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Witness Name: Sarah Munby
Statement No.: WITN11520100
Dated: 23 September 2024
POST OFFICE HORIZON IT INQUIRY
FIRST WITNESS STATEMENT OF SARAH MUNBY
I, Sarah Munby, will say as follows.
Introduction
I make this statement in response to the Inquiry's Rule 9 request for evidence
dated 26 July 2024. I have prepared it with the support of the Government Legal
Department and counsel. I served as Permanent Secretary to the Department for
Business Energy and Industrial Strategy (“BEIS” or “the Department’) from 20
July 2020 until 6 February 2023. I am now the Permanent Secretary at the
Department for Science, Innovation and Technology (“DSIT’).
The Inquiry has asked me questions relating to several matters including my
reflections on the adequacy and effectiveness of Post Office Limited’s (“POL”)
corporate governance arrangements during my time as Permanent Secretary at
BEIS, the culture of POL, the arrangements for and delivery of compensation and
redress to subpostmasters (“SPMs”), and the departure of Mr Henry Staunton
from the POL Board.
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3. It is my understanding that rapid receipt of my written evidence on the departure
of Mr Staunton from the POL Board would provide particular assistance to the
Inquiry in its efficient conduct of its oral hearings. I therefore address only that
matter in this first witness statement on an expedited basis and will provide the
Inquiry with a second broader witness statement addressing the other topics
raised in the Rule 9 request later this month.
4. Given the narrow scope of this witness statement, I anticipate that my second
statement may be of broader interest to the Inquiry. In that statement I am keen to
provide as helpful a perspective as possible on the ongoing work to provide
redress for the terrible injustices suffered by postmasters, and work to reform POL
and HMG to ensure similar events could never happen again. Understanding the
extent to which redress and reform have been effective and how they could be
improved is a vital part of learning from what has happened.
Background
5. I My background before Government (apart from a brief stint as a junior civil servant
after leaving university) was as a management consultant, where I worked for
McKinsey for 15 years. At the time I left McKinsey I was a Partner, leading the
firm's strategy and corporate finance practice in the UK and Ireland. I re-joined the
civil service when I was appointed as a Director General in BEIS in July 2019. I
stayed in that role until 19 July 2020 when I was appointed as Permanent
Secretary for BEIS (this was in the midst of the Covid pandemic). I remained as
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Permanent Secretary at BEIS until 6 February 2023 when I moved to the
Department for Science, Innovation and Technology as Permanent Secretary.
This followed the Machinery of Government change that dissolved BEIS and
created several new Government Departments in its place. At that point,
responsibilities for POL were passed from BEIS to the new Department for
Business and Trade (“DBT’) and I ceased to be the relevant Permanent Secretary.
As Permanent Secretary at BEIS I was the Civil Service head of the Department
with overall responsibility for its management and leadership. I was personally
responsible for the effective stewardship of Departmental resources as Principal
Accounting Officer, accountable to Parliament for Departmental expenditure. The
Civil Service team in the Department aims to support Government in achieving
policy objectives and ensure the effective running of the Department. As
Permanent Secretary I held primary responsibility for that Civil Service team.
During my tenure as Permanent Secretary of BEIS, the Department consisted of
around 6,000 civil servants in the core Department divided into 9 Director General-
led Groups with an overall Departmental budget of about £30bn per annum. The
Department was responsible for over 40 Public Bodies including (among many
others) UK Research and Innovation, the Nuclear Decommissioning Authority, the
Met Office, and Companies House. Our responsibilities included supporting
businesses through the Covid-19 pandemic, overseeing the UK’s energy transition
and net zero strategy, managing the majority of HMG’s Research and
Development funding, and administering schemes to support energy bills in the
aftermath of Russia’s invasion of Ukraine.
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Day-to-day Departmental matters concerning POL were handled by a team of
officials that formed part of the Business Resilience Directorate headed by Carl
Creswell, Business Resilience Director, then to the relevant Director General, and
through them to me.
Mr Staunton’s appointment to and removal from the POL Board
10.
11.
Mr Staunton was appointed as POL’s Chair on 2 September 2022 by Kwasi
Kwarteng, the Department’s Secretary of State at the time. In the usual way, this
appointment followed recommendations made by officials to the Secretary of State
after a competitive public appointments process. As Permanent Secretary, I was
amember of the appointment panel. I first met Mr Staunton as part of that interview
process.
