How the Mandelson scandal threatens Starmer

0:00Hello, I'm Peter Mandelson and I'm proud to serve as His Majesty's British Ambassador to the United States of America. Many people love him. Others love to hate him. But to us, he's just Peter. Had I known then what I know now, I'd have never appointed him. Welcome to The State of It, the podcast that promises to take you inside the room where it happens. I'm Stephen Swinford, the political editor of The Times. I'm Caroline Wheeler, the political editor of The Sunday Times. And I'm Patrick Maguire, Chief Political Commentator for the Times, sadly not joined. On my right side by Gabriel Pogren from the Sunday Times this week.

0:43This week, there is only one topic, one topic to rule them all, and that topic is Lord Mandelson. So I'm going to open listeners with a small anecdote from the trip to China. So Caroline and I were with the Prime Minister, we accompanied him to China, and we were flying back on Saturday. And it's fair to say Starmer was in a pretty good mood. and we did a lobby huddle, which is where all of the press gather around him. In this case, next to a toilet. It was very cramped, not a lot of space. And I asked him two questions in that huddle. I asked him about Andrew's relationship with Epstein and whether Andrew should give evidence and also about Mandelson because new revelations from a giant new cache of Epstein emails were casting new light on Mandelson.

1:25And I said, did his behaviour fall below the standards you would expect of the peer of the realm and the fascinating thing was starmer went for andrew and he said andrew should give evidence he should take a victim-centered approach that was a splash that you guys did in the sunday times good story but on mandelson he had nothing to say he said i've said all i want to say on that matter um that didn't last long because he flew back into a firestorm as email after email exposed more information about mandelson and we get to where we are today, where it looks like, again, a kind of full-blown crisis for Starmer and the Labour Party.

2:04So look, we're going to start on those emails from the heart of Downing Street and why they are such a problem for Keir Starmer and Labour. So we've been going through them. Anyone want to start on the most damning thing they've seen in these emails? I mean, where do you start? This might be the most egregious standards in a public life, standards in political office scandal since Perfumo. Look at what Peter Mandelson, on the base of these releases, was forwarding to Jeffrey Epstein. You have advice at the very height of the financial crisis about the health of the British economy, about tax policy, about what the Treasury should do on bankers' bonuses.

2:47And you not only have Peter Mandelson disseminating this stuff, apparently, to Jeffrey Epstein, you have him giving direction on what people who are opposed to those government policies should do. There's the recommendation that Jamie Dimon, the banker, should mildly threaten the Treasury, which actually turns out to have happened. And I spoke to Nick Butler, who was a senior policy advisor to Gordon Brown. I spoke to him yesterday because he's the author of one of the memos that was leaked and given to Epstein. And these are people who've been in politics a long time. And there are people who've known Peter Mandelson a long time.

3:29And Peter Mandelson has always divided opinion in Westminster. Brownites in particular always had quite a low opinion of him. But even people who knew him well, and perhaps because they knew him well, were shocked and taken aback. I mean, Nick Butler, who is not a man given to hyperbole and overstatement, said it was a disgusting breach of trust. And he said he could only assume that if the emails were leaked, they were leaked to give Epstein the potential to make money. And that is extraordinary. That's extraordinary when you just hear that. And this stuff is almost so shocking that we're almost past the point where the story is man made misjudgment and maintained friendship with convicted paedophile, it becomes another order of magnitude of allegation to be facing.

4:18And that is a serious problem for everybody involved. Yeah. I mean, I think what really struck me was just the scale of the contact, but also just that the Prime Minister sought to appoint Peter Mandelson in the first place. Because look, this is not the first time. I mean, I'm old enough to remember the Hindujas passport scandal. Before that, there was the home loan scandal, if you remember, with Jeffrey Robinson. These were all deals, basically, that were done by Peter Mandelson behind the scenes using his position. The suspicion was that he was doing it because he wanted to do favours for very wealthy people because of the fact that it would benefit him later in his business life.

5:01And of course, that is actually what happened. If you look at what the trajectory was of Peter Mandelson after that, he went and established a very successful or public affairs agency, which made absolutely millions and millions and millions of pounds based on those connections. Yeah, and we need to come on to Starmer's judgment and huge questions about his judgment left, right and centre over this, which we will do. But I just wanted to give a little bit of insight into the emails themselves, having spent yesterday trawling through hundreds of them. The nuts thing is, from what I can see, is that Peter Mandelson seems to have been using a BT internet account, which is now defunct, to actually conduct the highest level of business.

