The Mandelson loan: Mystery of the pounds 475,000 townhouse

IT HAD long been a mystery. How did Peter Mandelson afford a pounds 475,000 house on a backbench salary of pounds 43,000?

And, once he had, how did his budget stretch to Ozwald Boateng suits at pounds 1,800 a throw? Where did he get the money for his lavish lifestyle and for expensive stays in Venetian hotels? Well, now we know.

Thanks to the pounds 373,000 he borrowed from Geoffrey Robinson - at preferential rates of interest - his salary went much further. And, once his salary rose to pounds 90,267 a year as Secretary of State for Trade and Industry, it went further still.

At the time he borrowed the money from Mr Robinson, Mr Mandelson could have expected a building society to advance him no more than about pounds 130,000 - three times his salary - or, more unusually, pounds 172,000 - four times his salary. Instead, he got pounds 373,000 from Mr Robinson at the Midland Bank base rate of interest.

If he had borrowed the same amount from the Halifax, the monthly repayments at the end of 1996 would have been about pounds 2,172, compared with pounds 1,865 on base rate - or a monthly saving of pounds 307.

At current rates of interest, and taking into account a pounds 40,000 repayment Mr Mandelson made to Mr Robinson in the spring of 1997, the difference between Halifax-rated repayments and base-rate repayments would have risen to pounds 541 a month - or enough for an Ozwald Boateng suit every three months.

The total saving over 25 months may have been not far off pounds 10,000.

Nevertheless, the repayments will still have stretched Mr Mandelson, as he had to take out a mortgage for a further pounds 150,000 to buy the property and to refurbish it.

At the time, his take-home salary would have been in the region of pounds 2,500 a month - an amount which would have been swallowed up by both sets of repayments.

His mother, Mary, is believed to have helped him, but she is not thought to be particularly wealthy. Mr Mandelson's father, George, left her the family home in Hampstead Garden Suburb and other assets valued at pounds 57,711 when he died in 1988.

The trade secretary's grandfather, Herbert Morrison, a former home and foreign secretary, left pounds 28,000 when he died in 1965. That would be worth pounds 300,000 today, but it all went to his second wife, leaving his first wife, Mr Mandelson's grandmother, with nothing.

Mr Mandelson, who also owns a pounds 70,000 house in his Hartlepool constituency, is likely to have made some money from the sale of his previous home, a flat in Wilmington Square in upwardly mobile Clerkenwell - the sort of property that now sells for up to pounds 125,000. But this is not enough to make a dent in the cost of his four-storey Notting Hill house.

With a basic salary of pounds 35,000, MPs can raise a mortgage of up to about pounds 126,000 - which is just enough to buy a studio flat in Notting Hill. For a house of Mr Mandelson's size, such a sum would mean he would have had to buy in a more downmarket areas of London, like Lambeth.

Margaret Beckett, the minister's predecessor at the Department of Trade and Industry, has retained a "grace-and-favour" flat in Whitehall since she became the Leader of the House.

No such official residence exists for Mr Mandelson.

Like all ministers with constituencies outside of London, Mr Mandelson is eligible for a pounds 12,717 grant towards the upkeep of his Hartlepool home. The Additional Cost Allowance grant is paid to all MPs who claim it, but unlike backbenchers, ministers cannot use the money on a home in London.

Diane Abbott, Labour MP for Hackney North and Stoke Newington, said that she was "baffled" by the size of the Robinson loan to the minister.

"I would hate the public to think that all MPs insist on having half- a-million-pound houses. MPs from outside London get this allowance and they are perfectly able to purchase somewhere reasonable," Ms Abbott said.

"Peter must know the issue here is not just whether any impropriety occurred but whether there is the appearance of impropriety," she said.

"He argues he did not reveal this sizeable loan to his officials and he didn't declare it in the register of MPs' interests because he did not see that there was a conflict of interest.

"But Peter must know that that is not the point - the point is that we strive for the utmost transparency."

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

SThree: Trainee Recruitment Consultant - Dublin

£13676.46 - £16411.61 per annum + OTE: SThree: SThree Trainee Recruitment Cons...

Ashdown Group: Marketing or Business Graduate Opportunity - Norwich - £22,000

£18000 - £22000 per annum + training: Ashdown Group: Business and Marketing Gr...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + Commission: SThree: Are you great at building rela...

Ashdown Group: Database Analyst - Birmingham - £22,000 plus benefits

£20000 - £22000 per annum + excellent benefits: Ashdown Group: Application Sup...

Day In a Page

Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before