Mr Staunton’s tenure began on 1 December 2022. I was Permanent Secretary
until 6 February 2023 when I moved to DSIT, so our roles only overlapped by two
months. Given this, we had limited interactions. I wrote him one letter, on 9
December 2022, and we spoke once, on 5 January 2023.
I understand that Mr Staunton was dismissed on 28 January 2024 by the then
Secretary of State for Business and Trade, Kemi Badenoch. I have no first-hand
knowledge of the reasons for, or of the circumstances surrounding, Mr Staunton’s
departure. By that time I was running a different Department and I was not involved
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in the process or decision to remove him. The Permanent Secretary of the
Department for Business and Trade at this time was Gareth Davies.
12. \had no further contact with Mr Staunton after our conversation on 5 January 2023
and, to the best of my recollection, I have never had direct contact of any kind with
Ms Badenoch before writing to her on 21 February 2024 — the day of a Times
article reporting that Mr Staunton was claiming that I had given him an instruction
to stall compensation payments at our meeting on 5 January the previous year.
Claims made by Mr Staunton about our meeting on 5 January 2023
13. On 18 February 2024, the Sunday Times published an article [RLIT0000256] (“the
First Article”) based on an interview given by Mr Staunton.
14. In the First Article, Mr Staunton is reported to have made a series of allegations,
including in relation to the reasons for his dismissal, which concern events which
postdate my move to DSIT, and I am unable to comment on those.
15. However, one specific claim related very particularly to me — though that was not
explained in the Frist Article itself. The First Article reported that Mr Staunton
claimed:
“Early on, I was told by a fairly senior person to stall on spending on
compensation and on the replacement of Horizon, and to limp, in quotation
marks — I did a file note on it — limp into the election,’ he said. ‘It was not an
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16.
17.
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anti-postmaster thing, it was just straight financials. I didn’t ask, because I said,
“I'm having no part of it — I’m not here to limp into the election, it’s not the right
thing to do by postmasters.” The word ‘limp’ gives you a snapshot of where they
were”.
There was then a further article published in The Times [RLIT0000345] (“the
Second Article”) the following Wednesday (21 February 2024), which identified
me as the person who had supposedly said this. In the Second Article, The Times
reported that Mr Staunton had located and passed on his file note of the
conversation between us on 5 January, and quoted a number of lines from it. The
Second Article inaccurately reported that this file note supported Mr Staunton’s
claims about what I had said, which I address in some detail below.
I was shocked and astonished by Mr Staunton’s allegation. His claim that I told
him to stall compensation payments is completely false. It has no basis
whatsoever. I never told Mr Staunton, directly or indirectly, expressly or by
implication, that POL should stall on compensation or otherwise delay or reduce
compensation payments to SPMs. I did not say anything that could sensibly have
been understood to convey that implication.
There is a significant set of contemporaneous documents surrounding my
conversation with Mr Staunton, including two detailed contemporaneous notes,
one made by Mr Staunton himself. None of the documents support Mr Staunton’s
accusation in any way.
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19. While the speed at which SPMs have received compensation has received
significant criticism, I have not ever seen or heard any evidence, documentary or
otherwise, which would suggest to me that any member of the Civil Service or any
Minister ever had any conversation with Mr Staunton or anyone else at POL during
my tenure to the effect that compensation to SPMs should be deliberately delayed
in order to save money. While I was Permanent Secretary, Ministers and officials
consistently took the view that postmasters should receive compensation as
quickly as possible.
20. In summary, Mr Staunton’s allegation was untrue.
21. Iaddress his allegation in detail in this statement only because if it had happened
it would obviously have been important both for the Inquiry and for SPMs.
My conversation with Mr Staunton on 5 January 2023
22. I had a “POL catch up” meeting with BEIS and UKGI representatives on 16
November 2022 [BEIS0000882] to review where the organisation stood. This was
followed up with a written quarterly update on 23 November 2022 [BEIS0000873].
At that time, as is reflected in these documents, I was acutely aware that POL was
struggling as a commercial enterprise and that we were under pressure both to
increase operational funding to POL in the short-term, and to come up with longer-
term proposals for how to put the operation on a more sustainable footing.
Delaying or reducing compensation payment to SPMs was never suggested (or
mentioned) by anyone at any point in the conversation on 16 November 2022, or
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23.
