The Post Office fired permanent IT staff and rehired them on “exorbitant” pay rates, according to the former chief people officer at the company.
Jane Davies, chief people officer at the Post Office from December 2022 to June 2023, said that when she joined the organisation, she was made aware of the practice, used mainly by the IT department, which saw IT staff let go and rehired on three times more pay.
This came at a time when the Post Office IT team was working on a huge project to replace the controversial Horizon system from Fujitsu, which is at the centre of the Post Office scandal.
In her witness statement to the Post Office scandal public inquiry, Davies wrote that the practice, known as “flipping”, saw “friends and former colleagues” of staff fired and rehired at “exorbitant” rates.
“The government expects all parts of the public sector to use public money responsibly and to ensure services and costs are proportionate, justifiable and deliver value for money for the taxpayer, and I felt that POL [Post Office Ltd] failed to deliver on this requirement in many respects,” she said.
Davies said that once flipped, “full-time employees went from modest salaries to exorbitant daily rates of two to three times their salaries, which did not represent value or proper management of money”.
She said the contractor roles were not subject to a formal review or approval on daily rates, which would have been the case with permanent staff. “As such, the department on many occasions agreed excessive daily rates with the individuals (who were friends and former colleagues of many of the current department employee or contractors),” said Davies, adding that the Post Office was losing its permanent talent to contractor status, resulting in additional “back fill” costs.
Out-of-control spending and decision-making
Davies said she spoke to and emailed outgoing CEO Nick Read on many occasions about the spiralling costs in the IT department, related to spending on contractors. “My emails pointed out that the IT department was out of control with spending and decision-making,” she wrote.
Davies described a case where a senior IT manager – a Post Office employee of seven years who was earning about £120,000 a year – had their contract terminated under a settlement agreement, but was brought back the following week on what she understood to be a £1,500 per day rate as a contractor, which equates to £360,000 a year.
The Post Office has recently changed the IT department and brought in a new chief, Andy Nice. His main role is to oversee the project to replace the controversial Horizon system used in Post Office branches.
Contractors are now being let go by the new leadership. The Post Office recently confirmed that 80 consultants and 29 contractors will leave over the coming weeks in a second wave of job reductions, with about 100 already cut.
But this came after the project, known as New Branch IT, saw costs escalate. Computer Weekly revealed in May this year that a review by government project management experts at the Infrastructure and Projects Authority rated the Horizon replacement project as “currently unachievable”, with budgets ballooning from £180m to £1.1bn and implementation being delayed by as much as five years.
The Post Office had not responded to Computer Weekly questions when this article was published.
The Post Office scandal was first exposed by Computer Weekly in 2009, revealing the stories of seven subpostmasters and the problems they suffered due to the accounting software (see timeline of Computer Weekly articles about the scandal below).
