Post Office inquiry: Execs and government ‘dragged their feet’ on compensation, ex-chair Henry Staunton says

Published

1 month ago

October 1, 2024

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The Post Office was a “mess” run by executives and government appointees who “dragged their feet” in efforts to compensate and exonerate sub-postmasters, the former chairman has told the public inquiry.

Henry Staunton, who was sacked after 14 months as chair by then business secretary Kemi Badenoch in January, also accused the organisation of having a “huge cultural problem” with a lack of ethnic and gender diversity – and of overseeing “vindictive” investigations into two sub-postmasters who served on the company board.

He also denied allegations that he made racist and misogynistic comments about Post Office colleagues, saying he had been “deeply stung” by an internal investigation he says was used as a pretext by Ms Badenoch to remove him.

A former chairman of WH Smith and director of ITV, Mr Staunton was appointed in December 2022 after being approached by headhunters who told him he would be “giving something back” if he took the job.

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He said he found a culture of chaos in senior management that immediately required more than the two days a week he had been told was required.

“The place was a mess that required more of my time,” he said. His view was that executives did not fully accept the findings of the High Court judgment that established the role of the Horizon computer system in hundreds of flawed prosecutions.

“My initial impression was that the Post Office and government were dragging their feet in terms of making payments for remediation – in the first place – and in the second place I thought that there was no appetite at all for exoneration,” he told the inquiry.

Mr Staunton said that initially a “ridiculous” amount of his time was taken up with requests for a pay rise from chief executive Nick Read, who he previously told a Parliamentary inquiry was unhappy and threatening to resign.

In November 2022, before he was formally in post, he was asked to sign a letter to the secretary of state recommending an increase from the maximum of £788,500 to £1.125m, a “massive” increase that Mr Staunton said the minister was right to reject.

He said the environment among senior staff was characterised by “risk aversion and paralysis” and “a culture of fear and worry”, in part because executives feared being called to give evidence to the public inquiry.

Referring to a letter he received from an anonymous whistleblower, that alleged a “disgusting culture” at the Post Office, Mr Staunton agreed the organisation “had a huge problem with culture”.

“Ethnicity was very poorly represented. We did have a problem with ethnicity. We did have a problem with gender.”

He also recognised claims that Mr Read had referred to, of those with a “public school education”, and that there was a perception of “jobs for the boys”.

Mr Staunton was also highly critical of an internal investigation launched into two sub-postmasters who had been appointed to the board as non-executive directors, alleging it was held open for months as a means of intimidating them.

Inquiry hears recording of chair’s sacking

The inquiry also heard details of Mr Staunton’s dismissal and was played a recording of the telephone call in which Ms Badenoch told him he was being removed because of “complaints that are so serious the government needs to intervene”.

Mr Staunton told the inquiry that her call came several hours after a journalist, understood to be Sky News’ Mark Kleinman, rang him to tell him he was likely to be fired.

He was not told on that call what the complaints were, but the previous month had learned his conduct was being examined as part of a Post Office investigation based initially on an 80-page complaint against Mr Read by the then chief people officer. In the complaint, Mr Staunton was mentioned only once and not by name.

The allegation against him was that he made inappropriate comments about gender and race at a meeting about candidates to chair the Post Office remuneration committee. In his witness statement to the inquiry, he said: “I deny those allegations completely and feel deeply stung by them.”

He told the inquiry that three former Post Office colleagues – one Jewish, one Muslim and one black – had provided letters of support in his defence to questions from the Institute of Chartered Accountants.

“All three directors have said they thought there was not an ounce of racism in me and indeed I was a champion of greater diversity of ethnicity and gender on the board,” he said.

In his witness statement, he said details of the investigation and its findings against him, which have never been published, were leaked to the media by a government source who claimed they explained why he objected to being sacked by a minister who was “black and female.”

“I was deeply aggrieved at being made a fall guy for failings that I myself had been struggling to get the Post Office to address,” he said.

“This was a report into Nick Read, not about me, but because I had taken the side of the sub-postmasters it was weaponised against me.”

Business

Retail giants face food price hikes dilemma after budget

Published

6 hours ago

November 4, 2024

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Retail giants face food price hikes dilemma after budget

Two of Britain’s biggest food retailers will this week face pressure to publicly disclose whether they expect a fresh spike in prices next year as the industry grapples with huge tax hikes imposed in last week’s budget.

Sky News understands that Marks & Spencer (M&S), which will unveil half-year earnings on Wednesday, and J Sainsbury, which reports interim results the following day, are collectively facing an additional bill of close to £200m as a result of changes to employers’ national insurance contributions (NICs) announced by Rachel Reeves, the chancellor.