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in the written update document of 23 November (or at all). In fact, the written
update refers to various ideas officials were exploring to ‘increase compensation
speed”. These documents match my recollections as to the context for the meeting
with Mr Staunton.
On 9 December 2022, I wrote to Mr Staunton congratulating him on his
appointment and setting out the key strategic priorities that BEIS, as sole
shareholder, would like POL to focus on over the coming year [Email thread
between UKGI and BEIS, BEIS0000621; letter from Sarah Munby to Henry
Staunton on strategic priorities, BEISOO00607]. One of the three key objectives
was “engaging positively with the Post Office Horizon IT Inquiry and implementing
change, including resolving historical litigation issues, successfully delivering the
Strategic Platform Modernisation Programme (SPMP), and reaching settlements
with claimants”. (Note that settlements were the mechanism by which payments
to SPMs were made.) If I had suggested delaying or reducing compensation
payments to SPMs, that would have been totally contrary to this key Departmental
objective. Had Mr Staunton genuinely thought I had or may have implied any such
thing, I cannot understand why he failed to query it.
In my letter of 9 December 2022 I also asked Mr Staunton to focus on “Effective
financial management and performance, including effective management of legal
costs, to ensure medium term viability”. This reflects the shared concerns about
POL’s difficult financial position that Mr Staunton and I then discussed at our
meeting on 5 January 2023. “Legal costs” in this context has the usual meaning —
ie. the costs of the lawyers who were supporting POL (both on compensation
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25.
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schemes and on responding to the Inquiry). At that time we had a long-standing
debate with POL about what we and HMT saw as excessively high spend on their
own lawyers. This concern is reflected in the quarterly update of 23 November
2022 [BEISO000873] where officials briefed me that POL had spent c.£80m on
lawyers with one law firm alone. This issue was discussed regularly between POL
and UKGI at the time — nobody within POL could possibly have interpreted my ask
for management of these costs as a request to slow down compensation
payments to subpostmasters.
Mr Staunton responded to me on 14 December 2022 [Letter from Henry Staunton
to Sarah Munby, BEISO000629]. In that letter Mr Staunton told me that POL were
“making very good progress with compensation”. He then referred to the New
Branch Information Technology (“NBIT’) in the context of the Strategic Platform
Modernisation Programme (“SPMP”) and said that he would “confirm to [me] the
request for sufficient funding to enable its effective completion by March 2025”. Mr
Staunton also confirmed that “Legal costs are challenged regularly and all options
explored to secure best value whilst ensuring good quality external support for
delivery” which indicates to me that he clearly understood my reference to legal
costs to be about better management of the cost of support from external lawyers.
A first meeting between me and Mr Staunton was scheduled for 3 January 2023.
For diary reasons I do not now recall, it was pushed back two days to 5 January
2023 [Email from the Private Secretary re; briefing for upcoming meeting on
05/01/2023, BEISO000633]. This was an introductory meeting, similar to those I
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would normally have had with newly appointed Chairs of important public bodies
connected to BEIS.
On 19 December 2022, my Private Secretary emailed the Departmental Post
Office policy team and UKGI to produce a briefing for the meeting [Email from
Rebecca Stockbridge to Brooks-White and Ed Baird re: FW: [Briefing Request -
midday Friday 23/12, BEISO000752]. The briefing was provided to me on 23
December 2022 [Meeting Brief from Siv Rajeswaran to Sarah Munby re:
Introductory Meeting, Henry Staunton (Chair, Post Office Ltd) , BEISO000631]. The
agenda items were (i) CEO pay; (ii) NED appointments; (iii) POL finances and
three-year plan; (iv) recent correspondence; (v) NI energy bill support scheme; (vi)
AOB/other live issues. None of these were unexpected; I was familiar with these
current issues including from the 16 November meeting and the 23 November
quarterly update. The 6-page briefing note contains a significant amount of
content, and some appropriately challenging messages for POL on pay, NED
diversity, finances and culture. It does not mention or imply delaying or reducing
compensation at all.
The email chain in which the briefing for the meeting is requested and provided
[BEIS0000752] contains a side-reference to me writing to Mr Staunton in advance
of our meeting regarding historical matters; this being the work POL was doing to
change its systems, policies, processes and culture. For the sake of clarity, I note
here that I decided not to write to Mr Staunton in advance of our meeting but have
located a draft of that short letter in case it is of assistance to the Inquiry [Draft
Letter from Sarah Munby to Henry Staunton re Historical Matters, BEISO000780].
