity.
Internal Concerns About Reputational Damage
One senior official emphasised the payment required urgent approval, noting: 'There is a potential that, absent a positive indication, Peter goes public on some of his claims so there is some urgency.' A separate Foreign Office memorandum warned: 'The individual has a high profile, which could give rise to reputational damage to the Foreign Office and Government were a court or tribunal claim to be pursued.'
Officials subsequently congratulated themselves on 'getting this settlement down this low with minimal fuss', with Foreign Office permanent secretary Sir Olly Robbins describing it as 'good value for money'.
Clear Violation of Treasury Guidelines
This assessment directly contradicts official Treasury guidance outlined in the 'Managing Public Money' manual. The document explicitly states departments should not treat special severance payments 'as a soft option, for example to avoid management action, disciplinary processes, unwelcome publicity or reputational damage.'
The Treasury further advises that departments should contest dubious employment claims even when potential costs exceed settlement amounts, as 'winning such cases demonstrates that the government does not reward failure'. These regulations are enshrined within the ministerial code, which mandates ministers 'should be mindful of the requirements set out in Managing Public Money, and of the Accounting Officer's role as a steward of the department's resources'.
Conservative Demands for Accountability
Conservative MP Kieran Mullan told the Mail: 'There is no getting out of this now. This puts it in black and white that they have broken the ministerial code. They have directly broken their own rules with this disgraceful payout. You are not allowed to use taxpayers money to be a bung to manage bad publicity but that is exactly what they did.'
'We don't have to assume or infer that. It is in there in writing in the papers. The Foreign Secretary, the Treasury and No 10 all signed this off. Who is now going to take responsibility and resign?'
Official Government Response
Downing Street maintains the payment was legitimate, asserting that Treasury chief secretary James Murray approved the payoff 'in line with standard Treasury guidance on the use of severance payments'. The Prime Minister's official spokesman rejected characterisations of the cash as 'hush money', arguing it was paid to expedite Lord Mandelson's departure without risking protracted legal proceedings.
'He was entitled to go to employment tribunal,' the spokesman explained. 'There was a genuine worry that a long legal battle funded by the taxpayer could see costs run to hundreds of thousands of pounds.' This defence has done little to quell mounting political controversy surrounding the substantial severance payment.