Industry sources said the pressure on pricing would be “intense” given the thin margins on which the big supermarkets already operate.

“Food price increases from next April are inevitable,” said one.

The warning comes a day after Ms Reeves told Sky News that “businesses will now have to make a choice, whether they will absorb that through efficiency and productivity gains, whether it will be through lower profits or perhaps through lower wage growth”.

Pointedly, she did not highlight the prospect of higher prices at the tills, with some retailers now weighing whether to explicitly blame the government for impending price increases – a move which will trigger renewed inflation in the UK economy.

The grocery industry is expected to be among the hardest-hit by the changes to employer NICs, particularly after the chancellor slashed the threshold at which businesses become liable for it to just £5,000.

Tens of thousands of people employed part-time in the sector earn between that sum and the current threshold of £9,100.

The first major retailer to report financial results since the budget will be Primark’s parent, Associated British Foods (ABF), on Tuesday.

Insiders downplayed the risks of price hikes from Primark given its track record of absorbing inflationary pressures without passing them on to consumers.

ABF’s additional employer NICs bill is expected to be in the region of £25m, according to one analyst.

Overall, the retail sector could end up paying billions of pounds of additional tax given the scale of its workforce.

Ms Reeves has vowed to raise £25bn extra annually from the changes to employer NICs.

In addition to that, the rise in the national living wage will add a further burden to the financial pressures facing the retail industry.

Prior to the budget, Stuart Machin, the M&S chief executive, urged the chancellor not to increase taxes on it, calling them “a short-term, easy fix”.

“When I hear about plans to increase national insurance, a tax with no link to profit which hits bigger employers like us and our smaller suppliers, I’m concerned.

“The chancellor was right in the past to call national insurance a tax on workers.”

Jonathan Reynolds, the business secretary, will hold talks with British business leaders later on Monday about the impact of the budget.

A number of executives will be given the opportunity to ask questions on a call in which more than 100 companies are expected to be represented, although one boss who is critical of many of the budget measures said they were likely to be prevented from voicing their concerns publicly on the call.

ABF, M&S and Sainsbury’s all declined to comment.

Business

Zahawi in talks to help Efune clinch £550m Telegraph takeover

Published

7 hours ago

November 4, 2024

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Zahawi in talks to help Efune clinch £550m Telegraph takeover

The former Conservative chancellor Nadhim Zahawi is in talks to smooth the path to a takeover of The Daily Telegraph being led by the New York-based media investor Dovid Efune.

Sky News has learnt that Mr Zahawi has been working for several weeks with LionTree, Mr Efune’s investment banking adviser, on the deal, which is expected to be worth in the region of £550m.

City sources said on Monday that Mr Efune, proprietor of the New York Sun, was exploring securing a portion of funding for the takeover from Sir Mohamed Mansour, the former Tory treasurer.

In September, Sky News revealed that Sir Mohamed had been approached to provide as much as £150m to a standalone bid for the Telegraph titles that was being spearheaded by Mr Zahawi.

Mr Efune subsequently secured a period of exclusivity to finalise a deal before the end of November, and is now lining up financial backers to help clinch the deal, aided by the former Tory chancellor.

If completed, the transaction will crystallise an unlikely profit for RedBird IMI, the Abu Dhabi-backed vehicle which paid £600m to acquire a call option that was intended to convert into ownership of the Telegraph newspapers and The Spectator magazine.

One source said that depending on the final structuring of the deal, it could be worth as much as £575m

The Spectator was recently sold for £100m to Sir Paul Marshall, the hedge fund billionaire, who has installed Michael Gove, the former cabinet minister, as its editor.

Insiders said that Mr Zahawi was likely to be handed an ongoing role at the Telegraph if the bid from Mr Efune was successful.

The former chancellor, education secretary and vaccines minister has been involved in the Telegraph process in various guises, initially helping broker a deal with RedBird IMI before assembling his own offer.

He has close connections to many of the Gulf-based figures involved in the process, including Sultan Ahmed al-Jaber, chairman of the bidding vehicle.

Mr Zahawi has also since been named chairman of Very Group, the online retailer owned by the Barclay family which controlled the Telegraph for two decades, and which is now part-funded by IMI.

The UAE-based IMI, which is controlled by the UAE’s deputy prime minister and ultimate owner of Manchester City Football Club, Sheikh Mansour bin Zayed Al Nahyan, extended a further £600m to the Barclays to pay off a loan owed to Lloyds Banking Group, with the balance secured against other family assets.