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29.
30.
31.
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See also [UKGI00044315], a letter dated 23 May 2022 from me to Tim Parker and
[BEIS0000878], a letter from Tim Parker to me dated 1 September 2022 for
context. The draft letter [BEISO000780] did not concern payments to SPMs but
concerns the written process by which POL should next update BEIS on progress
in making changes to systems, policies, processes and culture. I decided to
address this process question at our meeting rather than in correspondence.
I met Mr Staunton on 5 January 2023 together with my Private Secretary. We did
not have wider officials attending because, as the note shows, one of the agenda
items related to someone’s personal pay. In the event, this was my only meeting
with Mr Staunton because a few weeks later I moved to my new post at DSIT.
On 6 January 2023 my Private Secretary circulated a contemporaneous note of
the meeting to the Departmental Post Office policy team and UKGI in the usual
manner [BEIS0000752]. I confirm that the note accurately summarises the topics
discussed. Mr Staunton also prepared a note of the meeting [RLIT0000254]. I did
not see Mr Staunton’s note at the time and he wrote it entirely independently.
The two contemporaneous notes are similar and clearly record the same
conversation, though Mr Staunton’s note contains a bit more detail on what he
said about POL's financial challenges, and less detail on the rest of the
conversation, including discussion of salaries. Crucially, neither note suggests in
any way that I gave any instruction, either explicitly or implicitly, to delay or reduce
compensation payments to SPMs. There is absolutely no mention in either note
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33.
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of delaying or reducing compensation payments at all and nothing that could justify
the idea that anything like that was implied, however indirectly.
If delays had been discussed or implied I am confident that it would have been
recorded in the notes. It would have been recorded by my Private Secretary as an
important issue for the readout. And it would surely have been recorded by Mr
Staunton, who now says he was extremely concerned by it and remembers it as
a central conclusion of the meeting from his point of view (though he did not raise
any such concerns at the time, until talking to a newspaper a year later, shortly
after his dismissal).
We did briefly discuss a separate point about compensation to SPMs. This is
recorded in my office’s readout [BEISO000752] as “HS [i.e. Mr Staunton]
mentioned targets ref in inquiry hearing — wasn’t looking for apology but wider
point around being synced up and acknowledging where each others roles lie”.
The background to this is that I had been made aware on 23 December 2022 that
the Department had incorrectly stated at the Inquiry that it was the Department's
target that 100% of offers would be made under the Horizon Shortfall Scheme by
31 December 2022. The Department expressed disappointment that POL had
only achieved 95% by that time. That was an error: a target of 100% by that date
had not in fact been agreed with POL. The Department apologised to POL and to
the Inquiry for that mistake [BEISO0000752]. Mr Staunton raised this at our meeting,
and I accepted it had been an unhelpful error and that we should remain “synced
up”. The issue did not cause any further confusion or concern at the meeting. It
certainly did not give rise to any discussion relating to whether compensation
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payments should be delayed. It was rather the opposite; Mr Staunton was
criticising the Department for suggesting that POL had been too slow and not met
a target.
34. In summary, looking across the documents from the time, I cannot see any
evidence for Mr Staunton’s claim. Delaying compensation was not discussed in
the full and frank internal update meeting we had before I met Mr Staunton.
Delaying compensation was not mentioned in the detailed briefing I was given for
the conversation. Delaying compensation was not mentioned in either of the
contemporaneous readouts. This is because I did not ask Mr Staunton to delay
compensation.
35. Most importantly, I would never have asked him to stall or delay compensation —
I didn’t believe that compensation should be stalled, and no Minister (or colleague)
ever asked me to stall or to tell POL to stall. Indeed if I had said or implied anything
of the sort, it would have been in direct contravention of explicit Ministerial direction
(and therefore a serious breach of the civil service code) and absolutely against
my own clear beliefs. It is completely inconceivable.
36. In the First Article, Mr Staunton claims he said “!’m having no part of it — I’m not
here to limp into the election, it’s not the right thing to do by postmasters.” He
never said this to me, or anything like it; and neither note of the meeting suggests
he did. He would have had no reason to, as I had not asked him to delay payments.
