David Mills - a former Post Office CEO - is now explaining how the PO didn't have a proper IT department when he took over. "We had Fujitsu," he says. "That was the IT department in reality."

Inquiry lawyer Sam Stevens asks Mills whether he thinks he had sufficient IT expertise within the Post Office to properly understand whether Horizon was adequate.

"No," he says, adding he did try to address that by recruiting an IT director.

Stevens asks if he told David Miller (who we heard from earlier) about his IT concerns, to which Mills says he did.

"Miller is a crucial man in this. He is very thoughtful. He worked extremely hard, he was running the network, and he was running the network with aplomb in my view, given the things that we were trying to do," Mills adds.

Stevens is asking Mills about his witness statement, where he says Horizon was delivered before he arrived at the Post Office.

He's now being asked what he knew about Horizon and when.

Mills tells the inquiry that it was David Miller who told him "probably on my first day".

He says they had a "major decision" to make about whether they fixed Horizon or wrote it off.

They decided to refurbish it, he says, and "try and use to it to unbelievably automate the entire back office of the Post Office all in one go."

Jacqueline Howard
Reporting form the inquiry

This part of Mills's evidence centres around his first six months as Post Office chief executive in 2002.

The Horizon system was well underway by this point, but Mills says he was too preoccupied with the business as it failed to have had the "brainpower" to identify issues with the Horizon system on top of that.

As you may have seen in our last post, Mills isn't holding back in his assessment of the Post Office business - he's referred to it as a "burning ship" that was "losing £1m every single day it operated" - and that it was "at real risk of going under".

This isn't the first time we've heard of the state of the Post Office's finances around the time of the Horizon scandal, but Mills is certainly not mincing words in describing it.

Stevens asks if Mills' key priority after joining the company was to bring what's being referred to as POL - Post Office Ltd - back to solvency.

Mills says he didn't realise that when he was appointed, but it didn't take him long to realise "that we had a burning ship" and it was "losing £1 million every single day".

Asked if he considered appointing something akin to a general counsel or head of legal, he says "definitely not" because those roles were undertaken by the legal function of the wider Royal Mail group. (The Post Office and Royal Mail were part of the same group until 2012 when the PO was split into a separate business.)

Stevens asks Mills if, at the time, he considered it problematic that the legal function was led by a parent body that he didn't have oversight of.

Mills says yes, it did, but it took at least six months for it to dawn on him that he wasn't comfortable with it.

Next up is David Mills, who held the role of chief executive between 2002 and 2005. He's being questioned by inquiry lawyer Sam Stevens.

Stevens is outlining Mills' career in the years before he moved to the Post Office - he confirms he was at the bank HSBC beforehand.

Turning now to his witness statement, Stevens highlights a segment where Mills wrote that the Post Office board was "not exercising proper or effective oversight of any function".

When asked why they were not functioning properly, Mills tells the Inquiry this is because "it was not functionally organised", it only had four directors who met "infrequently" and that while "they dealt with matters that were of importance to Royal Mail group, they were not into the detail of running the company."

Image source, Post Office Inquiry

Miller's evidence reinforces number of missed opportunitiespublished at 14:32 British Summer Time 16 April

14:32 BST 16 April

Emma Simpson
Business correspondent, at the inquiry

David Miller had umpteen chances to tell the board, his new CEO and those involved with the prosecutions all about the issues and problems with Horizon which were apparent right from the start.

But he didn’t do it.

Miller agreed today that the case of Julie Wolstenholme was a missed opportunity to halt this scandal. There have been many of those over the years.

But despite his regret now, let’s not forget that at the time Horizon was too big and important to fail despite the terrible consequences for sub-postmasters.

Tim Moloney KC, representing 76 Post Office operators, asks the next questions.

He asks Miller about minutes from a December 2004 board meeting when he was tasked to ensure the Post Office could recover the pensions of fraudsters.

"Was this not an opportunity given that those fraudsters were sub-postmasters for you to raise your concerns that Horizon was a new system coming in and everybody should be very cautious about the evidence that came out of that system?" he asks.

Miller responds by saying had he "known what I now know, the answer would be yes".

