Post Office was reluctant to cut costs despite 143 central staff earning more than £100k

Former minister tells public inquiry that convincing the Post Office CEO to cut central costs was like “drawing teeth”, despite many executives and managers earning more than £100,000.

In his evidence to the Post Office Horizon scandal public inquiry, Kevin Hollinrake, who was the minister in charge of the Post Office until July’s general election, was critical of outgoing Post Office CEO Nick Read.

Despite government pressure, the Post Office CEO was reluctant to cut central costs, while subpostmasters “struggled to break even”, the inquiry was told. Hollinrake said that he never heard a good reason as to why management and executives should not be cut to save money.

During the hearing, Hollinrake said that he was aware of 143 Post Office executives earning more than £100,000 a year and that the government had pushed the Post Office costs.

He added that a reduction in central costs through cutting down on management and executive staff, which was being encouraged by the government, would have a direct impact of increasing subpostmaster pay.

Asked by inquiry KC Jason Beer as to who at the Post Office was reluctant to cut costs, Hollinrake answered: “The CEO [Read] – the CEO carries the can for everything.”

Hollinrake said that he sympathised with the challenges faced by Read, running an organisation which had “hit so much trouble”, but that he does not sympathise with not “doing things that clearly needed to be done”. He added that hw would have listened if Read had come back to him with reasons as to why certain people should not be cut from the organisation, but Read never did.

The failure to cut central costs was an example of “a failure in leadership”, said Hollinrake, adding that Read was paid a lot for “not doing a very good job”.

In his witness statement, he wrote: “I repeatedly asked for basic information about management headcount and a plan to reduce senior management headcount and costs. It was like drawing teeth. You would expect the CEO to have this information.”

When discussing the slow payments of financial redress to scandal victims, Hollinrake called for independent experts to be the decision-makers over financial redress payments, “rather than having lawyers arguing on either side”.

The Post Office Horizon scandal public inquiry is now in its seventh and final phase, focusing on the Post Office’s current practice and procedure as well as recommendations for the future.

Computer Weekly first exposed the scandal in 2009, revealing the stories of seven subpostmasters and the problems they suffered due to Horizon accounting software, which led to the most widespread miscarriage of justice in British history (see below timeline of Computer Weekly articles about the scandal since 2009).