Ex-Post Office chair was told not to ‘rip off the Band-Aid’ with compensation payments

It comes as Kemi Badenoch is plunged into a separate political row over a claim she is engaged in trade talks with Canada – which Canada denies

The row between the former Post Office chair and the government has deepened, with a top civil servant responding to accusations that she told him not to “rip off the Band-Aid” in relation to compensation payments to subpostmasters.

After business secretary Kemi Badenoch accused Henry Staunton of lying when he said he had been told to stall compensation payouts for postmasters affected by the Horizon scandal, Mr Staunton unearthed a memo in which he had recorded the instruction.

It revealed that Sarah Munby, who was then the business department’s permanent secretary, had warned Mr Staunton that “politicians do not necessarily like to confront reality” and that “now was not the time for dealing with long-term issues”.

However, on Wednesday evening, Ms Munby denied telling Mr Staunton to delay payments. In a letter published by the government, she said the claims were false and that the discussion had been focused on the commercial side of the business.

The revelation raises questions about Kemi Badenoch’s denial of Henry Staunton’s claim and her decision to accuse him of lying (PA/Getty/Sky News)

The contemporaneous note of their first meeting on 5 January last year, revealed by The Times, also raised questions about Ms Badenoch’s denial of Mr Staunton’s claim and her decision to accuse him of lying.

It emerged after she told the Commons there was “no evidence whatsoever” to support his account and branded it “a blatant attempt to seek revenge” for his sacking.

In her own defence, Ms Munby wrote: “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.”

At Prime Minister’s Questions, Rishi Sunak sidestepped calls to repeat Ms Badenoch’s claims that the former Post Office chair was lying, as Labour leader Sir Keir Starmer called for an investigation into whether the government had sought to delay the payments.

When asked by Sir Keir if he would say Mr Staunton had lied, Mr Sunak replied: “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.”

The emergence of the note will also add to pressure on the government to set a deadline date for payments to wronged postmasters – something that the chair of the business and trade committee, Liam Byrne, has called for.

And it came as Ms Badenoch was plunged into a separate political row over a claim that she is engaged in trade talks with Canada, which Canada has denied.

The business secretary told MPs “explicitly” last month that talks with Canada were “ongoing”, as a March cliff-edge for British carmakers approaches.

But the Canadian high commissioner to the UK, Ralph Goodale, wrote to the House of Commons business select committee to insist that such talks had not taken place, the Financial Times reported.

The row between Mr Staunton and Ms Badenoch erupted when Mr Staunton gave an explosive interview to The Sunday Times in which he said he had been told to “stall” on compensation for subpostmasters ahead of the general election.

Mr Staunton, who was ousted last month after less than a year in the role, said he had been told the delay was to allow the Tories to “limp into” the vote.

But Ms Badenoch hit back, accusing him of “lies”, and said he had been removed from his post because of “concerns over his conduct”.

She also claimed he was being investigated over bullying allegations before he was fired as chair, and that concerns had been raised about his willingness to cooperate with the investigation.

At PMQs, Sir Keir said he hoped Mr Sunak would “instigate that investigation into what was said on Monday, because one of the features of this miscarriage [of justice] is that where concerns have been raised they have been pushed to one side”.

The Horizon scandal saw more than 700 postmasters handed criminal convictions between 1999 and 2015 after Fujitsu’s faulty Horizon system made it appear as though money was missing at their branches.

Toby Jones as hero Alan Bates in the ITV drama about the Post Office scandal, which thrust it into public attention (ITV)

Mr Staunton’s note, as reported by The Times, recounts him telling Ms Munby a month after taking his post that he “had been on over a dozen public company boards and not seen one with so many challenges”.

She was “sympathetic” to his arguments, but said that “politicians do not necessarily like to confront reality”, adding that in the run-up to a general election there was “no appetite to ‘rip off the Band-Aid’”.

The note suggests Ms Munby was referring to the overall finances of the Post Office, but Mr Staunton said the two biggest spending items were compensation payments and replacing the Horizon system.

Ms Munby wrote in her letter: “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 [a] delay to compensation payments for postmasters.”

“None of this discussion about short-term and long-term issues related to compensation payments,” she added.

The Liberal Democrats demanded an investigation be carried out by the government’s ethics adviser, suggesting that Ms Badenoch may have breached the ministerial code.

Deputy leader Daisy Cooper said: “Time and again Conservative ministers have undermined the integrity of our politics. 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. Subpostmasters – who are at the heart of this whole scandal – deserve justice, financial redress and the truth.”