Another lawyer, Flora Page, brings Miller's evidence to an end by asking him whether issues with Horizon weren't flagged because "you and the Post Office board were keen to forget or deny the problems with Horizon as soon as you could".

"No," he replies firmly.

And with that, we move straight on to David Mills.

Jacqueline Howard
Reporting from the inquiry

Sam Stein, currently asking Miller questions, is taking a far tougher approach than inquiry lawyer Emma Price did earlier today.

He focuses a large part of his questioning on a report by IT expert Jason Coyne - which revealed Horizon was "clearly defective" and which we covered earlier.

"I didn't read it, I have made that clear and it's a matter of some regret to me," Miller says - but Stein doesn't seem to be accepting that explanation.

The lawyer, who represents former sub-postmasters, accuses Miller of either lying through his teeth, or of complete incompetence - and it makes for a fiery exchange here in the inquiry room.

Miller: "I'm not lying through my teeth."

Stein: "So you're incompetent."

Miller: "If you wish to say that."

I note some members of the public, sitting just across from me, smirking as Stein's questions come to an end.

After a break, David Miller is now being questioned by lawyers representing the sub-postmasters.

Sam Stein opens the questions, asking about a correction Miller made earlier.

Earlier, Miller changed his statement to say that he was involved in part of the Impact programme, introduced in the late 1990s to update accounting processes at the Post Office to reduce costs. His statement had previously said he was not.

As part of the Impact programme, there were suspense accounts. This is where money that was disputed or unexplained would stay until the issue was solved.

However, the Impact programme removed this, taking away the Sub-postmasters ability to suggest they were not at fault through this method.

Miller is asked why this was removed.

"There was a view that previously the suspense account had been used to store all sorts of things," he says, and that they wanted it to be "a lot cleaner".

However, he is "not sure that the precise impact" of this removal was "fully comprehended".

Image source, Crown copyright: Post Office Inquiry

David Miller, a former manging director of the Post Office, is back in the hot seat and we're now going to hear him questioned by lawyers who represents various sub-postmasters and postmistresses who were pursued and prosecuted by the Post Office.

We'll then hear from David Mills, who held the top job as chief executive between 2002 and 2005.

Expect key lines from us and remember you can follow the hearing live by clicking the Play button at the top of the page.

Image source, Getty Images

While we wait for today's hearing to resume, let's remind ourselves of the basics when it comes to this saga.

More than 900 sub-postmasters and postmistresses were prosecuted on charges including theft and false accounting due to a faulty IT software - developed by Fujitsu - called Horizon, in what has been called the UK's most widespread miscarriage of justice.

The Post Office itself took many cases to court, prosecuting 700 people between 1999 and 2015. Another 283 cases were brought by other bodies, including the Crown Prosecution Service(CPS). Some went to prison and others were financially ruined.

In 2017, a group of 555 sub-postmasters took legal action against the Post Office via the High Court. Two years later, it agreed to pay them £58m in compensation, but much of the money went on legal fees.

A draft report uncovered by the BBC shows the Post Office spent £100m fighting the group in court despite knowing its defence was untrue. The Post Office said it would be "inappropriate" to comment.

Although campaigners won the right for cases to be reconsidered, only 95 convictions had been overturned by mid-January 2024.

A quietly shocking morning of evidencepublished at 13:37 British Summer Time 16 April

13:37 BST 16 April

Peter Ruddick
Reporting from the inquiry

In every long-running scandal or saga there are 'forks in the road'. Moments where, looking back, history could be rewritten.

Today, David Miller has admitted there was one of those in 2004. A missed opportunity.

Just a reminder why this matters. This is half a decade before a 2009 article in the Computer Weekly magazine raised the alarm more widely.

In that time, many more innocent sub-postmasters were pursued. The Post Office defended itself in court. Ministers and officials were sent out to say Horizon was "robust".

Finally before lunch, asked about Alan Cook's evidence last week - when the former managing director said he wasn't aware of the private prosecutions until 2009 - Miller says he's "surprised [Cook] wasn't told".

Miller is the one who handed the role over to Cook in 2009, so Price asks if he should have been the one who was responsible to draw this to his attention.

