Mandelson 'should return cash'

Peter Mandelson: Back inside a year

Northern Ireland Secretary Peter Mandelson should return the severance payment made to him when he resigned from the cabinet under a cloud in 1998, a Liberal Democrat MP has said.

Mr Mandelson stepped down amid a row over a loan he was given by the then Paymaster General, Geoffrey Robinson, to buy a house in west London.

To get a redundancy payment when you expect to be back in office is a little bit odd

Norman Baker

He did not declare the loan on the Register of Members' Interests.

Like all ministers who leave office, Mr Mandelson received one quarter of his ministerial salary - the amount over and above what he earned as an MP - in compensation.

This figure was about £11,000, or approximately £1,000 a month while he was out of the cabinet.

The prime minister confirmed in a parliamentary written answer to Liberal Democrat Norman Baker on Monday that Mr Mandelson would not be returning the money.

'Scrap the system'

Mr Baker said the system should be abolished, not least because payments are made regardless of the circumstances of a minister leaving the cabinet.

He told BBC Radio 4 that severance payments could not really be justified: "People know when they take ministerial office that they can be deprived of that at any point in their career, if they are not performing or if the prime minister has a whim to get rid of them.

"I think it is particularly serious in Mr Mandelson's case, firstly because there was this home loan business, and secondly because it was widely expected even when he departed that he would be back in government, and indeed that was the case.

"To get a redundancy payment when you expect to be back in office is a little bit odd," he said.

Under the current rules, ministers only have to be out of office for three weeks to qualify for a severance payment.

Mr Baker said he wanted to scrap the system altogether, but "if you are going to have it, the period must be longer than three weeks ... The period has to be extended to a year at least."