Matthew Norman: Welcome home Lord Mandy

The photograph is so inherently, immutably surreal that, gazing upon it now, a part of me suspects one of those cunning paste-up jobs art directors contrive on Apple Macs. That or someone is wearing a latex mask, the impersonating device Tom Cruise used no more than a dozen times in Mission Impossible II. Or did some Downing Street wag sequester the dummy from the Madame Tussaud's storage depot for a jape?

On reflection, we can rule out the latter on the grounds that the person captioned as Peter Mandelson looks the spit of Peter Mandelson, and not Mike Tyson, Katie Boyle, Rin Tin Tin or television's hardest man Ross Kemp.

The other two theories are less glibly dismissed, because however long it has been since the news broke, however much one has read about it and however incontrovertible the fact, it remains a mental challenge to accept the stark visual evidence that here is the Baron Mandelson of Foy and Hartlepool sitting opposite Gordon Brown in a meeting of his Cabinet.

Accept it we must, of course, although for some it is harder than others. Indeed, yesterday's more frequently printed photograph, of an ermined Mandelson flanked by Lady Jay and Lord Falconer of Girth, provoked seething outrage from some who see his ennoblement as an historic low point for the honour and dignity of the upper chamber.

It is an argument, I suppose, although how an institution that welcomed that public relations cutie pie Tim Bell, an erstwhile cocaine abuser with a conviction for indecency (for masturbating at the window of his Hampstead bathroom in full view of passing au pair girls) – and with Margaret Thatcher herself as one of his sponsors – could have any new nadir to plumb escapes me for now.

These days the noble Lord Bell of Much-Tossing-Over-The-Heath's lavish client list includes the self-exiledBoris Berezovsky, while according to reports, Lord M has a Russian oligarch connection of his own.

His appearance on the yacht of aluminium billionaire Oleg Deripaska neatly combines with his generous Brussels pay-off to lend a translucent fig leaf of principle to a Vesuvial eruption of familiar loathing; not to mention homophobic ranting of a poisonous blatancy you naively assumed had long ago been driven underground by a sense of the passage of time, if not the dictates of common decency.

My God, though, isn't it great to have him back? I say this not only because he adds so incomparably to what his chief tormentor du jour, Richard Littlejohn, would call – with a hefty nudge and a Jim Davidson-esque wink – "the gaiety of the nation". It goes without saying that he is the most captivating character that Westminster has produced in generations, and that we who make a living offering two-bit opinions about British politics should be down on our knees (thank you, Richard, that'll do) with gratitude.

Few hacks have made more merry with him over the years than your columnist. I cannot express the pride I take from having given him his nickname, when according to the latest NOP poll, barely 97 per cent of five-year-olds have the innate wit required to think up "Mandy" for a playground colleague surnamed Mandelson.

The ensuing feud kept me busy for years. It ended a decade ago almost to the day when he invited himself to dinner shortly before his first and fully justified Cabinet sacking, and it would be dishonest not to state that I am fond of the old boy. ("I never break bread with them," as a lobby correspondent of the Twenties put it when asked if he socialised with his subjects. "It dilutes the purity of my hatred.")

More pertinent than personal feeling, surely, is this. No one sensible denies that this is a highly intelligent and extremely able ministerial presence in an era not notably overladen with those. I wouldn't wish to extend this comparison with the please-God future President, but the pettiness of the attacks on Mandelson this week are reminiscent of the laughable McCain-Palin smears against Barack Obama for occasionally attending the same educational meetings as William Ayers. This is simply too colossal a moment in history for dwelling on the trivial, you sense, and fixating on allegedly dodgyassociations diminishes the accuser more than the accused.

What matters is how effective his lordship will be as a Secretary of State for Business, as businesses, great and small, face what we assume will be their most intense survivalist struggle since that monstrous monetarist recession of the early 1980s.

If he is half as talented a pragmatist as his civil servants thought him during those sadly truncated stints at Trade and Industry and Northern Ireland – a post from which he was absurdly fired for no other reason than reputation – those still in work because of his efforts in a year's time may conclude thathe is welcome to his EU pension and House of Lords allowance, and even the odd glass of vintage Bolly on an oligarchic superyacht.

With Alastair Campbell and the other ageing beauties suddenly back in harness, the Blair Gang renaissance of which Mandelson's Cabinet post is the most startling manifestation has an oddly cinematic quality, even if it's too soon to have much clue which film is the template. It might be Awakenings, with Gordon reviving the narcoleptics for so poignantly short a while. Or possibly Cocoon, in which a bunch of political geriatrics are miraculously and permanently rejuvenated. It could be The Big Chill, where a group of mates are reunited by a funeral (albeit Gordon is off life support for now). Who knows, maybe it's the British college reunion movie Peter's Friends, with the petty jealousies and resentments of old varsity pals placed in perspective and partly resolved by the terminal condition of their host. As the psychodrama develops, all should become less opaque.

For now, all I can do is stare at that Cabinet Room snapshot, and – noticing a beaming Hazel Blears in the background – reflect that Peter Mandelson is a titan among pygmies at a time when baggage seems slightly less important than having seriously clever people doing what they can to dig us out of this economic cesspool. So welcome home, your lordship. Now get to work and make us proud.

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