The former Labour peer lost his role in September 2025 over his relationship with the convicted sex offender.
The latest release of files by the US government detailed Mandelson’s relationship with the convicted sex offender, including email exchanges about fiscal policy.
A separate police investigation was initiated in the UK, and on Friday, police searched to homes linked to Mandelson. He has not been arrested.
Meanwhile, the taxpayer-funded payoff he received after being sacked as ambassador to the US is under review “in light of further information that has now been revealed", the Foreign Office has confirmed.
The total sum could be as high as £55,000 before tax and deductions, according to a report by the Sunday Times.
Full details about Mandelson’s payoff will be revealed to Parliament after MPs backed a call for disclosure of papers relating to his time in the Government.
The Sunday Times suggested the figure could be between £38,750 and £55,000, based on Mandelson being paid at the highest rate in the diplomatic service, an annual salary of between £155,000 and £220,000, and qualifying for a three-month payoff.
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, who was friendly with Mandelson before his downfall, said the disgraced ex-Labour peer should “certainly” hand back the money.
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 Cabinet Office. A review has been instigated in light of further information that has now been revealed and the ongoing police investigation.”
The Metropolitan Police said its investigation into Mandelson over alleged misconduct in public office would “take some time” after officers finished searching his homes in London and Wiltshire.
“This will be a complex investigation requiring a significant amount of further evidence gathering and analysis,” Metropolitan Police Deputy Assistant Commissioner Hayley Sewart said.
Meanwhile, Lucy Powell, Deputy Labour Leader, believes the scandal could impact the Gorton and Denton by-election.
She told the Independent: “I imagine Mandelson will come up in some parts of the constituency. More than others for those who more closely follow the news.
“All I’d say is that prime ministers have to make judgement calls all day long and all the time, and sometimes they get them wrong. I think the prime minister’s put his hands up about that.”