The Second Article, and the evolution of Mr Staunton’s claims
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37. The Second Article was written after Mr Staunton had found his own file note in
his personal emails. It fails to explain that Mr Staunton’s file note does not at all
support Mr Staunton’s claim that I told him to stall compensation. In aggregate the
Second Article creates the completely false impression that the file note is
evidence for Mr Staunton’s claim and therefore confirms the contents of the First
Article.
38. In fairness to the reporter, the article does at one point hint at the problem, saying
that “Although the note suggests that Munby was referring to the Post Office’s
overall finances, Staunton said that by far the two biggest items where the Post
Office was able to vary its spending were compensation payments and
replacement of the Horizon system.” I assume from this that The Times had raised
the point with Mr Staunton that his note didn’t mention compensation. The Inquiry
may have the recordings and notes of these interviews which I assume Mr
Staunton will have disclosed, though I have not seen them. I assume he told them
that he had understood my general discussion with him about how to address
PoL’s financial challenges to somehow clearly imply that compensation payments
should be reduced or delayed. This is of course quite different to the claim made
in the First Article, and quoted again in the Second Article, that I specifically “told
[him] to stall on spending on compensation”. Neither version of events is true. I
neither said it nor implied it.
39. On 21 February 2024, later in the day on which the Second Article was published,
I took the unusual step of writing to Kemi Badenoch, the Secretary of State for
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Business and Trade [Letter from Sarah Munby to Kemi Badenoch, RLIT0000255].
This letter was also placed on gov.uk [Response to claims on the governance of
Post Office Limited, gov.uk webpage, RLIT0000355], alongside the two
contemporaneous notes of the meeting [Business department formal note of
meeting with Sarah Munby and Henry Staunton, BEISO000917; Henry Staunton's
note of meeting with Sarah Munby, BEISO000918]. I thought it important to
formally explain what had happened to the Secretary of State (who was of course
in a different Department to me), given the extraordinary and untrue nature of Mr
Staunton’s claims about what I had personally said to him. In that letter and the
accompanying annex, I provided the Secretary of State with a detailed response
to the allegations made in the two Articles, my recollection of the 5 January 2023
meeting, and my comments on the two contemporaneous notes of the meeting.
The letter and the annex reflect the contemporaneous notes and are consistent
with this witness statement.
It is important that I address this idea of some kind of implied instruction that was
introduced in the Second Article after Mr Staunton found his own note (the note
was of course entirely at odds with the claims he had, by that point, already made
in the First Article on the front page of The Sunday Times).
Mr Staunton expanded upon this “implication” idea in more detail when he gave
evidence to the Parliamentary Select Committee a week later on 27 February 2024
[Business and Trade Committee Oral Evidence, 27/02/2024, RLIT0000346 ]. He
said to the Chair that “! thought that your “nod and a wink” phrase just about sums
it up” making clear that by this point he was no longer suggesting I “told” him to
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stall compensation payments but now making a different (also false) claim that I
had implied to him in our conversation that compensation should be delayed.
While I can only speculate as to what can have happened here to explain Mr
Staunton’s two inconsistent positions in the public domain, I suppose that, once
he had seen that his own contemporaneous note did not back him up at all, he
must have thought an “implication” claim looked slightly more defensible than his
original assertion. It is, however, equally untrue, equally unsupported by any
documents (including his own note), and equally at odds with common sense.
Mr Staunton said to the Select Committee that he had responded to my statement
that money was tight by explaining this meant he would need to look at all the
spend levers he had. His evidence [RLIT0000346] was “Well, in terms of trying to
hold back [financially], there are only three levers of big cash outflows that we can
pull: one is the inquiry costs, which are significant; one is compensation; and one
is the replacement for Horizon, which is the biggest lever. In detail, I said [in my
conversation with Ms Munby], “With the inquiry, the costs will be what they have
to be, surely. In respect of compensation, we need to do the right thing by
postmasters in taking this money. And we are in dire need of a new system.” She
repeated, “Money is very tight. This is no time to rip off the Band-Aid.” I was left in
no doubt that this was not a time to rip off the Band-Aid and I would have to look
at those three levers.” As I understand Mr Staunton’s evidence, his suggestion
was that me saying that “money was tight’ led him to think he had received a “nod
and a wink’ to reduce compensation costs, and that he had then confirmed back
to me that he thought this was the wrong thing to do.
