‘Labour should pay the cash again!’ MP livid over Mandelson’s £75k sev | Politics | News | EUROtoday

Paying disgraced peer Peter Mandelson a controversial severance bundle of £75,000 broke Treasury guidelines, an MP has claimed.

Mandelson, a former Labour MP and Cabinet minister, was sacked as British ambassador to the US on September 11, 2025, following the publication of leaked emails which illustrated his persevering with friendship with billionaire paedophile Jeffrey Epstein.

Sir Keir Starmer and the Government have been beneath mounting strain to disclose how a lot they knew concerning the 72-year-old’s ongoing relationship with Epstein and why he was appointed to such a high-profile function within the first place.

Released “Mandelson files” final week confirmed the previous ambassador sought a £500,000 payout upon being fired, however nonetheless acquired £75,000, which MPs now need again. Mandelson can be topic of an ongoing police investigation, however no expenses have been introduced

Inside the bundles of paperwork launched regarding Mandleson’s appointment a “Proforma for Special Severance Business Cases” discussing his payoff was despatched from the Foreign Office to the Treasury on September 30, 2025.

It states “given the reputational impact for HMG (His Majesty’s Government), a modest settlement as proposed is the recommended course of action”.

However, in what seems to be a direct contradiction, the Treasury’s personal steerage dismisses “reputational damage” as a purpose for making such a cost.

Under “Use of Special Severance Payments”, it notes in black and white: “Departments should not use special severance payments as an easy alternative to proper management action, e.g., to avoid difficult decisions, disciplinary processes, unwelcome publicity, or reputational damage.”

In a Commons debate on Monday, Alicia Kearns, Conservative MP for Rutland and Stamford, highlighted the Treasury steerage and mentioned the “British people had to fork out for a payout even though Treasury rules say that severance payments cannot be used”.

When requested if he thought “no rules were broken with Mandelson’s payoff?”, Sir Keir Starmer’s Chief Secretary Darren Jones MP advised the House: “On severance payments, the documents were published in a bundle last week, and they speak for themselves.”

Ms Kearns advised the Daily Express: “The Government has been caught red-handed breaking Treasury rules. It’s just common sense that you don’t pay severance to someone dismissed for gross misconduct.

“But not only did Starmer pay him, their own paperwork reveals it was to try and salvage Labour’s reputation. Treasury rules explicitly forbid that – the money must be paid back, even if it comes from Labour Party coffers.”

A Treasury source said the issue had been “politicised” and that guidance for severance payments also includes justifications for payments including potential future larger financial losses from legal action. They said the severance package potentially saved hundreds of thousands of pounds in potential legal costs.

They added that HMT could “disregard irrelevant components comparable to embarrassment” and that the severance pay decision “was anchored in value management and correct course of”.