What began as background unease inside Westminster has now blown into a full-scale political storm.
Senior Labour figures are openly furious, fingers are being pointed at the very top of the party, and questions are mounting about judgment, accountability, and damage control.
At the centre of it all is Lord Peter Mandelson — and the growing sense that this saga should have been handled very differently from the start.
Mandelson Walks Away as Epstein Questions Explode Again
Lord Mandelson has formally quit the Labour Party after fresh US document releases reignited scrutiny over his past relationship with convicted sex offender Jeffrey Epstein.
The timing could hardly be worse for Labour’s leadership, with reports emerging that Mandelson may now be summoned by the US House Oversight Committee to testify about those links.
The resignation came late last night, following a weekend of damaging revelations — including the circulation of an awkward photograph showing Mandelson in his underwear speaking to a woman in a bathrobe.
While trivial compared to the wider allegations, the image added to the sense of humiliation engulfing the party.
A Letter of Regret — and a Strategic Exit
In a letter to Labour general secretary Hollie Ridley, Mandelson said he was stepping aside to avoid further embarrassment for the party.
He insisted allegations that Epstein made financial payments to him two decades ago were false, saying he had no memory or record of receiving such money and needed time to investigate the claims himself.
He also issued another apology to the women and girls harmed by Epstein, acknowledging that their voices should have been listened to much earlier.
Mandelson framed his resignation as an act of loyalty, arguing that leaving the party was in Labour’s best interests.
Emails Raise Alarming Questions About Influence
The controversy deepened after newly released documents appeared to show Mandelson corresponding with Epstein in 2009, when Mandelson was business secretary.
One email exchange suggests Mandelson may have been lobbying within government over a controversial tax on bankers’ bonuses — a so-called “super tax” introduced in the aftermath of the financial crisis.
In the messages, Epstein appeared to ask whether the tax could be limited to cash bonuses only, with a reply allegedly from Mandelson indicating he was “on the case” despite resistance from the Treasury.
If authentic, the emails raise serious questions about access, influence, and judgment.
Claims of Payments — and Strong Denials
Bank records circulating in the US appear to show Mandelson receiving around $75,000 from Epstein between 2003 and 2004, during his time as a Labour MP.
Mandelson has flatly denied any recollection of such payments and questioned whether the documents themselves are genuine.
Sources close to him argue the paperwork contains formatting errors, wrongly suggests he had a US social security number, and implies financial transfers that would not have been technically possible at the time.
They have urged JP Morgan to confirm whether the records are authentic and pointed to US Justice Department warnings that some released material could be fake or misleading.
Leaked Briefings Add to the Fire
Tax campaigner Dan Neidle has highlighted emails allegedly leaked to Epstein following the 2008 financial crash.
One message, apparently forwarded by Mandelson in 2009, included a confidential briefing for then-prime minister Gordon Brown about the UK’s economic resilience and “saleable assets.”
Epstein reportedly replied asking what those assets were — a question Mandelson did not immediately answer publicly.
Requests for comment on the issue went unanswered as the political backlash intensified.
Ministers Defend the Decision — Carefully
Making the media rounds, education minister Olivia Bailey said she was “pleased” Mandelson had resigned from the Labour Party, acknowledging that serious questions needed answering.
However, she was more cautious when asked about stripping him of his peerage, noting that removing a seat in the House of Lords is legally complex and usually requires imprisonment or new legislation.
Bailey also confirmed Mandelson is currently on leave from the Lords and has indicated he does not plan to return.
Starmer Branded ‘Weak’ by Allies and Rivals
While Mandelson has taken the immediate hit, much of the anger is being directed at Prime Minister Keir Starmer.
Labour MPs and opposition figures alike have accused him of ignoring warnings and showing poor judgment by appointing Mandelson as US ambassador despite longstanding concerns over Epstein.
Veteran Labour MP John McDonnell said he had warned Starmer about Mandelson but was ignored. Andy McDonald went further, calling for Mandelson to be expelled outright.
One unnamed Labour MP said it was “a shame he wasn’t kicked out.”
From across the aisle, SNP leader Stephen Flynn accused Starmer of lacking the courage to act sooner.
Conservatives Demand a Full Investigation
The Conservatives have seized on the controversy, calling for an independent inquiry into how Mandelson was ever appointed ambassador in the first place.
Party leader Kemi Badenoch said every possible mechanism should now be explored, including whether Mandelson can be removed from the House of Lords.
Tory officials accused Starmer of allowing Mandelson to resign voluntarily instead of enforcing disciplinary action, arguing this reflected a failure of leadership at the heart of Downing Street.
Labour Draws a Line — But Questions Remain
Labour insists disciplinary proceedings were already underway before Mandelson quit and says his departure was the right outcome.
A party spokesperson stressed that Epstein’s crimes devastated countless lives and that victims remain at the forefront of their concerns.
Still, with potential US testimony looming, disputed financial records circulating, and internal trust shaken, the fallout is far from over.
What Happens Next?
Attention now turns to Washington, where Mandelson could be compelled to answer questions under oath.
At home, pressure is mounting for a deeper probe into government appointments and oversight failures.
For Starmer, the episode risks becoming a defining test of leadership — one that critics say he has already failed.
And for Labour, the bigger challenge may be convincing voters that lessons have truly been learned, not just damage contained.
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