5:39He was emailing the prime minister on his secret email address on it. He was emailing other senior cabinet ministers on it. And he was then, often when he got replies or something interesting, he was forwarding it to Jeffrey Epstein within minutes of receiving it. It's almost like a reflex. Interesting note, he says, when he passes on one of the emails, which is a discussion on a kind of huge government sale of assets to reduce debt, which would be a clear interest to a financier like Jeffrey Epstein. Another note from Shruti Vadira, the then city minister and advisor to Gordon Brown, in which she ripped into the Treasury, ripped into Mervyn King.

6:17It's all in capital letters because that's how Gordon Brown used to like to read his memos famously. And again, straight to Epstein, straight out the door. And that's consistent. There's another exchange where Epstein comes to him with some details of what looks like a massive bailout on the EU. And this is on the eve of Labour leaving office, a 500 billion euro bailout to save the euro. And Mandelson not only confirms it, he tells him about the timing of the announcement and then they have a discussion about it. So it is all privileged insider information. And then perhaps the most amazing one of all is on the day of Brown announcing that he was leaving.

6:55So he had been accused. He'd been in Downing Street after the election for a while. They were trying to sort out a coalition. he was accused of squatting in number 10 and that morning manderson has a conversation with him brown announced he's going to go and the rest of the country doesn't know the content of that conversation no one knows and manderson writes in an email directly to epstein finally got him to agree to go again market sensitive information huge implications for the country it is the end of labor government it is the start of the tory coalition with the lib dems that follows and Epstein was there ahead of it.

7:29And Epstein replies, well, this will make your book increase in value. So masses of issues around what was disclosed in government. And then once he's left government, Epstein essentially coaches him on how to get a better job. And Patrick, you were looking at some of the Deutsche Bank emails, which are amazing. Yeah, long, long correspondence between Peter Mandelson and Jeffrey Epstein, in which, you know, Peter Mandelson wonders aloud whether he's underselling himself to Deutsche Bank for the promise of a million pound salary. And as you say, Steve, what is sort of, I don't even know what adjective you use to describe it, but in all of Peter Mandelson's public statements about his relationship with Epstein until his resignation, there was always this sort of sense in the way he worded his responses was that he had been introduced to Jeffrey Epstein by Ghislaine Maxwell and he regretted ever having met him.

8:24And the way it was worded sort of seemed to imply, look, loads of famous people knew Jeffrey Epstein. I may have been on the island. I may have been at the parties. Charmed by him. Yeah. We were, you know, one was charmed by him, et cetera, et cetera. What we didn't know until we read these emails is just the frequency of contact, as you say. There is no major decision Peter Mandelson takes, seemingly, or no decision the government takes without Jeffrey Epstein at some point being looped into it. That is, and lots of people in politics have friends who are sounding boards, which obviously poses ethical questions.

8:59But as Nick Butler said to me, nobody in Gordon Brown's government knew that everything they discussed or everything that they discussed that ended up sort of in Peter Mandelson's head, loads of it ended up going to Jeffrey Epstein. And Nick Butler and Gordon Brown and others are sort of all completely shocked by this because they say every government discussion is liable to leak. But there's an expectation at the highest level in number 10. It's really, really rare that stuff leaks, particularly on market sensitive stuff. And that is the sort of paradigm exploding, really, really problematic thing about this release.

9:38And then there's the familiarity. I want to talk about the pictures in a minute, which we will come on to. But when you look at the correspondence as a whole, it's constant. So it will be Lord Mandelson will write, what are you doing? Epstein will reply, I don't know, I'm in Paris. Mandelson will say, I'm going to come to Paris, can I stay at your apartment? Yes, stays at the apartment in Paris, stays at the apartment in New York, stays on the Caribbean island. And it's this constant flow of almost flirtatious exchanges. You get Epstein referring to Mandelson as Petey, repeatedly Petey. mandelson saying that he misses him that he loves him that well you are my best friend you have this bizarre vein of emails from reynaldo who is was then peter mandelson's partner now his husband and you get a sense the intimacy of the relationship because it's sort of reynaldo emailing epstein saying hi i'm on my lunch break hope you're all right you know thanks for the all the money for my osteopathy course it's just a level of intimacy that totally undermines everything Peter Mandelson has said about this relationship to date.

