Breaking News: Mandelson files rock Starmer: Labour grandee was handed £75,000 payoff after being sacked as US ambassador – and PM DID know he stayed friends with Epstein…see more

The disgraced former Cabinet minister had apparently been demanding £547,000 compensation for losing his £161,000 a year job and threatening legal action.

Despite the PM claiming in Parliament that Mandelson ‘lied’ during his vetting, the government privately assessed was there was no evidence of ‘misconduct in role that would give rise to normal disciplinary proceedings’.

Foreign Office permanent secretary Olly Robbins wrote of the package: ‘This represents good value for money.’

Extraordinarily, the Chief Secretary to the Treasury, James Murray, responded that he was ‘happy’ to sign the payment off – including £34,000 severance as well as cash in lieu of notice.

Meanwhile, the papers published by the government confirm that Sir Keir was aware when he appointed Mandelson in December 2024 that his friendship with the financier continued after he was convicted.

In December 2024, a note from a senior aide to the premier stated he and chief of staff Morgan McSweeney had expressed a ‘preference for a political candidate’ to be Washington envoy and Mandelson was the ‘lead candidate’.

It said the Director of Communications – Tim Allan at the time – had been ‘satisfied’ with Mandelson’s responses about his relationship with Epstein.