The former chairman of the Post Office has claimed the organisation’s current chief executive was going to resign because he was “unhappy with his pay”.

A source at the Department for Business and Trade (DBT) confirmed an investigation is ongoing into Nick Read after Henry Staunton told MPs of an 80-page report compiled by the organisation’s HR director.

Mr Staunton gave evidence to MPs on Tuesday where he said former business secretary Grant Shapps had told him about Mr Read’s pay: “Don’t even think of coming for any salary increase.”

The former chairman said the Post Office boss “fell out” with the business’s HR director and said his own behaviour was only referenced once in the 80-page document about Mr Read.

The Post Office later said it was investigating a complaint against a number of people including Mr Read, but said he had never offered to resign.

Mr Staunton told the Business and Trade Committee on Tuesday he has been the victim of a “smear campaign” since his public fallout with Business Secretary Kemi Badenoch.

He previously said he had been told to delay payouts to subpostmasters affected by problems with the Horizon computer system.

It opened a row with Ms Badenoch, who accused him of spreading “made-up anecdotes”.

Following the evidence heard by the committee, a DBT source said: “The department was aware that Nick Read was also under investigation, although we have not seen the 80-page report referred to by Henry Staunton and cannot attest to the content.

“The Secretary of State was clear in her statement to the House of Commons on February 19 that she lost confidence in Mr Staunton because he was blocking an investigation into his conduct, as well as his attempt to bypass the formal process to appoint a new director to the board.

“It was these issues, as well as overall concerns about his grip on the Post Office – demonstrated by his discredited newspaper interview and the manner in which his story has changed in the following days – that led to his sacking.”

A note sent later to all Post Office employees by Ben Tidswell, senior independent director on the Post Office Board, said: “Like many of you, I know that Nick Read has at times felt the weight of Post Office’s awful history on his shoulders.

“It is no surprise, and is entirely appropriate, that he will have discussed this, in confidence, with the former chairman. However, to my knowledge he has never tendered his resignation and he continues to accept leadership responsibility for the challenges that we are all working on each day.

“Post Office has received a complaint against a number of people within the organisation – Nick is one of those employees – and I am sure you will all agree that Post Office should investigate every complaint with due process. Nick accepts this and has co-operated fully with the investigation.

“In spite of the distractions happening around us, the Board asks that we all remain focused on supporting the Government to bring about faster justice and redress to victims, and helping build a Post Office that supports the postmasters of today.”

Asked if he was informed that his behaviour was under investigation in November last year, Mr Staunton said: “What there is, actually, is Mr Read fell out with his HR director and she produced a ‘speak up’ document which was 80 pages thick.

“Within that, was one paragraph… about comments that I allegedly made.

“So this is an investigation, not into me, this is an investigation made into the chief executive Nick Read.

“That one paragraph you could say was about politically incorrect comments attributed to me which I strenuously deny.

“This was not an investigation into me, this was an investigation based on the 80-page document prepared by the HR director.”

Mr Staunton continued: “This 80-page document was actually taking a terrible toll on Nick Read.

“He said: ‘I’m not being supported by the board, this is just bad news for me and my family, I’m going to resign tomorrow, I’ve just had enough.”

Asked to confirm he had had a verbal conversation in which Mr Read had announced his intention to resign, Mr Staunton said: “The 80-page report alleges, from the HR director, not my words, that Nick was going to resign because he was unhappy with this pay.

“She’s put that in this document.”

Going on to address conversations between Mr Read and himself, Mr Staunton told MPs: “I think he was doing fine. Huge, huge pressures on him.

“I must have had four conversations when he said he was going to chuck it in.

“And my job was just to be someone that would understand the pressures that he was on, because I think it would be very difficult to find a replacement at this stage with the business in the state that it’s in.

“If I didn’t think he was doing satisfactorily, I’d have asked to change things.”

He added: “I got a strong message from Mr (Grant) Shapps when he was Secretary of State: Don’t even think of coming for any salary increase. I got a strong message from minister (Kevin) Hollinrake.

“I said to him: ‘Nick is unhappy with the salary.’ He said: ‘Don’t waste a postage stamp coming to talk to me about it.'”

Since Mr Staunton left the Post Office last month he has claimed that in a meeting with former Department for Business, Energy and Industrial Strategy (BEIS) permanent secretary Sarah Munby he was told to “hobble” into the next general election, according to notes reported by The Times newspaper.

Speaking about his fallout with the Business Secretary, Mr Staunton told the MPs: “We all know that things were moving far too slowly … and the reason why people have latched onto what I said in the Sunday Times was that finally someone was being honest about how deep-seated the problems were and why nothing was being done.

“I still think that more could be done, at least to make compensation more generous, and the process of getting justice less bureaucratic.

“But I will at least have achieved something if the sunlight of disinfectant, which the Secretary of State so approves of, means that Government now lives up to its promises.

“What the public wants to know is: why was everything so slow? … And why does everything remain so slow? I’ve spoken up on matters of genuine public concern, have been fired, and am now subject to a smear campaign.”

The Horizon IT scandal saw more than 700 subpostmasters prosecuted by the Post Office and handed criminal convictions between 1999 and 2015 as Fujitsu’s faulty Horizon system made it appear as though money was missing at their branches.

Hundreds of subpostmasters are still awaiting compensation despite the Government announcing those who have had convictions quashed are eligible for £600,000 payouts.