10:38And then there's the money. Exactly, as you say, there's the money for Ronaldo. There is, you know,$10 ,000 there for an osteopathy course. Suggestions of direct money to Mandelson,$75 ,000, although he claims not to remember that. I think I would probably remember$75 ,000 appearing in my account. And then there's the pictures, Caroline, which is just on another level. Yeah, that was the kind of abiding image, wasn't it, of the weekend, was that picture of Peter Mandelson standing in his white white fronts talking to a woman basically wearing a toweling robe. And he's still saying he has no recollection of those events happening.

11:12But they cast a really sort of grim sort of spectre over what was going on, particularly given what we now know was going on with Jeffrey Epstein. And I think that that's something that he's going to really struggle to get away from. And I suspect is the reason why Peter Manson felt the need to resign from the Labour Party. presumably this finally was Peter looking at those front page pictures and realising pretty quickly that this was the moment that it was all going to implode although I have to say looking at the interview that he did with Katie Balls and having read that this morning I mean there is still a sort of element I think and I appreciate that much of the interview was done prior to these events but there still is this kind of I don't know sense that he doesn't really accept that what he's done or the involvement that he's had with this individual was really that bad and that it was an accidental friendship.

12:03And, you know, he didn't realise the extent to which he was embroiled in all of these things. His position is that he was groomed and manipulated by someone we now know to have been one of the most prolific groomers and manipulators of people, adults, and more pertinently, lots and lots of children who suffered at his hands and the hands of his co-conspirators. Not saying, of course, that Peter Mandelson was responsible or involved in that kind of criminality. So Peter Mandelson's position is obviously, look, I was as hoodwinked by this guy as anybody else. I wrongly believed his assurances that he was framed by the FBI.

12:38But the problem for Peter Mandelson and accepting what is happening in the court of public opinion, at least, and in terms of political judgments that's now being cast in his career, is no longer about a personal misjudgment about a friendship. It's about how that friendship affected his behavior it's when he was running the country with Gordon Brown for Gordon Brown he was the most important man in government with the exception of Gordon Brown and Alistair Darling the then Chancellor and it's just another order of magnitude you know five minutes ago five days ago this was a story about an ill-advised friendship now it is a story about a whole range of other things well it's corruption isn't it I mean at the heart of it is corruption it's insider trading but you know whether or not Jeffrey Epstein is or isn't a paedophile almost becomes kind of a moot point in the fact that, you know, if you are the business, if you are working for the prime minister in, you know, incredible moments of kind of pressure, given the crash and the effect on the economy, and you are effectively leaking government secrets to an individual whose entire job is to make money off the back of markets, which, you know, all of these bits of information are what we would call market moving, where people can cash in by either shorting particular shares or stock market manoeuvres.

14:00I mean, this is going to be a really big problem. And obviously, the police are now looking at it quite rightly. But it's going to be fascinating to see how they now deal with it, given what a high bar it is for prosecuting people for these particular type of offences. But I think just in the minds of the public, they're going to be sitting there and thinking, my god just before we go to the interval i just wanted to mention again this brilliant katie balls interview with lord mandelson and i'll give you some of the background she's going to talk about more of it on our brilliant other podcast which is the state of it usa which is katie balls and jerry baker but she spent months trying to sort out this interview get it she got it she sat down with him a few weeks ago and then obviously the world shifted on his axis and she had to go back for more so she spoke to him again on i think it was sunday night so we just have to resign just after his resignation minutes after his resignation and the line in it is absolutely extraordinary he says that he views this as a reset moment for himself and he says that what he wants to do is he wants to kind of go from being the insider to the outsider looking in and it's very clear that at the point that she spoke to him mandelson still thought there was another comeback in him.

15:13He thought that he could be a kind of figure that would give advice to subsequent governments. And he says as much to Katie in this incredibly earnest interview. And it just shows, I think, how detached from reality he is about this whole situation and how he's clearly not aware of the significance and gravity of what these emails are showing. And obviously, any sense of comeback is over. But I think also the thing that strikes me is, If you did have that sort of relationship with an individual at the time you were in government, you would know that this was about to all implode. I mean, you'd know that all of these emails were about to come out.

