Labour has demanded answers after the former chairman of the Post Office said he was told to “stall” on compensation for subpostmasters ahead of the general election.
Henry Staunton was ousted last month after less than a year in the role after the business secretary Kemi Badenoch declared “new leadership” was needed.
Her intervention came as politicians faced intense pressure over an ITV drama which highlighted the appalling miscarriage of justice.
Hundreds of postmasters were wrongfully prosecuted over a decade and a half because of faulty IT software, called Horizon.
No 10 has confirmed the estimated final compensation bill is around £1bn.
Mr Staunton, the former boss of WH Smith, said a senior civil servant suggested holding back spending ahead of the election.
He told The Sunday Times: “Early on [in the role], I was told by a fairly senior person to stall on spend 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.
“It was not an 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.”
The government has denied Mr Staunton’s claims but Labour said it would seek “answers” in the row in parliament this week.
A government spokesperson said: “We utterly refute these allegations.” They said ministers had sped up compensation payments and encouraged other postmasters to come forward with claims. “To suggest any actions or conversations happened to the contrary is incorrect. In fact, upon appointment, Mr Staunton was set concrete objectives, in writing, to focus on reaching settlements with claimants – clear evidence of the government’s intent.”
The drama, Mr Bates vs The Post Office, highlighted the long legal fight for justice by subpostmasters.
Many, including leading campaigner Alan Bates, have since complained about unnecessary delays to victims in receiving compensation.
More than 700 branch managers were prosecuted by the Post Office between 1999 and 2015 after the accounting software made it look as though money was missing from their shops.
Shadow business secretary Jonathan Reynolds said: “These are incredibly serious allegations. Under no circumstances should compensation to victims be delayed and to do so for party political purposes would be a further insult to subpostmasters.”
Illegal migration minister Michael Tomlinson said the allegations were “not something that I accept or recognise”.
He told Times Radio: “It’s right to say the whole government has been encouraging subpostmasters to come forward to claim the compensation that they deserve, after what was the biggest travesty of justice that we’ve seen. And we’re encouraging postmasters to come forward and claim the compensation that they deserve.”
Liberal Democrat leader Ed Davey said: “These allegations are deeply disturbing and ministers must come to parliament and explain exactly what has happened at the earliest opportunity.
“The victims of this horrific miscarriage of justice need swift and fair compensation. It is the least they deserve.”
