The former postal minister Kevin Hollinrake has said that the outgoing Post Office chief executive, Nick Read, was “paid lots whilst not doing a very good job”, and that working with him was like “drawing teeth”, the inquiry into the Horizon IT scandal has heard.

Hollinrake, who held ministerial responsibility for the Post Office from October 2022 until the general election, gave a scathing assessment of the culture and management of the Post Office, describing it as an “inward looking, poorly led, dysfunctional organisation”.

Read, who gave three days of witness testimony last month, was watching as Hollinrake gave the inquiry an excoriating perspective of his leadership of the Post Office.

“I worked constructively with Nick Read [but] as time went on I formed the view that [he] was unable to lead the organisation as it needed to be led,” said Hollinrake, who helped push through unprecedented legislation allowing more than 700 operators to have their wrongful convictions overturned. “I thought it right to give him a decent chance to see through reform of the Post Office’s culture. But my view was the guy was being paid lots whilst not doing a very good job.”

Read, who joined the Post Office as chief executive in 2019 with a pledge to “right the wrongs of the past”, is due to step down from the role at the end of March.

Hollinrake also criticised the former chair Henry Staunton, who twice asked the government for Read’s pay to be doubled and was fired in January. He said he concluded that Staunton was “incapable of chairing the organisation”.

Giving testimony to the inquiry, Read has conceded his various attempts to double his pay look “very poor” given so many branch owner-operators are still awaiting compensation over Horizon IT failings. He has denied accusations that he had threatened to leave if his pay was not increased.

Read was paid £573,000, including bonuses, in 2022-23. The year before he earned £816,000, of which £415,000 was salary and the rest bonuses. This reflects the fact that he agreed to pay back a £54,000 portion of his bonus that was linked to the Post Office’s participation in the official inquiry.

Staunton has previously told the inquiry that the pay deal being requested for Read would have taken his remuneration to £1.1m for on-target performance, and hundreds of thousands more if he achieved better-than-expected results.

Hollinrake listed a number of issues with how the Post Office was run, including the “persistent and aggressive lobbying by the chief executive to significantly increase his remuneration”, as well as Read’s refusal to act to reduce central costs such as senior management headcount.

In written evidence provided to the inquiry, Hollinrake said getting information on pay from Read had been difficult and he understood that there were 143 people earning more than £100,000 working at the Post Office.

Hollinrake said it was a “failure of leadership” by Read not to act to cut substantial central costs and headcount, which could in turn have helped to improve the commercial situation for post office operators who “were struggling to break even”.

“I was extremely frustrated by the Post Office’s inability to provide this basic information,” said Hollinrake. “A particular example of this is [Read’s] inability or unwillingness to reduce central costs. It was like drawing teeth. I did not think it was right to give [Read] a big increase.

“My view was that we should not be moved by his threats to leave, and that if he wanted to leave he should leave. His departure will present an opportunity to replace him with a truly exceptional leader, and one who recognises that this is a public service role. The solution is good leadership. Nothing can replace that.”

Earlier this year, Hollinrake held “constructive” talks with Post Office workers about ultimately transferring ownership of the service to operators.

At the inquiry on Wednesday, he addressed the prospect of potential mutualisation, but conceded that there would be many issues to overcome before ownership could be transferred.

He said: “Mutualisation is an option that appeals to me. Although it would still involve a long-term subsidy from central government, and an agreement to underwrite various liabilities, such as the compensation schemes and Horizon replacement. [But] mutualisation wouldn’t mitigate the chances of this being run badly.”