The ‘trusty’ Lord Mandy takes his seat with a smirk

The one-time Prince of Darkness was reborn as a peer of the realm in a colourful ceremony in the Upper House, with a clutch of Blairites watching from the gallery.

He took his seat amid calls for him to turn down a £1 million "golden goodbye" payoff from
the European Commission.

Lord Mandelson — or to use his full title, Baron Mandelson of Foy in the county of Herefordshire and Hartlepool in the county of Durham — broke into a beaming smile as he was introduced to the Lords, wearing traditional scarlet and ermine robes.

He then basked as the royal letters patent were read out by the clerk granting "our trusty and well-beloved Peter Benjamin Mandelson Esquire to the state, degree, style, dignity, title and honour of Baron".

Friends of the peer will be relieved that he has asked to be simply known as "Lord Mandelson" in everyday life.

The traditional letters patent also assured him of "all the rights, privileges, pre-eminence, immunities and advantages" that a peerage comes with for life.

The new peer then made the oath of allegiance before shaking hands with Baroness Hayman, the Speaker, and other peers.

It was a day of celebration for allies of Tony Blair, who once said he yearned for the day when Peter Mandelson would be popular.

The former Northern Ireland Secretary has twice been forced to resign from the Cabinet in disgrace.

The new Business Secretary's European Commission package comprises "transitionary payments" of £78,000 per year for the next three years — £234,000 in total — so that he does not suffer now his salary has dropped to £104,386 from the £182,500 he got as a commissioner.

Also, when he turns 65, in just over 10 years, he will receive an inflation-linked pension starting at £31,000 per year, equivalent to a fund of about £750,000, according to experts. He is also due a one-off resettlement grant of £15,000 to help with the move back to London.

Mark Francois, the Conservative spokesman on Europe, said the details of the ex-commissioner's "golden goodbye" would anger voters.

"Not only did Gordon Brown recall Peter Mandelson to shore up his own position, but it adds insult to injury to know taxpayers will have to pay extra for the privilege," he said.

Sources close to Lord Mandelson said: "Peter doesn't know what he is going to get. He hasn't been told."