Sir Anthony tells the inquiry that he tried to make clear to the Post Office that its case "didn't make sense".

"Throughout the whole of the mediation scheme, the Post Office was maintaining that the Horizon system was robust and there was nothing wrong with it," he says.

But Hooper believes it didn't make sense that "reputable SPMs [sub-postmasters], appointed by the Post Office... would be stealing these sums of money".

Visibly frustrated, Hooper says he "made that point over and over again" - including to Post Office executives Paula Vennells and Alice Perkins.

"It's why Lord Arbuthnot and the MPs got involved", he adds.

Sir Anthony goes into the details of how the mediation scheme broke down - saying conflicts between the Post Office and accountants Second Sight grew over 2014.

He lists several examples of this deteriorating relationship, calling it a "slow disintegration".

He says there were only two people from Second Sight who were tasked with dealing with 150 cases, and adds that "I'm sure we had much more work than was anticipated". I praise them for all the work that they did, he says, but there was "no way that they could keep up".

He highlights that the Post Office was increasingly objecting to Second Sight's role, and maintained "over and over again" that the Horizon system was robust.

Sir Anthony Hooper says he was not aware of issues around Gareth Jenkins, a former engineer at Fujitsu who was used by the Post Office as a key witness in court.

Jenkins's evidence that financial shortfalls were not caused by Horizon has been cast into doubt. He is being investigated by the Metropolitan Police for potential perjury.

When the Post Office decided to sever ties with Jenkins, Sir Anthony says he was not informed. "I should have been told they would have had to abandon a witness," he says.

Jenkins has previously declined to comment on allegations against him while the inquiry is ongoing.

The inquiry is shown an email exchange between lawyers referring to case studies of sub-postmasters from January 2014, a short time after the mediation scheme launched.

The scheme's chairman says they were referring to four cases which had gone past the "charge stage" to trial. He was "concerned, not as a chairman, but as someone who wanted to make sure there were no wrongful convictions".

Sir Anthony Hooper says he asked to look at the case summaries for those four postmasters and suggested those cases should be dropped.

He adds that the Justice for Subpostmasters Alliance (JFSA) was aware of these prosecutions and wanted to know what was going on, to which he said he would do his best to help them, while noting it was outside the terms of the mediation scheme.

Sir Anthony Hooper is asked to explain how the scheme operated.

He says it was designed to see whether complaints from sub-postmasters about the Horizon program were "substantiated or not".

Sir Anthony says there were "about 150 applications" to the scheme. Applicants had to complete a case questionnaire, and Second Sight would subsequently decide if there was enough information there to launch and investigation.

That was then followed by the Post Office carrying out an investigation and doing their own report, and Second Sight prepared a case report on that.

Then there would be a vote as to whether to move the case to mediation - both the Post Office and the Justice for Sub-Postmasters Alliance would have to agree, and if they didn't Sir Anthony says he would have the deciding vote.

Image source, Post Office Inquiry

Sir Anthony Hooper is now giving evidence, and is being questioned by barrister Julian Blake.

He is asked if he was aware when he was approached for the position of chairman of the Post Office's mediation scheme about the possibility that accountants Second Sight might be transitioned out of the process.

"Not at all," replies Hooper.

Would that have affected the approach you took to the role? asks Blake.

Hooper says it would have made the whole mediation process "undoable", because they were a central part of the process.

In 2013, the Post Office announced the creation of the complaint review and mediation scheme to resolve concerns raised by sub-postmasters.

A working group, with representatives from the Post Office, forensic accountants Second Sight and the Justice for Subpostmasters Alliance, was established to supervise and try and ensure its fairness.

Sir Anthony Hooper, a former Court of Appeals judge and a practicing barrister, acted as the independent chair of the working group until the scheme was halted in 2015.

Next to give evidence is Sir Anthony Hooper, a former Court of Appeal judge and chairman of the Post Office's mediation scheme.

Hooper is appearing remotely before the inquiry, so they're taking a few minutes to get the tech set up for his evidence session. Stay with us.

As Lord Arbuthnot's evidence session wraps up, he is asked whether has anything else he'd like to add.

Arbuthnot says: "I think that, with the help of this inquiry, we are moving belatedly to the right place."

"So I'd like to say thank you," he says.

The judge then pays tribute to Arbuthnot, thanking him "profusely" for his work, and his support for the inquiry.

A letter from former Post Office CEO Paula Vennells to Lord Arbuthnot from 2014 is shown to the inquiry.

Vennells wrote that the Post Office could not agree to a mediation process for all cases which Second Sight recommended.

After the email, Lord Arbuthnot says that the break down of the whole process gave him "a sleepless night".

The inquiry is shown a document from Arbuthnot in which he was quoted as saying: "I can no longer give it [mediation scheme] my support. I shall now be pursuing justice for sub-postmasters in other ways."

The inquiry moves on to a meeting in November 2014 where, Lord Arbuthnot says, MPs "essentially broke off relations" with the Post Office.

There was a feeling among the MPs present that they "couldn't trust" the Post Office anymore.

In his witness statement, Arbuthnot mentions specifically the suggestion from the Post Office that they should exclude from the mediation scheme anyone who has pleaded guilty.

This, he says, was "the final straw" and told Paula Vennells she was "breaking her word", with the meeting later breaking up "in acrimony".

Speaking to the inquiry, Arbuthnot says he felt that the Post Office was worried that Second Sight were getting "too close to the truth" and it "posed an existential threat" to the future of Horizon and the Post Office.

The Post Office refused to endorse the critical report produced by Second Sight.

