The Post Office (PO) attempted to use government funding earmarked to help transform subpostmaster’s stores on its legal defence against subpostmasters in the Horizon case.

In a 2018 letter seen by RN, Department for Business, Energy and Industrial Strategy (DBEIS) Permanent Under-Secretary of State Alex Chisholm warned now former PO CEO Paula Vennells: “In your recent funding request, you indicated that you intended to use DBEIS funds for non-transformation-related spend specifically in relation to the ongoing Horizon litigation.”

Chisholm went on to state that this was not an “approved investment activity” and called for Vennells to confirm that the funds were not being spent on the PO’s Horizon case defence.

In Vennell’s response, dated January 2019 and also seen by RN, she agreed to pay back £2.3m that had been allocated to the trial defence and cancelled a request for a further £2.4m in funding for the trial.

The CEO said that “change funding” comes from PO revenue and government funds, and
added: “The GLO [Horizon case] work draws on shared (scarce) resources from this change budget; we have been transparent about these costs.”

The Communications Workers Union (CWU) shared the letters with RN. CWU branch secretary Mark Baker said: “This money should have been spent on helping subpostmasters with the ongoing changes.”

Under EU State Aid law, the approved funds could only be spent on the PO’s Network Transformation project, which involved converting post offices to either main or local format branches.

Baker alleged that the spending was a breach of this law.

The Horizon case refers to accusations by 550 subpostmasters that faults with the PO’s computer system lost them significant sums of money, and even led to criminal prosecutions.

The PO denies that faults were responsible for the losses.

When approached for a response, a PO spokesperson told RN: “The Post Office is funding its defence, not the government.”

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