The former boss of the Post Office was told by a senior civil servant to “hobble into the election” and not to “rip the band-aid off” in terms of finances, according to an unearthed memo.

Henry Staunton wrote a note on 5 January last year which said that Sarah Munby, then the permanent secretary at the business department, had warned him during a meeting that day that “politicians do not necessarily like to confront reality”.

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The note, seen by Sky News, also showed Ms Munby telling the Post Office chairman that “now was not the time for dealing with long-term issues”.

Mr Staunton wrote the record of the meeting later that evening and emailed it to himself. He then forwarded a copy to Nick Read, the Post Office’s chief executive, the following day.

The 75-year-old, who was sacked last month, is said to have discovered the note in his personal emails on Thursday and shared it with The Times, which first reported on the story.

It comes as he is embroiled in a deepening row with Kemi Badenoch, the business secretary, after he claimed he was told soon after taking the job to stall compensation payments to victims of the Horizon scandal – something she has strongly refuted.

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The Lib Dems are now calling for an ethics investigation to get to the bottom of what went on, as both sides are standing by their version of events.

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Row over disputed memo

Mr Staunton’s memo recorded a meeting that took place a month after he became Post Office chairman in 2022.

It said that he told Ms Munby that he “had been on over a dozen public company boards and not seen one with so many challenges”.

It adds that the board had identified a financial shortfall of £160m as of September 2022 and that “there was a likelihood of a significant reduction in post offices” if more government funding was not made available.

He wrote that Ms Munby “was sympathetic to all of the above” and understood the “huge commercial challenge'” of the financial position.

She described “all the options as unattractive” and said that “politicians do not necessarily like to confront reality” particularly “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,” the memo adds.

In response, a government source suggested Mr Staunton was either “confused or deliberately mixing up” long-standing issues around Post Office finances with the payouts to wrongfully convicted sub-postmasters.

They added: “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.”

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The story behind the victims

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Was ousted boss asked to delay compensation payments?

In his original interview with the Sunday Times, Mr Staunton claimed that he was ordered by a senior civil servant to stall spending on compensation for Horizon victims to allow the government to “limp into the election”.

He said it “was not an anti-postmaster thing, it was just straight financials”.

He also claimed that when he was sacked he was told someone had to “take the rap” for the Horizon scandal, which came under renewed public scrutiny following the ITV drama series Mr Bates Vs The Post Office.

Mr Staunton later went on to claim that there was “no real movement” on the payouts until the airing of the ITV drama.

However, Ms Badenoch has said the claims are “completely false” and accused Mr Staunton of seeking “revenge” after he was sacked.

She also claimed he was being investigated over bullying allegations before he was dismissed from his short-lived post – something he has denied.

He has said he decided to go public “out of a desire to ensure that the public were fully aware of the facts surrounding the multiple failures that have led to postmasters in this country being badly let down”.

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The Horizon scandal saw hundreds of sub-postmasters prosecuted because of discrepancies in the Fujitsu-developed IT system between 1999 and 2015, in what has been called the biggest miscarriage of justice in UK history.

Labour has called for a Cabinet Office investigation to establish what happened.

Meanwhile, the Lib Dems said that in light of the memo, there should an an ethics investigation into whether Ms Badenoch has misled parliament by denying Mr Staunton’s allegations.

Daisy Cooper MP, the party’s deputy leader, said: “If Badenoch misled parliament then she clearly breached the Ministerial Code.

“Sub-postmasters – who are at the heart of this whole scandal – deserve justice, financial redress and the truth.”

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