Mandelson 'set for £1m package'

6:43pm Sunday 12th October 2008

Peter Mandelson is in line for a taxpayer-funded pay-off and pension of up to £1 million after leaving the European Commission to rejoin the Cabinet, it has been revealed.

The new Business Secretary is entitled to the package despite giving up his post as Trade Commissioner voluntarily after four years.

The scale of the compensation - on top of Mr Mandelson's £104,386 ministerial salary - is likely to provoke anger amid widespread criticism of the City bonus culture and its role in the credit crunch.

Under generous EU rules, Mr Mandelson will be eligible for around £78,000 in "transitionary payments" annually for the next three years.

The money - £234,000 in total - will also be subject to preferential tax rates devised for EU officials. The top-up ensures that his income in his new job is the same as his £182,500 salary as a commissioner.

When he reaches the age of 65, Mr Mandelson will receive a gold-plated pension, starting at £31,000 and then rising in line with the cost of living.

Buying a pension of that size in the private sector would require a fund of around £750,000, according to experts.

As he relocates from Brussels to London, Mr Mandelson is also due a one-off resettlement grant of some £15,000.

The former Northern Ireland Secretary - who has twice resigned from Cabinet posts in controversial circumstances - will take his seat in the Upper House as Lord Mandelson of Foy and Hartlepool.

Hartlepool used to be his Commons constituency, while Foy is a village in Herefordshire where he took holidays.

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