Henry Staunton: Ex-Post Office chair escalates compensation row

Former Post Office chairman Henry Staunton has released a note he claims proves he was told to stall compensation payments to postmasters.

His memo records a top civil servant saying “now was not the time for dealing with long-term issues” and they should “hobble” up to the election.

The government says she was referring to the state of the Post Office finances, not payouts for postmasters.

It marks the latest twist in the long-running Post Office scandal.

The row between Mr Staunton and the government first erupted at the weekend when the former Post Office chair – who was sacked in January – said in an explosive interview with the Sunday Times that he had been told to slow down compensation payments victims.

Between 1999 and 2015, hundreds of sub-postmasters and sub-postmistresses were wrongly prosecuted after faults with Horizon made it look like money was missing from their branches.

The government has promised to quash convictions and pay compensation, but concerns have been raised over the speed and complexity in victims securing financial redress, with just 33 claims fully settled out of the 938 postmasters convicted.

In January last year, Mr Staunton emailed himself and colleagues, including Post Office chief executive Nick Read,notes of a conversation he had with Sarah Munby, then the most senior official at the Department for Business.

In the memo, he laid out the serious financial challenges facing the Post Office, which included the growing bill from the Horizon scandal.

As chairman Mr Staunton was tasked with righting the wrongs of the long-running scandal.

Ms Munby told Mr Staunton she understood the “huge commercial challenge” of the financial position facing the Post Office, according to his notes.

But she warned him that “politicians do not necessarily like to confront reality”.

His memo recorded Ms Munby saying that the Post Office needed to know that in the run up to the next General Election there was no appetite to “rip off the band-aid [sticking plaster]”.

“Now was not the time for dealing with long-term issues,” the memo said, and that the Post Office needed a plan to “hobble” up to the election.

In response to the memo, a government source said issues around Post Office finances were “a matter of public record” and did not include sub-postmaster compensation, which is being “fully-funded by the government”.

“Henry Staunton is either confused or deliberately mixing up the two issues,” the source said, adding that he should “apologise to the government and the postmasters”.

Mr Staunton’s memo indicates the conversation appears to have been broader than merely discussing compensation for the sub-postmasters.

Sources close to Mr Staunton said he understood from the conversation that “long term issues” included the compensation payments to victims of the scandal.

They said as a relatively new chair of a scandal hit business Mr Staunton would want to take decisive action over a long running scandal and he interpreted the civil servant’s comments as a warning against taking such action.

On Monday, Business Secretary Kemi Badenoch denied the Post Office chair had been told to stall payments, saying there was “no evidence” to support the claim and accused him of spreading “made-up anecdotes”.

She insisted the government had done “everything it can” to speed up payments to those wrongfully prosecuted and that it would be “a mad thing to even suggest”.

At Prime Minister’s Questions on Wednesday, Sir Keir Starmer called on the prime minister to commit to releasing correspondence relating to the row.

The Labour Leader quoted the campaigning former sub-postmaster Christopher Head, saying “we need to see the correspondence between the Post Office, the department and UKGI because all of the time everything gets shrouded in secrecy.”

When he was asked repeatedly whether he wanted to repeat Ms Badenoch’s allegations relating to Mr Staunton, Prime Minister Rishi Sunak declined to do so.

Sir Keir also raised the BBC’s recent investigation which revealed David Cameron’s government knew the Post Office had ditched a secret investigation in 2016 that might have helped wrongly accused postmasters prove their innocence.

Mr Sunak declined to commit directly to releasing the correspondence and said the current inquiry into the Post Office Scandal was the “right and proper way to get truth the victims deserve”.

Some Conservative MPs the BBC has spoken to privately questioned the wisdom of Ms Badenoch attacking Mr Staunton so vociferously. “Why add oxygen to the row?” they asked.

> Sarah asked for first impressions , i said i had been on over a dozen public company Boards and not seen one with so many challenges .

> I focussed on the financing and Network challenges :

> – On Financing we had identified in Sept a deficit of £210m . After much effort we had identified savings of £170m ( mainly out of the change budget , cap exp and exceptionals ) . However since then extra costs of £120m have arisen : from Horizon £60 m( training needs esp with Inquiry ) ; Inquiry £30 m ( taking longer ) ; and telephony/Internet £30m . In total we have a shortfall therefore of £160 m …..and this before the deficit arising from the material downturn in the parcels business , and to a lesser extent from the implications for our cash business of the FCA Money Laundering regs on deposits .

> – there was a likelihood of a significant reduction in post offices if more funding was not required . Last year half of all Post Offices were either loss making or earning less than £5,000 profit . The position would have deteriorated substantially because of increase in Minimum Wage and fuel /electricity prices .A recent survey indicated that one third of PMs would hand back their keys over the next 5 years and that figure would now be higher because of extra costs . The reputational consequences for PO and for Government were fraught .

> Sarah was sympathetic to all of the above . She understood the” huge commercial challenge ” and the ” seriousness ” of the financial position . She described ” all the options as unattractive ” . However , ” politicians do not necessarily like to confront reality “. This particularly applied when there was no obvious ” route to profitability ” .

> She said we needed to know that in the run up to the election there was no appetite to ” rip off the band aid ” . ” Now was not the time for dealing with long term issues ” . We needed a plan to ” hobble ” up to the election .

> Having said that we and BEIS needed to do the long term thinking for a new Government of whichever colour . This would include what is politically acceptable wrt the size of the network . . She also referred to ” operational ” issues colouring HMT’s thinking. ( “Trust” in the PO Board and management has not been high .) They could see this as another ” begging bowl ” request from the PO . I said the funding issues revolved around poor decisions made many years ago wrt Horizon and related legal issues .

> With regard to the forthcoming meeting with the SoS she gave some advice . He is nice and easy but not interested in meetings . He prefers the written form . We should expect him to be ” pushy and demanding ” as he was with the train operators whilst SoS for Transport . He would ” hold us to account ” . He will take a hard line on pay . So far Sarah’s efforts on pay have fallen on deaf ears .