Starmer was warned of 'reputational risk' over Mandelson's links with Epstein, files show

Sir Keir Starmer was warned that Lord Mandelson's relationship with Jeffrey Epstein posed a "reputational risk" before he was confirmed as US ambassador.

Documents released by the government include advice sent to the prime minister which said the pair's relationship continued after the financier's conviction for procuring an underage girl in 2008.

The PM's chief secretary Darren Jones said the due diligence process "fell short" and the government had already taken steps to address "weaknesses in the system".

The files also suggest Mandelson explored the possibility of a severance payment of more than £500,000 after he was sacked, although the BBC understands he takes issue with this claim.

The Treasury ultimately agreed to a payment of £75,000.

The BBC understands Lord Mandelson claims he was quick to agree the sum he was eventually paid by the Foreign Office and made it very clear he had no intention of taking his case to an employment tribunal – and that had any issues about him lying been raised he would not have been entitled to any payout.

Lord Mandelson was sacked as the UK's ambassador to the US last September, following new revelations about the extent of his friendship with Epstein.

The files - running to 147 pages - are the first batch relating to his appointment to be released.

More documents are due to be published in the future but the Metropolitan Police has asked for some to be held back to avoid prejudicing the ongoing criminal investigation into Lord Mandelson.

When Lord Mandelson was appointed, supporters argued the Labour veteran's contacts across business and politics, as well as his ability to charm, would help him to develop a strong relationship with the incoming Trump administration.

However, a due diligence document sent to the PM on 11 December 2024 - nine days before he was confirmed as ambassador - raised a number of issues which could pose a "reputational risk".

It highlighted a 2019 report commissioned by US bank JP Morgan which found Epstein appeared to "maintain a particularly close relationship" with Lord Mandelson.

The document notes that the peer reportedly stayed in Epstein's house while the financier was in jail in June 2009.

The prime minister has maintained he did not know the extent and depth of the pair's relationship when Mandelson was appointed.

The document also flagged other reputational risks around Lord Mandelson's previous resignations from government, which both related to financial matters.

Other documents published by the government reveal the PM's national security adviser Jonathan Powell found the appointment process for Lord Mandelson "weirdly rushed".

In a record of a call on 12 September 2025, the day after Lord Mandelson was sacked, Powell is noted as having raised concerns "about the individual and reputation" to Sir Keir's then-chief of staff, Morgan McSweeney.

Powell also claimed Philip Barton, the most senior civil servant at the Foreign Office at the time, had "reservations around the appointment", according to the document.

Meanwhile, a Treasury document claimed that negotiations over Lord Mandelson's severance payment began with a suggestion from the peer that he could be entitled to a sum equal to the remainder of the salary for his four-year appointment, totalling £547,201.

Following his sacking, an email shows Lord Mandelson also told a Foreign Office official he wanted to leave the US "with the maximum dignity and minimum media intrusion", arguing he remained a civil servant and "expect to be treated as such".

Jones told MPs Lord Mandelson's position on severance pay was "inappropriate and unacceptable".

Giving a statement in Parliament on the documents, the PM's chief secretary said the government "wouldn't have wanted to pay £1" to Lord Mandelson but a settlement was agreed to avoid even higher costs from a drawn-out legal claim.

The Conservatives questioned why ministers agreed to any sum, while the Liberal Democrats called for Lord Mandelson to donate any payment to charity.

Tory leader Kemi Badenoch said Sir Keir should consider his position as PM in light of the documents.

She said the release exposed that he "has not been honest with the country" about the extent of what he knew about the relationship between Lord Mandelson and Epstein.

The government was forced to release the documents after MPs voted for them to be published through a parliamentary procedure known as a humble address triggered by the Conservatives.

It has promised to publish all papers related to Lord Mandelson's appointment as US ambassador, as well as communications between the peer and the prime minister's chief of staff, special advisers or ministers in the six months before his appointment and during his time as ambassador.

Only documents which jeopardise national security or international relations will be withheld, along with any files police say could prejudice their investigation.

Parliament's Intelligence and Security Committee, a cross party group of MPs and peers, has been reviewing documents to decide what can be released.

The initial batch does not include a series of follow-up questions that Number 10 sent to Lord Mandelson about his relationship with Epstein.

The BBC has been told these questions related to his continued contact with Epstein after his first conviction, reports that he had stayed at Epstein's home while the financier was in prison and his association with a charity founded by Epstein associate Ghislaine Maxwell.

Police asked Downing Street not to publish the exchanges yet to avoid prejudicing their ongoing investigation.

The prime minister has previously said Lord Mandelson "portrayed Epstein as someone he barely knew" and that when it became clear that was not true he sacked him.

Sir Keir has accused Lord Mandelson of repeatedly lying about the pair's relationship.

Lord Mandelson remains of the view that he did not lie to the prime minister, does not recall being asked questions about Epstein face-to-face during vetting interviews and answered written questions about his contact with the sex offender after his conviction truthfully and fully.

Lord Mandelson was sacked following the emergence of supportive emails the peer sent to Epstein as he faced charges for sex offences in 2008.

The peer has long argued that he accepted Epstein and his lawyer's version of events and only discovered the truth after his death in 2019.

He resigned from the Labour Party in February and was arrested on suspicion of misconduct in public office weeks later, over allegations he had passed market-sensitive government information to Epstein when he was a minister.

He remains under police investigation but his bail conditions were lifted last week.

Lord Mandelson has repeatedly let it be known that he believes he has not acted criminally, did not act for personal gain and is cooperating with the police.