Rishi Sunak has refused to repeat Kemi Badenoch’s claim that the former Post Office chairman Henry Staunton lied about the government’s handling of compensation for victims of the Horizon scandal.
The prime minister said the government was taking “unprecedented steps” to pay compensation as the Labour leader, Keir Starmer, called for a full investigation into the extraordinary clash between Badenoch and Staunton.
Staunton, who was sacked as chairman of the Post Office last month, has been embroiled in a war of words with Badenoch after making damaging allegations about the government’s handling of the scandal. Staunton claimed he was ordered to delay compensation payments and “limp into the election” to save the government money.
Asked by Starmer at prime minister’s questions whether he would repeat Badenoch’s allegation that Staunton was lying when he said he was told to “go slow”, Sunak said: “As the business secretary said on Monday, she asked Henry Staunton to step down after serious concerns were raised. She set out the reasons for this and the full background in the house earlier this week.”
Sunak added: “We have also taken unprecedented steps to ensure that victims of the Horizon scandal do receive compensation as swiftly as possible and in full.”
The Labour leader urged Sunak to launch a Cabinet Office investigation, saying: “One of the features of this miscarriage is that where concerns have been raised they have been pushed to one side.”
According to Staunton’s account, a senior civil servant told him that in the run-up to the election there was no appetite to “rip off the band aid” in terms of government finances. On Wednesday, the Times published a contemporaneous note of the conversation, which Staunton said he found in his personal emails.
Staunton’s note was taken after his first meeting with Sarah Munby, then permanent secretary at the business department, on 5 January 2023.
According to the note, also seen by the Guardian, Staunton presented Munby with the difficult financial position the Post Office was in without more government money.
He wrote: “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.”
Staunton told the Times he wrote the memo that night and emailed it to himself before forwarding a copy to Nick Read, the Post Office’s chief executive, the next day.
Although it suggests that Munby was referring to the Post Office’s overall financial position, Staunton said that by far the two biggest areas where the Post Office could cut spending were compensation payments.
A government source said: “The longstanding issues around Post Offices finances are a matter of public record and do not include postmaster compensation which is being fully funded by the government. Henry Staunton is either confused or deliberately mixing up the two issues.
“Even if we trust the veracity of a memo he wrote himself, and there’s not much to suggest we can, given the false accusations he made about the secretary of state in his original interview, it’s time for Henry Staunton to admit his interview on Sunday was a misrepresentation of his conversations with ministers and officials and to apologise to the government and the postmasters.”
In response, the Liberal Democrats have called for Laurie Magnus, the government’s independent adviser on ministerial interests, to launch an investigation into whether Badenoch misled the House of Commons.
Earlier this week, Staunton’s claims triggered a furious response from Badenoch. Speaking in the Commons, she said he was making “wild baseless accusations” in a “blatant attempt to seek revenge”, and claimed that he had been under investigation for bullying when she fired him.
She argued that it would be “mad” for the government to ask Staunton to delay compensation payments. “We have no evidence whatsoever that any official said this and, actually, if such a thing was said, it is for Mr Staunton himself to bring the evidence,” Badenoch told MPs.
“There would be no benefit whatsoever of us delaying compensation. This does not have any significant impact on revenues whatsoever. It would be a mad thing to even suggest, and the compensation scheme which Mr Staunton oversaw has actually been completed, and my understanding is 100% of payments have been made, so clearly no instruction was given.”
Between 1999 and 2015, the Post Office prosecuted hundreds of post office operators after a faulty computer system, Horizon, made it look as if money was missing. It has come to be seen as one of the worst miscarriages of justice in British history.
Meanwhile, Badenoch has been engulfed in a fresh row over her claim that she was engaged in trade talks with Canada last month.
She told MPs on the business select committee on 29 January that talks with Canada were “ongoing” to avoid a tariff cliff-edge for UK car manufacturers. But the Canadian high commissioner to the UK, Ralph Goodale, wrote to the committee to insist these talks never happened.
In his letter, published on Tuesday, Goodale wrote: “As far as I am aware, since the UK announced its pause on January 25th, there have been neither negotiations nor technical discussions with respect to any of the outstanding issues.”
The committee’s chair, Liam Byrne, demanded that Badenoch correct the record on the trade talks. “Without doubt there are now some questions to answer,” he wrote on X.
Badenoch halted free-trade talks with Canada on 25 January in a row over beef and cheese.
