Labour Government Crumbles Amid Mandelson Fraud Probe
The EU's anti-fraud office opened a formal investigation into Peter Mandelson, triggering a crisis summit at Chequers as Prime Minister Keir Starmer's government faces collapsing poll numbers and internal rebellion.
The European Union's anti-fraud office opened a formal investigation into Peter Mandelson on April 24, turning a British Labour peer into a suspect in Brussels. Four days later, Prime Minister Keir Starmer summoned his dwindling Cabinet loyalists to Chequers to discuss how to survive what one MP called a coming "bloodbath."
The probe exposes how cronyism and governance failures have hollowed out cabinet solidarity and public trust in a government now unraveling from within. Starmer appointed Mandelson as Ambassador to the United States in December 2024 despite the peer failing standard security vetting, creating a chain of executive pressure that culminated in Friday's crisis summit.
Starmer met with Chief Secretary Darren Jones and Work and Pensions Secretary Pat McFadden to "wargame his survival" after the Mandelson scandal engulfed his government. A government source denied it was a "survival summit," calling it instead a discussion of "framing around the King's Speech."
The OLAF investigation centers on Mandelson's four-year tenure as EU Trade Commissioner from 2004 to 2008. The European Commission asked OLAF to investigate on Feb. 18, examining allegations including that Mandelson gave Jeffrey Epstein advance notice of a €500 billion eurozone bailout during the 2010 crisis.
That investigation follows a cascade of failures. Sir Olly Robbins, the ousted Foreign Office permanent under-secretary, testified before the Foreign Affairs Select Committee that Downing Street created an "atmosphere of pressure" and "constant chasing" to approve Mandelson's vetting. Robbins was sacked for not informing the prime minister about the failed clearance.
Morgan McSweeney, Starmer's former chief of staff, resigned in February taking "full responsibility" for recommending Mandelson. McSweeney denied calling Foreign Office officials to "just f***ing approve" the vetting, telling the Express: "I find it strange reading about a character with the same name as mine sometimes. I don't recognise that character."
Cabinet solidarity is fracturing as ministers publicly distance themselves from Starmer's decisions. Energy Secretary Ed Miliband told Sky News he warned David Lammy that Mandelson's appointment "could blow up" and told Good Morning Britain it was "a fair point" that the appointment was "not just risky but wrong." Work and Pensions Secretary Pat McFadden and Foreign Secretary Yvette Cooper publicly distanced themselves from Downing Street's attempt to give departing communications chief Matthew Doyle an ambassadorial role.
YouGov polling shows Starmer tied with Kemi Badenoch 28 percent to 28 percent on who would make a better prime minister, while Ed Davey leads Starmer 23 percent to 19 percent.
A Lord Ashcroft poll put Reform at 21 percent alongside Tories and Greens, with Labour trailing at 17 percent. Labour faces catastrophic losses in the May 7 local, Scottish and Welsh elections.
The party could lose up to 2,000 council seats in England as Reform and Greens gain ground. For the first time since 1999, Labour will no longer run the Welsh government. The SNP is expected to comfortably win the Scottish Parliament election.
No leadership challenge has materialized because Labour lacks an obvious successor. Angela Rayner faces a tax wrangle with HMRC. Wes Streeting, the health secretary, is widely seen as a protégé of Mandelson. Andy Burnham, the figure Labour MPs have "coalesced" around, is not an MP and cannot stand in a leadership contest.
One senior Labour source told the Daily Mail: "There's a risk we end up with a Left-wing version of Liz Truss, which would be the end of the party at this point."
Starmer told Parliament routine checks had cleared Mandelson. Starmer blamed civil servants for withholding information about Mandelson's failed vetting, arguing that data-protection rules did not prevent them from sharing the vetting recommendation.
Tim Bale, professor of politics at Queen Mary University of London, told Al Jazeera: "He's managed so far to hold on to his cabinet, but he's completely lost the trust of the electorate — and that's hard to get back."
Mandelson was arrested by UK Metropolitan Police on Feb. 23 on suspicion of misconduct in public office and released on bail after surrendering his passport. The investigation is reportedly stymied by the US Department of Justice, which refuses to release redacted Epstein file material without a formal Mutual Legal Assistance request.
That process could take 18 months, pushing any charging decision to 2028 at the earliest.
Starmer is now looking to hire his fifth communications chief since taking office in 2024. The Chequers summit reveals a prime minister fighting for survival while his government collapses from within. Two separate quotes from two different anonymous Labour MPs to the BBC capture the mood. One MP told the BBC: "Lots of cabinet ministers seem to know that he is not going to lead us into the next election — the question is whether they want to force something to happen soon or to wait until it's too late." Another MP added: "They are looking for life rafts. They are thinking six months ahead, and they are saying that they would still very much like to be in the cabinet. Someone else's cabinet."