Civil servant denies telling ex-Post Office chairman to stall compensation payments

Sarah Munby
Henry Staunton claims Sarah Munby, who was then permanent secretary at the Department for Business, Energy and Industrial Strategy, told him politicians 'don't like to confront reality' - Supplied

The senior civil servant at the heart of the Post Office row has denied she told the organisation’s former chairman to stall compensation after she was named for the first time.

Sarah Munby had been accused by Henry Staunton, the former Post Office chairman, of telling him that “now was not the time for dealing with long-term issues,” which he took as an instruction to put payments on the back burner.

On Wednesday afternoon, she hit back, saying: “It is not true that I made any instruction... to delay compensation payments.”

In an extraordinary move, she made public a four-page long memo on her memory of the meeting with Mr Staunton when she was permanent secretary at the business department.

“I am able to give you the very strongest reassurance… that I did not at any point suggest to Mr Staunton, or imply to him in any way whatsoever, that there should be delay to compensation payments for postmasters,” she wrote.

“I did not believe they [compensation payments] should be delayed and no minister ever asked me to seek delays.”

She also revealed that Mr Staunton had suggested closing several Post Office branches to save money, and that he was in favour of pay rises for senior executives.

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

However, they admit that his notes were not verbatim.

The source said: “This was a note that Mr Staunton sent himself subsequent to the conversation. It was never intended to be verbatim.”

They added: “The two big levers which the board had to improve the financial position of the Post Office were the Horizon Replacement system and the compensation for sub-postmasters.

“That was the context in which the conversation took place and can not be understood in any other way.”

On Monday, Kemi Badenoch, the Business Secretary, told MPs there was “no evidence” to support Mr Staunton’s claim and accused him of spreading “made-up anecdotes”.

But in the Commons on Wednesday, Rishi Sunak, the Prime Minister, declined to repeat her allegation that Mr Staunton had been telling lies.

Meetings ‘not about compensation’

In a note outlining her position, Ms Munby, now permanent secretary at the Department for Science, Innovation and Technology, said: “It is not true that I made any instruction, either explicitly or implicitly, to Mr Staunton to in any way delay compensation payments. I did not.

“Neither Mr Staunton’s note, nor the contemporaneous note that my office made, suggest otherwise. In fact, no mention of delaying compensation appears in either note…

“Mr Staunton originally said that there had been a direct instruction. Since he located the file note, this seems to have moved to a suggestion of some sort of implied instruction. Such a claim is also not in any way supported by the notes and did not take place.”

Ms Munby said the meetings were to discuss Post Office operational funding, not compensation funding. She said these two areas of spending were separately ringfenced, and it was factually wrong to suggest that cuts to compensation would have improved the Post Office’s financial position.

She said Mr Staunton had never raised with her or anyone else any of these claims at any point in the last year, until his Sunday Times interview.

Further notes released on Wednesday evening, which were undated but are understood to have been written immediately after the meeting, read: “Henry noted he has never seen a corporation challenged on so many fronts (eg the network, parcel biz etc), don’t have luxury of prioritisation as every issue is a big one!

“SM (Sarah Munby) agreed that challenge is significant and that politics around POL [Post Office Limited] make this an even trickier problem to solve, the timing of agreeing a longer-term solution this way is also very difficult.”

The memo also stated that Munby had “flagged” that the relationship with the Treasury was “difficult” and that “their [the Treasury’s] view will always lean towards the ‘begging bowl’ type scenario, a dynamic worsened by horizon/inquiry costs.”

‘Sub-postmasters deserve the truth’

The Liberal Democrats called for a Cabinet Office investigation into whether Ms Badenoch broke the Ministerial Code by claiming in Parliament on Monday that Mr Staunton’s comments were “completely false”.

According to a note written after the January 2023 meeting by Mr Staunton and shared with The Times, Mr Staunton alleges that Ms Munby told him she understood the “huge commercial challenge” of the financial position facing the Post Office.

Ms Munby warned him that “politicians do not necessarily like to confront reality,” he said.

His memo recorded Ms Munby as saying that the Post Office needed to know that, in the run-up to the election, there was no appetite to “rip off the band-aid [a US term for sticking plaster]”.

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

On Monday, Ms Badenoch denied he 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.

Daisy Cooper, the deputy leader of the Liberal Democrats, said the Business Secretary could have potentially broken  article 1.3c of the Ministerial Code, which sets out that “Ministers who knowingly mislead Parliament will be expected to offer their resignation to the Prime Minister”.

“Time and again Conservative ministers have undermined the integrity of our politics,” said Ms Cooper. “Now, this row embroiling Kemi Badenoch raises a whole series of new questions to which we urgently need answers.

“If Badenoch misled Parliament then she clearly breached the Ministerial Code.

“Sub-postmasters, who are at the heart of this whole scandal, deserve justice, financial redress and the truth.”