15:52It was widely being reported on Saturday, very clearly that there were millions of emails, that basically the entirety of Jeffrey Epstein's back catalogue of emails was about to be released. And you would be fearful about what was in them unless you had somehow convinced yourself that there was nothing to be concerned about. Now, either, you know, Peter Madison suffers from terrible delusions and cannot, you know, remember what happened, you know, only a few years ago. Or has convinced himself that what he did was acceptable, which is also possible given, you know, personalities. But I just think on this, you know, given that when you are a minister, it is drummed into you.

16:31What is acceptable? What is not acceptable? I mean, we only have to think about even a modern example of this, which was Suella Braverman. Do you remember when she sent some emails? To a private email address, yeah. Exactly, to a private email. To John Hayes, yeah. To John Hayes, and she lost her job over it. Admittedly, she came back only a few days later. But, you know, this is a breach of the ministerial code of the highest order. Yeah. So let's head to the interval. When we come back from the interval, we're going to talk about arguably the biggest story now as this goes on, which is the question over Keir Starmer's judgment and why Lord Mandelson is such a threat to him going forward.

17:06Welcome back. We're going to talk about Keir Starmer now and how he has essentially consistently got this whole Lord Mandelson issue wrong. He made a mistake in appointing him. He announced his appointment where no vetting had taken place. He then was too slow in sacking him when there were revelations and emails. He initially expressed confidence and then eventually was kind of forced on the back foot into sacking him. And this week, again, totally flat-footed on it, saying nothing at the beginning. Now talking about how he shouldn't have a peerage. But obviously, he's going to have to act and strip him of his peerage.

17:40So shall we just break that down into three things? Caroline, do you want to kick off on the decision to appoint Mandelson in the first place, which is an extraordinary lack of judgment, it looks now in hindsight. Yeah, absolutely. I mean, the suggestion is that Mandelson was the only candidate that was really in the running for the whole time they were considering this, that it had been very much decided, particularly the man that's going to end up with the blame for this decision is going to be Morgan McSweeney, the Prime Minister's Chief of Staff, and is said to be very close to Peter Mandelson, and was pretty unilaterally, I was told, pushing Peter Mandelson from this job but the very beginning of the Labour government coming into power.

18:20And there was, as you say, Steve, very little vetting done. I mean, Peter Mandelson has repeatedly said that they knew everything that they needed to know. But I think it was very evident when he was sat that that wasn't the case. And in fact, I mean, I remember working on a story before his appointment, which was that we were being told repeatedly by a variety of different sources, not all in the kind of sort of Nigel Farage camp either, that there were real concerns in the White House about this appointment, not just because of his too cosy relationship with countries like China, for example, but because of these Epstein questions.

18:56And as far as I understand it, there was a dossier that was presented to senior figures in the White House, which included a lot of concerns and a lot of intelligence about his relationship with Epstein. So that had gone to the White House. It would have been perfectly available to number 10 had they chose to look for it. The Americans were raising concern about it. But yet the appointment in the UK went ahead with virtually no questions asked. That is the crazy thing about this, that we knew, and Starmer could have read it in any newspaper, I'm sure he did, that Mandelson had kept up a relationship with a convicted paedophile.

19:34So Epstein was convicted in 2008 and Mandelson had remained his friend and indeed had gone to stay in his New York apartment in years subsequent. And yet, despite knowing about this friendship, they appointed him. Now, that has always struck me as, you know, it was an open, it wasn't a secret. Everyone knew that Mandelson had this friendship with a convicted pedophile. And those words do not look good in any headline, Patrick, I would put it to you. No, they don't. And did number 10 just think it's out there? You know, he is still in public life. Clearly, that's baked into public perceptions of Peter Mandelson.

20:12What is clear, as you say, Caroline, is that senior people in number 10, Morgan McSweeney in particular, wanted Peter Mandelson to be ambassador. Now, they are, as you said, very close, or certainly were very close. Peter Mandelson was a constant source of almost paternal advice to Morgan McSweeney. There was a paper called Labour for the Country, which was written just after the Hartlepool by-election disaster, or just before. And it was the blueprint for Keir Starmer's mission to remake the Labour Party, to push to the right, to start hugging the flag. Tough lines on law and order and defence.

