Executive infighting adds to chaos facing the Post Office

On the outskirts of Sheffield in the north of England there is a busy atmosphere in the village Post Office. A steady stream of customers flowed through the Handsworth branch in the early afternoon, while Richard Trinder and his wife juggled parcels, processed bank deposits, and sold lottery tickets, stamps and birthday cards.

From behind their perspex security screens, sub-postmasters have watched as the state-owned business has struggled to rebuild its reputation.

“We had to somehow get the public onside,” Trinder said. “We had to say we’re postmasters, not Post Office Limited.”

More than 900 sub-postmasters were convicted using data from the Post Office’s faulty Horizon accounting system following its rollout in 1999. A 2019 High Court ruling concluded that the system was riddled with “bugs, errors, and defects” but complaints had long been met with denial.

Now sub-postmasters are worried that a board room spat will further harm the business, leaving management paralysed, unable to grip challenges including the need to replace an error-prone IT system.

The 388-year-old state-owned institution this week was sent reeling when it chief executive Nick Read was pulled into a quarrel between the business’ ousted chair, Henry Staunton, and the government. It emerged during a House of Commons business and trade committee hearing that Read was under investigation.

The executive mudslinging has undermined sub-postmaster’s confidence in management. “It’s wearing on all of us. We turn on the television every morning and there’s something else to drive us absolutely mad,” said Trinder.

One former Post Office board member told the Financial Times that the debacle surrounding Read and Staunton reflected wider tension within the organisation. “The strain and scale of the challenge [of overhauling the business] has not brought out the best in many decent and credible people,” they said.

The Post Office is wholly owned by the taxpayer, but is run at arms-length from the government through UK Government Investments (UKGI), a body responsible for managing a portfolio of wholly or partially state-owned companies such as NatWest and Channel 4.

Yet the state-owned business is under significant political pressure and UKGI is frequently sidestepped in favour of engagement between ministers and executives.

Kemi Badenoch, the business secretary, took the decision to oust Staunton in late January exposing unrest at the top of the organisation. He had been accused of circumventing board appointment processes, while also blocking an investigation into his misconduct. He denied these claims.

Staunton hit back in an interview with the Sunday Times last month, before revealing in a committee hearing this week that Read was also subject to a live investigation.

The Department for Business and Trade said: “We acknowledge that the Post Office has many competing pressures, from delivering redress for postmasters who have suffered as a result of the Horizon scandal to the delivery of essential services to communities across the UK.”

It added: “This is one of the reasons why the Secretary of State felt new leadership was required.”

Staunton’s removal raised doubts over a “governance refresh” that commenced with his appointment last year as the Post Office grappled with the work of rebuilding trust.

Read was appointed chief executive in 2019 at a time when the business was still in a High Court case involving 555 sub-postmasters over Horizon.

The findings of a board questionnaire from 2022-23 published on Monday showed that members believed the business was “constantly distracted by historical issues, short term crisis management and funding issues” and that they were rarely “asked to contribute to anything outside of Horizon and Horizon replacement”.

Liam Byrne, Labour MP and chair of the business and trade committee, said that the Post Office’s leadership did not have the capacity to manage its various crises and oversee redress and support for victims of the Horizon scandal.

The Post Office is providing evidence to a statutory public inquiry, processing disclosure requests for redress and managing compensation for some victims of the Horizon scandal. It is also a retail business running a network of 11,500 branches.

Executives have struggled to turn round its fortunes in a competitive market for parcel services. While it has attempted to reinvent itself by providing local banking services it still receives hundreds of millions of pounds in state subsidies to stay afloat. The Post Office posted pre-tax losses of £81mn in 2022-23, down from £131mn in the previous year.

Trinder and other sub-postmasters have said the current version of Horizon still flags non-existent shortfalls, while individuals found it difficult to dispute figures because of opaque records and a lack of support.

Nasar Raoof, another sub-postmaster in Sheffield, said that he was still making repayments on £3,000 in shortfalls. “It’s a broken system, it’s out of date, they’re constantly adding new things to it and at the end of the day it gives you huge losses,” he said.

Trinder said the system was poorly designed, crashed often, and frequently made errors processing transactions. He has installed a CCTV camera behind the till so he can watch back transactions to identify what had caused any shortfall.

The Post Office said that the current version of Horizon had been found in the 2019 High Court case to be robust relative to comparable systems. It said sub-postmasters could request an immediate investigation into any shortfalls through their terminals.

Delays in modernising and reviving the business have seen some call for it to be privatised. Trinder, who chairs the campaign group Voice of the Postmaster, would much rather it be mutualised to enable sub-postmasters to rebuild with a clean slate.

The government previously said it would only consider mutualisation once the Post Office had replaced its IT systems and dealt with redress for sub-postmasters.

But mutualisation would require current management to tackle several hurdles having lost the confidence of many sub-postmasters. “I don’t know if I’d trust them to run a bath,” Trinder said.