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44,
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I never made this implication, and hence he never responded to me on it. But this
is also more generally just not an accurate description of our meeting. Mr Staunton
simply did not set out these three levers to me in the meeting (and indeed there is
no mention or anything of this sort in the two contemporaneous notes). He did
describe a list of three pressures on POL that were leading to increased costs,
these are explicitly listed with figures in his own note in three categories: Horizon
replacement, Inquiry costs and telephony/internet. His list rightly did not include
compensation as a pressure given the financial support HMG was providing for
this purpose. Neither of us ever mentioned the idea that compensation delays or
reductions could or should be used as a way of saving money for POL.
Aside from this idea never being mentioned by either of us, this idea doesn't take
into account that POL’s financial outflows are not all funded from the same place
(as the Chair of POL would — and certainly should — know, and any POL, DBT,
HMT or UKGI official can confirm).
Inquiry costs, Horizon replacement costs and internet / telephony costs (i.e. the
three pressures Mr Staunton discussed) were funded out of POL’s main
operational budget. Although this budget is primarily POL’s to manage, and mostly
made up of POL’s commercial income, HMG provides financial support to POL’s
operations. At the time of our conversation this operational budget was supported
by £50m per annum of operational subsidy agreed at the Spending Review 2021
to support otherwise un-sustainable Post Office branches, and by a further one-
off capital support of £177m again agreed at Spending Review, to support the
amount of capital investment POL needed to make in its network. Increases to
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operational funding to POL were typically unpopular in HMT, who were keen for
POL to become commercially sustainable, and who regularly pointed out to both
POL and the Department that we did not have a proper long-term plan for that.
Given this backdrop, at the time of the Spending Review all this had been
supported by carefully worked through material from POL about how the money
would be spent, and why they needed it. By the time of the conversation, Mr
Staunton was advancing the argument that this financial support was insufficient
given the serious operational and strategic challenges POL was facing (a position
I had some sympathy with, as the notes show). After the conversation, we followed
through on my commitment to Mr Staunton to keep working on this, and following
further work by officials, BEIS and HMT provided an additional £253m to POL’s
operational budget (of which £103m was specifically to support Horizon
replacement costs) in December 2023. This payment recognised the structural
difficulties POL faced in their operations. This all fits very much with the record of
our conversation.
By contrast, it had always been much more straightforward to commit government
money to support compensation. By this point, HMG had committed over £1 billion
to funding growing compensation payments. In March 2021 HMG had made
financial commitments to support the increasing requirements of the Historical
Shortfalls Scheme. In December 2021 HMG formally confirmed funding for
overturned historical convictions. In October 2022 Ministers had announced to
Parliament that HMG was providing further support to POL for late applicants to
the Historical Shortfalls Scheme, as a further (then) recent example.
Compensation money was provided on a ringfenced basis. Ringfencing is a tool
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47.
48.
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used by HMT specifically in order to prevent Departments from cutting one budget
to cover pressures in another — it's a very common lever used by HMT to manage
these kind of situations where they want you to bear down on one budget (in this
case POL’s operational costs, where HMT were trying to reduce the level of
operational subsidy and get POL to become more self-sustaining) but don’t want
you to cut a different item (in this case, the vital task of compensating SPMs, where
our policy intent was to try to get POL to actually get the money out and where we
were bringing pressure to bear to do so as quickly as possible). Indeed, HMT
provide funding for compensation only at the point of use — i.e. the funding is not
transferred to POL until POL pay out a claim.
Breaking the ringfence would have required explicit (and publicly discoverable)
agreement from both the BEIS / DBT Secretary of State and from HMT Ministers.
Given Ministers’ priorities, it would have been absolutely unimaginable that they
would ever have agreed to this, even if it had ever been suggested to them (which
it never was, as the record shows).
Mr Staunton was asked by the Select Committee about ringfencing, which I had
by then mentioned in the letter I wrote to the Secretary of State for Business and
Trade on 21 February 2024 [RLIT0000255]. The Chair asked Mr Staunton “...the
Secretary of State points out that the Government have no incentive to delay,
because there is a ringfenced compensation fund. Do you agree with that
argument?”
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49. Though Mr Staunton did not provide a direct answer to that question, he did
confirm to the Committee that he understood the government payments were
ringfenced. Mr Staunton said, when asked about ringfencing, “It [compensation
funding] is mainly ringfenced and held within the Treasury, but say that we have
exoneration and much more money is paid out; then, the amount that you
ringfence becomes larger. Similarly, if we were tough on compensation and it
became smaller, that would release the money that we have ringfenced. That is
how ringfencing works.” He later says “Equally, as I say, if it goes down, more
money is available for whatever—NHS, tax cuts, or whatever it is.”
