Peter Mandelson exit payout: Pressure on Sir Keir Starmer over US envoy payoff

It is claimed Peter Mandelson had requested a higher payout following his sacking in September 2025. Photo / Getty Images

Peter Mandelson is reported to have received a five-figure, UK taxpayer-funded payoff after he was sacked as US ambassador.

The 72-year-old is understood to have been awarded an exit payment of between £38,750 ($87,681) and £55,000 – the equivalent to three months’ salary from the Foreign Office – although he was axed last September, according to the Sunday Times.

He had held the role, which has the highest pay band, SCS4, in the diplomatic service, of between £155,000 and £220,000 per annum, for seven months.

Pressure is growing on British Prime Minister Sir Keir Starmer over his decision to appoint Mandelson, even though the latter’s friendship to the paedophile Jeffrey Epstein was well known.

Starmer claimed Mandelson misled him about the depth of their friendship after Epstein’s 2008 conviction for soliciting prostitution from a minor.

A Foreign Office spokesman said: “Peter Mandelson’s civil service employment was terminated in September 2025 in accordance with legal ad­vice and the terms and conditions of his employment.

“As we have consistently said to Parliament, normal civil service HR processes were followed.

“Further information will be provided to Parliament as part of the Government response to the motion passed last week, which is being co-ordinated by the Cabinet Office.

“A review has been instigated in light of further information that has now been revealed and the ongoing police investigation.”

‘Should pay the money back’

It is claimed Mandelson had requested a higher payout following his sacking by Sir Olly Robbins, the Foreign Office’s permanent under-secretary.

Following the decision, negotiations were held over the payoff between the Foreign, Commonwealth and Development Office’s human resources department and Mandelson’s lawyers.

A No 10 source told the Press Association: “Given what we know now, Mandelson should either pay the money back or give it to a charity to support victims.”

Earlier this week, Health Secretary Wes Streeting, a potential successor to Starmer but someone who was friendly with Mandelson before his downfall, said the peer should “certainly” hand back the money.

It is understood the payout was in line with the standard contractual arrangements for civil servants in the department.

Mandelson has been approached by the Telegraph for comment via his lawyers.

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