20:50who wrote the early drafts of that paper? Peter Mandelson, who most Sundays would be the star turner at a discussion with people like Wes Streeting, sometimes people like Peter Kyle, Morgan McSweeney, around the kitchen table of a guy called Lord Liddle, another Blairite grandee in 2020, when Keir Starmer's leadership was just getting off the ground, Peter Mandelson. You know, Peter Mandelson is baked into this project. So it's sort of unsurprising that senior people around the prime minister would think it's sort of entirely natural that you give Peter this job. You know, he's a former EU trade commissioner.

21:30We know him. We know his abilities. Yes, Peter is Peter, but, you know, he can do this job. And clearly that had a momentum of its own. I mean, the other, you're right, Caroline, that the only person seriously considered by these people was Peter Mandelson. I'm already hearing from MPs that they're furious with Morgan McSweeney. They think that this is another disaster for Keir Starmer and it raises, as we've said, questions of judgment. I'm told that when the first time that this all emerged and there were concerns about the appointments process when he was sacked the first time and in between now as well, MPs have directly told Keir Starmer to get rid of Morgan McSweeney, have said that it's his fault that there have been numerous stories where his judgment has been the cause of the explosions that have happened around the Prime Minister.

22:21And this is the biggest one yet. And I think that there is going to be pressure on Morgan Book Sweeney again. I know when one MP went to tell the Prime Minister they needed to get rid of his chief of staff directly, he was told basically in no uncertain terms that that wasn't going to happen. Look, the judgment questions continue for Starmer this week. So as we said on the plane, didn't want to talk about Mandelson. Suddenly he's talking about him. But this issue of stripping Mandelson of his peerage. Now, Starmer has said, I don't think he should have a peerage. That should be gone. But the mechanism for doing it, and this is one of the great things about reporting on Parliament.

22:58It is so archaic. To strip a peer of a peerage. A peerage is for life. It's not just for Christmas. Conferred by the king, yeah. Conferred by the king. So to strip someone of a peerage, you actually need to pass an act of Parliament. And that hasn't happened since 1917, when a load of peers and royals were stripped of their titles under, I think it was the Titles Deprivation Act, for their links to Germany in World War I. So that's how historic we're talking. Now, Starmer, for some reason, does not want to do an act of parliament. I think they're worried it will get amended. So you're in this weird kind of bog now where they are effectively saying, what we need the laws to do is we need the laws to reform to remove the peers.

23:39And the problem is, if we're still in a position in a month's time when Mandelson is still a peer... Well, as per the Times style guide, we'll be calling him Lord Mandelson because that's his title. We will. And that's a problem for Starmer's leadership. It will show political impotence. So I suspect he's going to have to move on this. Yeah, political impotence is exactly the right phrase. This is Keir Starmer in microcosm. There's a massive problem staring us in the face. You have a massive parliamentary majority in the British system that gives you almost untrammeled power. what do you say you don't say bang let's resolve the problem quickly you just you say oh yeah there's a problem but there's loads of processological reasons that mean we can't handle it right you see this with the sort of you know when he was before the liaison committee the sort of avengers assemble of select committee chairs and senior mps in parliament just before christmas he was talking about i go to pull a lever and somebody tells me i can't pull the lever or the lever doesn't exist.

24:33It's like, you are the lever. Your parliamentary majority, your landslide majority is the lever. Just say you want to do something, then do it. And you have to wonder, there are lots of really horrible political questions here for number 10. And one of them is, if you're saying Peter Mandelson, who's not been convicted of any criminal offence, is just too reputationally toxic to be a peer, what are the second order consequences of that? Are you saying Peter Peter Mandelson is so beyond the pale, there is a sort of degree of guilt by association, which is always a dangerous game in politics. And we mentioned Morgan McSweeney.

25:07You know, if we're talking about people who are friends or friendly with Peter Mandelson, and if that's now a hanging offence in government, and who knows, we might get by the end of this week to a point where this is the subject of discussion. You're looking at Tim Allen, the head of comms in number 10. You're looking at Jonathan Powell, one of his closest colleagues from the Blair years. You're looking at cabinet ministers like Wes Streeting and Peter Carl. You're looking at loads of people who have links to Peter Mandelson. Where does this end? And that is the problem. And this is why process is so alluring as a refuge right now, because it allows you to say we can't deal with the problem rather than dealing with the problem and dealing with the aftershocks, which could be very, very disruptive.