Spokesmen for Mr Efune, Sir Mohamed and RedBird IMI all declined to comment on Monday, while Mr Zahawi could not be reached for comment.

The former minister has said little publicly about his interest in a role at the Telegraph, although he did tell Sky News presenter Sophy Ridge in September that it “would be an incredible honour for me, a real privilege if I were ever to… chair the Telegraph [or] be involved with [it]”.

Sir Mohamed, who has donated millions of pounds to the Tories, was knighted earlier this year – a move which was lambasted by critics of the honours system.

His family office, Man Capital, is the second-biggest shareholder in the coffee shop chain Caffe Nero, while he owns San Diego FC, a new Major League Soccer franchise which will make its debut next year.

The London-based billionaire was the Tories’ senior treasurer from late 2022 until this year’s general election.

Mr Efune’s bid has raised the extraordinary possibility of a return to the British newspaper group for Conrad Black, its former proprietor, Sky News reported earlier in the autumn.

Lord Black, who ceased to be a member of the House of Lords earlier this year on the grounds of his non-attendance, writes regular opinion pieces for the digital title and was a founding director of its publisher.

For decades, Lord Black was a colossal figure in the newspaper industry both in Britain and beyond, overseeing titles at Hollinger International which included the Telegraph, The Jerusalem Post and the Chicago Sun-Times.

He acquired an initial stake in the Telegraph group in 1985, before gaining full control later that year.

After being convicted in 2007 of fraud and obstruction of justice, he spent three-and-a-half years in prison, and in 2019 was pardoned by President Trump.

Other bidders for the Telegraph included National World, the London-listed vehicle headed by former Mirror newspapers chief David Montgomery, and Lord Saatchi, the former advertising mogul, who offered £350m.

Lord Rothermere, the Daily Mail proprietor, pulled out of the bidding earlier in the summer amid concerns that he would be blocked on competition grounds.

The Telegraph auction is being run by Raine Group and Robey Warshaw, the advisers to the Abu Dhabi-backed entity which was thwarted in its efforts to buy the media titles by a change in ownership law.

Business

UK budget dims prospect of aggressive rate cuts, say economists

Published

9 hours ago

November 4, 2024

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UK budget dims prospect of aggressive rate cuts, say economists

Hopes for consecutive interest rate cuts by the Bank of England over the next two months have been dampened by the UK government’s recent budget, economists have warned.

These rate cuts typically reduce borrowing costs for consumers and businesses over time.

The likelihood of back-to-back cuts slipped as the market digested last week’s statement, with the probability of a cut in November currently standing at 90%, but 65.2% for another in December, according to Refinitiv data. This is sharply down since last week.

The budget, which expanded fiscal spending by 1.2% of GDP for the coming year, is expected to reduce slack in the economy that might otherwise help lower inflation, according to Pantheon Macroeconomics.

“The positive data flow over the past month that put consecutive rate cuts on the table for the Monetary Policy Committee (MPC) in November and December has been erased by the budget,” Pantheon’s chief economist Robert Wood said.

Markets reacted with hostility to last week’s fiscal statement, with the pound falling sharply and gilt yields – the interest rate paid by the government – rising.

The Office for Budget Responsibility (OBR) forecasts the budget will add 0.5 percentage points to the Consumer Price Index (CPI) in 2025.

Earlier in October, Bank of England governor Andrew Bailey suggested that the MPC could take a more “aggressive” approach to rate cuts if inflation data continued to improve. However, Pantheon economists cautioned that the MPC is now likely to proceed more cautiously, wary of the inflationary impact of the budget’s fiscal loosening.

Pantheon said it now expects the MPC to deliver one more rate cut this year, potentially at this week’s meeting, followed by a 25-basis-point reduction each quarter in 2025, one fewer than previously anticipated.

“All told, we expect one further cut this year, at this week’s meeting,” Pantheon adds. “This is one fewer than we expected at the time of our last forecast review. The market is taking a similar view, with pricing now reflecting a full 25bp less easing by March than before the budget.”

Market expectations have also shifted, now reflecting a full 25 basis points less easing by March than prior to the budget.

The picture is different in the United States, where economists still expect two rate cuts before the end of the year.

Like the MPC, the US Federal Reserve will meet on Thursday, a day later than usual due to Tuesday’s election, and with inflation still cooling, the Fed is expected to reduce interest rates for the second time this year.

Fed policymakers, led by Chair Jerome Powell, are anticipated to lower the benchmark rate by a quarter point, bringing it to around 4.6%, following a half-point cut in September. Economists project another quarter-point reduction in December, with further cuts possibly coming next year.