One of Keir Starmer’s closest allies hit out at Downing Street’s thinking on economic policy as he complained about the government’s push to tax people to pay for more benefits, the latest Mandelson files have revealed. 

Pat McFadden told Peter Mandelson in May last year that meetings he attended centred on questions about hiking taxes to pay for extra benefits. 

He agreed with the former US ambassador that the parliamentary Labour Party was in a “mutinous state”, adding: “Every meeting I have is ‘who can we tax in order to pay benefits to others’. They’re asking the wrong questions.”

McFadden, who was in the Cabinet Office at the time messages were sent, became the work and pensions secretary in a reshuffle in September 2025. 

He also suggested there was “manoeuvering” against Starmer by both Angela Rayner and Gordon Brown and that the winter fuel payment U-turn “doesn’t feel good for Keir”. 

Mandelson responded to say that Starmer was not “leading from the front and Morgan [McSweeney, then his chief of staff] is not organising the centre as it needs to be”. 

He added that Brown “has it in for Keir (and Rachel [Reeves]) big time”.  

‘What do we actually do?’

In April 2025, Mandelson told McFadden “I am very worried about the economy,” adding “Confidence is being lost.” 

McFadden replied that this was “a convo for the phone” and that “there is a pattern we must get out of.” 

As the pair discussed potential messages to deploy in the event of local election losses, Mandelson said “The mantra is Plan for Change…but what is the change?”

He added “I felt when Rachel [Reeves] was here that she was on a growth mission but without an argument about where the growth will come from or how.”

When McFadden asked “what do we actually do?”, Mandelson said the problem “stems from the top” and that Starmer “lacks verve, as does the Cabinet as a whole.” 

He advised McFadden that ministers need to act “less like business as usual…and, dare I say it, [start] behaving in a more Trumpian risk taking and dare devil way.”

Mandelson called for OBR to be second guessed

Thousands of Mandelson files, released as a result of a parliamentary motion to provide transparency on his security vetting and time as US ambassador, have exposed surprising private comments made by ministers, their cosy relationships with Mandelson and the tangled workings of UK politics. 

Mandelson is facing a police investigation over potential misconduct in public office given alleged leaks of sensitive information to the late paedophile Jeffrey Epstein. 

The process for his security vetting has also raised questions within the civil service as a document seemed to raise concerns over his historic business links relating to China and Russia. 

In messages published on Monday, it was shown that Mandelson suggested to Starmer’s adviser Vidhya Alakeson that Number 10 brought in an “economic adviser” who would be “second guessing” the Office for Budget Responsibility (OBR). 

In July 2025, the disgraced peer told Vidhya Alakeson, who now serves as acting chief of staff, he had an “older, sage, nice, discreet” candidate in mind but warned caution was needed in how the role was presented.

“You also want to avoid this being a public thing,” he said.

“Needs to be quieter. Otherwise becomes an expression of lack of confidence in the Treasury.”

Mandelson described the unnamed figure as an “ideal” candidate to be “(quietly) second guessing [the] OBR”.

He warned Alakeson: “You don’t want to appear to be creating [a] Shadow Treasury. Everyone will immediately assume tension and this will worry markets.”

In September 2025, former Bank of England deputy governor Minouche Shafik was named as the new chief economic adviser to the Prime Minister. Mandelson’s reaction to Shafik’s potential appointment has been redacted in the files.

Mandelson and Torsten Bell’s close relationship

In one set of messages, Torsten Bell, who later became the pensions minister, congratulated Mandelson on his appointment as US ambassador in late 2024. 

Bell also later boasted to Mandelson that his new post as pensions minister was a “safe politically gig”. He also suggested the bigger picture around policymaking was “messy”, around the time the government U-turned on £5bn welfare spending cuts. 

“Everyone seems to think it’s someone else‘s job to get the policy right… which is very odd,” Bell wrote in July last year. 

“As the saying goes, rubbish in rubbish out,” Mandelson retorted. 

Further questions will now be raised on the vetting process as files suggested that Mandelson did not want to give up his Whatsapp messages during the process. 

Just as his appointment was set about to be confirmed, Mandelson told David Lammy he would make sure that the then foreign secretary would “never regret” appointing him as ambassador to the US. 

In a handwritten note to Lammy, Mandelson said he hoped the media speculation was “not too irritating to you”. 

He also said the post would be the “last thing I do in public life”.