"Um, probably," Miller says.

That's us caught up with the questioning of David Miller. We'll be back after the lunch break at 2pm with more.

Rounding off the first half of today's evidence, inquiry lawyer Emma Price returns to former Post Office chief operating officer David Miller's witness statement, external.

She highlights a statement Miller wrote in there, saying he believed the PO's corporate structure was "adequate" when he worked there, but in hindsight he has "concerns about the degree of autonomy enjoyed by the security and legal, and the lack of POL [Post Office Ltd] oversight".

He tells the inquiry that he now realises there were "organisation issues that led to problems".

Just before the inquiry paused for a lunch break, we were hearing about the case of Lee Castleton, the former sub-postmaster who was made bankrupt by the Post Office.

The inquiry was told that Castleton's lawyers intended to "call evidence other existing and former postmasters had about problems with the Horizon system" - and had asked for "disclosure of data about all calls or complaints logged from postmasters about the system"

Minutes from a Post Office meeting in 2005 that followed this say that there was no "understood process" for identifying emerging cases "in which the integrity of accounting information produced by Horizon may become an issue."

One of the recommendations to come out of the meeting was that a co-ordination role be established "to maintain a list of all current civil cases and potential civil cases where accuracy of Horizon accounting information may be an issue".

Miller says he was not aware there was a meeting to discuss Horizon's integrity, and asked if anyone reported its findings and recommendations to the board, he says: "Not as far as I was aware."

Today's proceedings have paused for an hour - thanks for following along so far.

We're just catching you up on the last few minutes before the break, so stay with us.

We're now hearing about the case of Lee Castleton, a former sub-postmaster who was made bankrupt by the Post Office, after he bought a branch in Bridlington in 2003 and months later had unexplained losses of up to £25,000.

He was eventually taken to the High Court by the Post Office where he had to represent himself.

When he lost his case, the Post Office pursued him for legal costs of £321,000 which bankrupted him.

Miller is asked if he knew of Castleton's case when he was in a senior role at the Post Office.

He says he knew of the name, but doesn't believe he was involved in the proceedings.

Image source, Crown Copyright

Documents continue to be shown in the inquiry, as we are used to by now.

The minutes from a board meeting that happened six months after Julie Wolstenholme's case was settled is on screen. It is dated December 2004.

It states that: "In the event of fraud against the company, David Miller would ensure that the pensions of fraudsters were targeted to help ensure that the company was reimbursed."

Price says this was a time where Miller was made aware that other sub-postmasters were having issues with Horizon, but Miller denies this was something he personally proposed.

"Did it occur to you at any time that this might be relevant to decisions about recovery in fraud cases?" Price asks.

Miller says he "didn't make the direct connection".

Image source, PA Media

Julie Wolstenholme was a sub-postmistress who ran a branch in Cleveleys, Lancashire.

Her life was turned upside down when her PO branch was closed in 2000.

It led to her staff being laid off and the breakdown of her family - she and her children ended up sleeping in a caravan in her parent’s garden.

The Post Office pursued her for £25,000 in the civil courts, but during her case a report by IT expert Jason Coyne into Horizon found it was “defective”.

That's the report we're hearing about in the inquiry today.

Jacqueline Howard
Reporting from the inquiry

Sir Wyn Williams, who's leading the inquiry, has been very quiet for most of the morning, but has just jumped in as questioning turns to how Julie Wolstenholme's case was discussed.

As we've said in our previous post, lawyer Emma Price was going through a section of Miller's witness statement, external in which he details a brief conversation with the head of security Tony Marsh about the case.

"I said something like 'you aren't saying there are issues with Horizon, are you Tony?' He said there were no issues and I got the impression it was a one-off case," Miller says in the statement.

It's at that moment that Sir Wyn interjects, saying he is "mystified" how this sits with emails we saw earlier describing issues with Horizon.

He puts it to Miller that either he was misled by Marsh (Miller says he trusted Marsh "implicitly") or that there were figures in Fujitsu and the Post Office who weren't prepared to accept that there were issues with the system and wanted the case gotten rid of "as cheaply as they could and then pretend it didn't happen".