25:53But the problem with that is what has happened time and time again is they've taken this thinking time. The pressure has built up. there's been enormous political damage and then they've ended up doing the one thing that they didn't really want to do in the first place after about a week when they've been you know damaged even more so they get damaged by the delay and then they get damaged by the decision that they already take but mandelston can't resign the title no that's confirmed so that's the that's the binary and as patrick says the times and sunday times style guide will still have him as a lord the other thing we should talk about in this which is the amazing thing at the heart of is Gordon Brown is clearly livid.

26:29And he put out this really aggressive statement yesterday saying, I asked the cabinet office to look at this. They investigated and they found nothing. And he's clearly very unhappy that, you know, this contact with Epstein wasn't uncovered by the government. And that is a pressure on Keir Starmer as well. He's got a former Labour prime minister on his back and I would not want Gordon Brown on my back. I mean, I still think there's a lot more to come from this about exactly what Gordon Brown knew or didn't know, what was it he knew at the time? Well, what he did know, obviously, was that he didn't entirely like or trust Peter Mandelson because of their long personal history.

27:07And that is a question, you know, before we were talking about the scale of Peter Mandelson's delusion, you know, his rhino hide, you know, why is he still coming out and saying he wants to play a part in public life? You know, to an extent, you sort of can't blame the guy because the Labour Party doesn't know how to quit him. He's been brought back from varying degrees of disgrace and notoriety by three Labour prime ministers. I mean, Gordon Brown had a famously tempestuous relationship with him. Tony Blair brought him back twice. You know, I think when he came back in 2008, shockingly, at the time to work with his old nemesis, Gordon Brown, I think it was Phil Webster.

27:40He quoted on the front page coverage of The Times that day, you know, even Jesus Christ only came back the once. And that was those are the sort of terms Peter Mandelson has been seen in the Labour Party. and Gordon Brown brought him back knowing exactly the sort of character Peter Manilson was even if he didn't know and the sort of operator he was. I mean, let's not forget this man is called the Prince of Darkness. It does kind of surprise me that people are always so shocked when these things happen. I mean, the man was given a nickname as the Prince of Darkness because of this very type of behaviour.

28:13We should talk about Keir Starmer's parallel universe briefly. The things that Keir Starmer would like to be talking about. We are told there is a big Keir Starmer speech coming on Thursday, that it's obviously going to be about cost of living. Yeah, it's about a scheme called Pride in Place, which is around a government funding for deprived communities, Labour seats across the country. Lots of Labour seats. Lots of Labour seats, you know, what you might call the red wall. Each community getting up to 20 million quid. So you're in the tens of billions overall. and the hope is that by the end of this parliament, local communities will be able to see the government making a difference.

28:48You know, you've always thought that thing in the middle of town was a disgracer and I saw the government have fixed it. To give you an example, Southport, my hometown, was the first place to get the funding announced at Labour Conference. I went with Rachel Reeves to Southport Pier, which has been shut for three years and that's the sort of thing they're doing and there are lots of people at the top of government really, really excited about this because they say this could be the transformative thing. This is the people seeing government making a difference. But here you go. Here is another week where a series of misjudgments mean that nobody is going to be talking about that big policy announcement.

29:26Or maybe on the flip side, people in government will say, actually, that's what people remember, not Peter Mandelson. But in terms of the media management of this government, Kier San will give a speech, maybe he'll take some questions, and every single question will be about Peter Mandelson, Jeffrey Epstein, and probably Morgan McSweeney and Keir Starmer's own judgment too. And that is ultimately the problem with this government, something that loads of people in government are really enthusiastic about, this pride in place scheme may well just be blown out of the water. I think on that very positive note, we will bring this week's podcast to an end.

29:56Who wants to do the big red button this week? Patrick, would you like to do it? Since Gabriel's not here yet. Thank you very much to our ace producers, Molly Guinness and Ewan Daughtry. And Gabriel, I hope, will be back next week. We'll be back next week. Thank you all.