Lord Peter Mandelson’s career has been thrown into turmoil once again.
The former Labour heavyweight has been dramatically removed from his role as Britain’s ambassador to the US after revelations about his long-standing friendship with disgraced financier and convicted paedophile Jeffrey Epstein.
Now, not only is he facing questions about a potential six-figure payout, but also renewed scrutiny over his future in the House of Lords.
Starmer’s Swift Decision
Sir Keir Starmer, who personally chose Mandelson for the prestigious Washington posting, acted quickly after emails surfaced showing the peer had sent messages of support to Epstein even as he was jailed for sex offences.
The Foreign Office admitted these emails revealed “a depth and extent” to the relationship that had not been disclosed at the time of Mandelson’s appointment.
Allies of the peer argue he had been transparent about his ties with Epstein during the vetting process, but that he no longer had access to the old account containing the incriminating emails.
HR Concerns and a Costly Exit
Mandelson refused to step down voluntarily, which meant the Government had to explore legal grounds for dismissal.
Without them, he could be entitled to a taxpayer-funded compensation package.
HR experts were reportedly brought in to ensure the dismissal followed procedure, but insiders fear Starmer’s decision to sack him without a direct conversation could complicate matters.
One government source warned it could turn into a “disastrous HR process” and leave taxpayers footing the bill.
At present, Mandelson remains on the government payroll while a settlement is negotiated.
Not the First Costly Payout
If Mandelson secures a large compensation deal, he’ll join a growing list of high-profile figures who left public office with big exit payments.
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Sir Tom Scholar, ousted days after Liz Truss became PM, received £335,000.
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Jonathan Slater, who resigned amid controversy over the A-Level grading algorithm, was paid nearly £278,000 in 2021.
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Sir Philip Rutnam won £340,000 after his constructive dismissal case against the Home Office, where he accused Priti Patel of bullying.
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Sir Philip Barton walked away with over £260,000 when he left the Foreign Office early, despite criticism for staying on holiday during the Taliban takeover of Afghanistan.
Can He Return to the Lords?
Beyond the payout question lies an equally thorny issue—Mandelson’s position in the House of Lords.
He is currently on a leave of absence until the end of this parliamentary session.
But under existing rules, he can return to the chamber simply by giving three months’ notice.
That possibility has raised alarm among MPs and peers.
Some insist he should never be allowed to resume legislative duties in light of the Epstein revelations.
Calls for Peerage Removal
Pressure is already mounting for stronger action. Labour MP Kim Johnson has said Mandelson should be removed from the Lords altogether.
SNP MP Brendan O’Hara has tabled an early day motion accusing him of bringing Parliament into “disrepute” and urging the Government to legislate for his removal.
Tory frontbencher Neil O’Brien also added his voice, arguing: “Surely now he has been forced to resign in disgrace for a third time, for attempting to secure an early release for a convicted paedophile, he cannot return to being a lawmaker and a serving member of the House of Lords.”
What Happens Next?
For now, Mandelson’s future remains uncertain.
While his ambassadorial career in Washington has ended abruptly, questions over a payout and his peerage are only just beginning.
Whether he quietly steps back or defiantly attempts a comeback, one thing is clear—this episode has reopened deep concerns about political judgment, accountability, and who is fit to remain in positions of public trust.