The former chair of the Post Office, Henry Staunton, who was dismissed last month, claims he was told by a top civil servant to "hobble into the election" and delay payouts to sub-postmasters, in a newly released memo.
But Business Secretary Kemi Badenoch told MPs there's "no evidence whatsoever that this is true", and called his allegations "a disgrace".
The row comes as only 5% of sub-postmaster claimants have received compensation for the Horizon IT scandal so far.
Late on Wednesday evening, the government published a letter from Sarah Munby, the former permanent secretary to Kemi Badenoch, responding to claims in The Times that government officials told Mr Staunton to stall on compensation payments to wronged postmasters. The letter stated: "It is not true that I made any instruction, either explicitly or implicitly, to Mr Staunton to in anyway delay compensation payments. I did not."
On this edition of the Sky News Daily, Niall Paterson speaks to Labour MP and chair of the Business and Trade Committee, Liam Byrne, who says it's now his job at next Tuesday's committee to "flush out who is telling the truth".
Plus, our deputy political editor Sam Coates discusses the fallout from the row.
Podcast producer: Alex Edden
Assistant producer: Evan Dale
Promotions producer: Jada-Kai Meosa John
Editor: Philly Beaumont
Sky News Daily