50. I would note that this evidence does not support what Mr Staunton seems to have
been saying earlier in his evidence — i.e. that I implied reducing compensation
payments would be a sensible lever for Mr Staunton to pull in order to address
POL’s financial difficulties.
51. By this time Mr Staunton’s allegation had become very confusing indeed to me. If
his claim had now morphed still further into an assertion that my supposed “nod
and wink” instruction was not actually about POL’s own finances but instead that
the state of public finance was so challenged overall that we should break our
promises to Postmasters around compensation, then that is ludicrous.
52. Such a claim is inconsistent with all Ministerial instructions. But it is also clearly
inconsistent with the conversation we had. As can be seen from the two
contemporaneous notes, I wasn’t describing a generalised desire to save money
for HMG — I was explaining that it was difficult to increase the operational subsidy
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for POL that had been agreed at the prior Spending Review. In fact, I told Mr
Staunton that despite the challenges (including budgetary trade-offs, a lack of
long-term answers around the future of POL and subsidy control legislation) we
were actively working to secure more operational funding for POL. (This is
recorded in my office’s note as: “SM We might end up doing something small to
buy space to collectively get to the longer term” and “SM ...funding will come with
conditions/scrutiny”.) The conversation was us talking about how POL might need
more public money, and why that was not straightforward (I observe Mr Staunton’s
own note refers to me being “sympathetic” regarding POL’s financial challenge,
and that such money went on to be provided to POL later the same year). The
conversation just was not in any way a generalised push to save money for the
public purse regardless of consequence, which Mr Staunton now seems to
suggest it was. There is a gulf between a conversation about the approach to
getting more money, and one that is about asking you to cut-back and spend even
less than your current budget. I do not think Mr Staunton could have been unsure
about this distinction.
Mr Staunton’s note records me saying “/n 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.”. Mr Staunton was
describing major changes at POL, as his note records. He was discussing the
potential closure of over 1/3 of branches and a total change to POL’s status and
constitution. In reality, such change is rarely implemented at the end of the
Parliament, especially when it involves ideas that take a long time to design and
implement, could be unwound by an incoming Government, and are politically
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54.
55.
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really challenging. My view was that the politically pragmatic strategy for POL was
to improve operational performance, try to secure additional short-term funding
from HMG with our help, and prepare the detailed work ready for a major strategic
review an incoming Government would be likely to want, regardless of who won.
Mr Staunton’s note records me saying next “we needed to do the long-term
thinking for a new Government of whichever colour’, accurately recording my
position in the meeting as to those major changes.
This part of the discussion was what was originally reported in the First Article as
me having instructed stalling on compensation “so the government could “limp into
the election” with the lowest possible financial liability’. I have already explained
that this account is not consistent with the conversation. I would add here that the
idea that any savings, that POL could supposedly have made, were large enough
to fundamentally alter government finances in a way that would (even marginally)
matter for a future election does not stand up to the most basic scrutiny. And if for
some reason I had been on a mission to extract savings from across budgets so
as to save the state of the government's overall financial position, I can say with
absolute certainty that I would not have approached such a task by bringing it up
without any briefing, and by implication only, in a single one-to-one introductory
conversation with the Post Office Chair. (At the time, I was leading an organisation
that had a total annual budget of around £30 billion and the kind of formal financial
processes and structures that you would expect.)
I do not see how Mr Staunton can possibly have got the message from my
conversation with him that he should delay compensation payments. If Mr
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56.
57.
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Staunton did somehow form the impression that I was asking him to delay
compensation payments, he did not mention this idea to me in the meeting. He
did not record it in his detailed email the next day to Nick Read. He also did not
mention it to Secretary of State, Grant Shapps, when he met him a few days later
on 9 January 2023 [Email from Hollinrake PS to SoS PS, 23/01/2023;
BEIS0000919]. He also did not mention it to the POL Board he Chaired (as I
understand the minutes confirm). In fact, he never raised it up at all.
