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The £75,000 taxpayer-funded payout Lord Peter Mandelson received after being sacked as ambassador to Washington was “value for money”, a minister has argued.

The sum awarded to the disgraced peer after his dismissal over his ties to paedophile Jeffrey Epstein was revealed in the first set of Government documents published on Wednesday.

Nick Thomas-Symonds expressed “moral outrage” over the payment, and called for the money to be donated to a victims’ charity.

But he sought to defend the amount by pointing out that Lord Mandelson asked for his contract to be paid out in full, totalling more than £500,000.

Cabinet Office minister Mr Thomas-Symonds told Sky News on Thursday: “You can look at the documents, you can see on a value for money basis why that decision was made. There was an original request for £547,000 that was negotiated down to £75,000.”

There was a risk of an employment tribunal, he said, although Lord Mandelson has reportedly denied intending to go down that route after his September 2025 sacking.

Mr Thomas-Symonds continued: “But from a moral point of view, it is incredibly difficult to even think that that money is still being retained.

“So what I would say is, do the decent thing, do the honourable thing, donate that money to charity. And I would suggest perhaps a charity supporting victims might be appropriate.”

A day after the publication of the files, Sir Keir Starmer is facing fresh questions about his decision to give Lord Mandelson the top diplomatic job after it emerged he had been warned of a “general reputational risk” and senior officials raised concerns about the appointment.

The Prime Minister is expected to speak to journalists during a visit to Belfast on Thursday, his first public appearance since the release of the first tranche of papers relating to the peer.

Sir Keir has insisted Lord Mandelson “lied repeatedly” to Downing Street about his relationship with Epstein, before and during his tenure as ambassador.

But papers published on Wednesday showed a “due diligence” document drawn up by the Cabinet Office in December 2024 over the appointment noted a series of reports detailing his links with the convicted sex offender.

The files also showed national security adviser Jonathan Powell believed the process for installing Lord Mandelson in the job was “weirdly rushed”.

The 31 files released by the Government on Wednesday did not include correspondence between No 10 and Lord Mandelson, in which a number of follow-up questions were asked about his relationship with Epstein.

MPs were told those exchanges remained subject to the Metropolitan Police’s ongoing investigation into the peer over allegations of misconduct in public office.

The Labour veteran was arrested on February 23 on suspicion of misconduct in public office, having been accused of passing sensitive information on to Epstein during his time as business secretary in Gordon Brown’s government.

He was subsequently bailed, but later released from his bail conditions, although he remains under investigation.