Mr Staunton’s claim about our conversation was first made shortly after he was
dismissed by the Secretary of State for Business and Trade, when he was
interviewed by the Sunday Times and was making a series of allegations about
his treatment. At that point, without any written record in front of him, he made the
accusation in the very strongest terms — that a “fairly senior person” (later alleged
to be me) had “told him to stall’ and that he had explicitly responded “I’m having
no part of it’. This is, of course, quite different to the later explanation he gave in
the Second Article and to the Select Committee that the request was implied as a
way of saving POL money. It is also different to the still further explanation he
seemed to give (when questioned by the Select Committee about ringfences) that
it was implied as a way of generally relieving pressure on central government
finances. None of these accounts is true.
In any event, if the Chair of a public corporation had been instructed by a
Permanent Secretary to do something as wildly inappropriate as to deliberately
delay a priority government programme in defiance of Ministers’ commitments and
all other due process, then for that Chair not to clarify this with anyone (nor to tell
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a Minister or any other body about it) would represent extraordinary conduct —
even were it not already utterly extraordinary conduct for a Permanent Secretary
to do such a thing in the first place.
58. Mr Staunton’s allegations are completely false. 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 subpostmasters.
59. I look forward to returning to matters of substance around reform and redress in
my Second Witness Statement, in order to assist the Inquiry in its important work.
Statement of truth
I believe the content of this statement to be true.
Dated: 23/09/2024
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Index to the First Witness Statement of Sarah Munby
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No.
URN
Document Description
Control Number
RLITO000256
The Sunday Times Article: Post
Office boss: I was told to stall
compensation to help Tories
RLITO000256
RLITO000345
Sunday Times Article - Post Office
boss was told ‘don't rip off the band
aid’ on finances - Oliver Shah
21/02/2024
RLIT0000345
BEISO000882
POL catch up - 16/11/2022 Meeting
Minutes
BEIS0000882
BEIS0000873
POL: Quarterly Update
BEIS0000873
BEIS0000621
Email thread between UK
Government Investments and
Department of Business, Energy
and Industrial strategy - 'RE: OS
COMMERCIAL: Perm Sec letter to
new POL Chair’
VIS00014236
BEISO000607
Letter from Ms Sarah Munby to Mr
Henry Staunton re Strategic
priorities that BEIS would like Post
Office to focus on
VIS00014222
BEIS0000629
Letter to Sarah Munby from Henry
Staunton RE: Strategic Priorities
2022/23
VIS00014244
BEIS0000633
Email from the Private Secretary re;
briefing for upcoming meeting.
VIS00014248
BEIS0000752
Email from Rebecca Stockbridge to
Brooks-White and Ed Baird re: FW:
[Briefing Request - midday Friday
23/12] RE: Attached Letter from
Henry Staunton, Chairman.
VIS00014367
10
BEIS0000631
Meeting Brief from Siv Rajeswaran
to Sarah Munby re: Introductory
Meeting, Henry Staunton (Chair,
Post Office Ltd)
VIS00014246
11
BEIS0000780
Letter from Sarah Munby to Henry
Staunton re Historical Matters Letter
VIS00014395
12
UKGI00044315
Letter from Sarah Munby to Tim
Parker: POL Strategic Priorities for
2022/2023
UKGI052977-001
13
BEIS0000878
Letter from Tim Parker to Permanent
Secretary re: Engaging with the Post
Office Horizon IT Inquiry and
implementing change
BEIS0000878
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14
RLITO000255
Letter from Sarah Munby to The Rt
Hon Kemi Badenoch
RLITO000255
15
RLITO000355
Response to claims on the
governance of Post Office Limited,
gov.uk webpage
RLITO000355
16
BEIS0000917
Email from Permanent Secretaries
to David Bickerton, Carl Crewell,
Roshana Arasaratnam and others
re: [Briefing Request - midday
Friday 23/12] RE: Attached Letter
from Henry Staunton Chairman
BEIS0000917
17
BEIS0000918
Email from Henry Staunton to Nick
Read re: FWD Note of meeting with
Sarah Munby on 5 Jan 2023
BEISO0000918
18
RLITO000346
House of Commons: Business and
Trade Committee - Oral Evidence:
Post Office and Horizon -
Compensation: follow-up, HC 477
RLITO000346
19
BEIS0000919
Email from Minister Hollinrake to
Secretary of State (Grant Shapps)
and Permanent Secretaries Minister
Hollinrake (BEIS) re: FW: OFF SEN
PERSONAL: FOR APPROVAL: POL
CEO pay sub follow up advice
BEIS0000919
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