Lord Arbuthnot says he was not surprised by the decision because of the Post Office’s “defensiveness, secrecy and legalism”, and the fact it seemed to be “blocking information” from reaching investigators.

In his witness statement, he describes the Post Office’s written rejection of the report as “unconvincing, defensive, offhand and designed to be obstructive”.

He also says he suspects that rejection was drafted by Chris Aujard, who was at that time a senior lawyer at the Post Office.

Asked why he believed that to be the case, he says - to some suppressed laughter in the room - “because I considered [Aujard] to be unconvincing, defensive, offhand and obstructive”.

A few minutes earlier Arbuthnot named former chief executive Paula Vennels, senior official Angela van den Bogerd and former chair Alice Perkins as Post Office employees who had been defensive and trying to keep information from MPs.

The lawyer for the inquiry is going through details of the report from independent forensic accountants' Second Sight, which played a key role in exposing the scandal.

The report found flaws in the Horizon computer system which generated false evidence of cash shortfalls at sub-post offices, leading to wrongful prosecutions of sub-postmasters.

He is highlighting points about the Post Office investigators failing to identify underlying root causes with shortfalls prior to action being taken against postmasters.

Almost all of the advisors found there was inadequate investigation, the report found.

The inquiry resumes with discussions about the report by forensic accountants Second Sight in 2014 which, in his witness statement, Lord Arbuthnot says contains many "damning points".

There was no reference in that report to the Post Office or Fujitsu being able to access Horizon remotely, something Arbuthnot says he "remembers being concerned about".

The question of whether Horizon is "fit for purpose" is answered in the conclusion, Arbuthnot says, which is "no".

And, asking himself whether, after reading this report, he would have believed the action taken against postmasters by the Post Office was fair, he says it was "almost certainly not".

After a brief lunch break, we're back with live updates from the Post Office inquiry.

We're about to hear the rest of Lord Arbuthnot's evidence - he's a former MP and vocal campaigner on behalf of former sub-postmasters and postmistresses.

Then we'll hear from Sir Anthony Hooper, a former senior judge who was chair of a Post Office mediation scheme between 2013 to 2015 which looked at issues arising from Horizon.

As always, we'll bring you the latest updates right here and you can also watch live by pressing Play at the top of this screen.

Azadeh Moshiri
Reporting from outside the inquiry

Lord Arbuthnot went on to compare the government’s ownership of the Post Office to the “risk of owning a dangerous dog”. He said, “you cannot say the dangerous dog has an arm's-length relationship with you, if the dangerous dog behaves badly”.

He said that position carried on through successive governments, including the Tory Lib-Dem coalition government.

In 2011, he raised his concerns with Ed Davey, the Liberal Democrats leader, who was then Parliamentary Under-Secretary for the Department for Business, Innovation and Skills.

He wrote that it was “a matter of urgency”. But Lord Arbuthnot did not recall receiving a response.

Ed Davey has previously said he’s sorry he “did not see through Post Office lies”.

Throughout this period, Arbuthnot said he was troubled by the number of people who were being told “you are the only person this is happening to”. He said not only was it “wrong” and “disprovable”, but “it meant they couldn’t get support from others”. Crucially, he said “it had an element of intimidation about it".

Azadeh Moshiri
Reporting from outside the inquiry

As far as Lord James Arbuthnot’s concerned, successive governments could have, and should have, done more for the victims.

When he was a Conservative MP, he said he was “frustrated”, and wanted “potentially an injustice" to be "sorted out". He said since the government owned the Post Office, he'd assumed they would.

Instead, the answer to his concerns was, in his words, “no, not me gov”.

As far back as 2009, he wrote to Lord Peter Mandelson, who was the Secretary of State for Business, Innovation and Skills at the time under a Labour government. He raised his concerns about the Horizon IT system, and the fact dozens of sub-postmasters and mistresses believed they’d been wrongly accused of theft.

He said the response he received, from a minister and not Lord Mandelson himself, was that the government had assumed an “arm’s length relationship” with the Post Office, and that it had been assured by the Post Office that these matters had been “fully investigated” and there was “nothing to indicate any problems” with the Horizon IT system.

Image source, Post Office inquiry

As the inquiry breaks for lunch, here's a look back at the evidence given by Lord Arbuthnot - a former Tory MP and leading supporter of the campaign for justice for hundreds of wrongly convicted sub-postmasters.

• Early on, Lord Arbuthnot said he felt the government in 2009 refused to take responsibility for the issues the Post Office was facing
• The inquiry heard how Paula Vennells - then the Post Office's managing director - had told Lord Arbuthnot in 2011 that the Post Office had no reason to doubt the integrity of the Horizon system
• Arbuthnot confirmed that he was not told about bugs within the Horizon system during a 2012 meeting with with senior Post Office figures, and was assured Horizon was not flawed
• He said the first "seeds of doubt" around the Post Office appeared in in 2013, when he felt there was a "a general slowing of everything down that worried me"
• He said that the Post Office was denying that remote access to manipulate records was possible, which would have "completely undermined the Post Office's position"

Let's bring you some more now what the inquiry discussed before the break.

Notes from a 2014 meeting that Lord Arbuthnot had with senior members of staff at the Post Office, including Alice Perkins and Paula Vennells, were shown to the inquiry.

In the minutes, Vennells assured Arbuthnot that the Post Office wasn't trying to restrict forensic accountants Second Sights' ability to access evidence or speak to MPs.

And in his witness statement, Arbuthnot says it "was not the first time that she had promised access" for any file relevant to their investigations.

The inquiry lawyer then moves on to an email from Arbuthnot's chief of staff after these minutes were published, asking for them to be amended to include assurances from Vennells that there would be "no no go areas" for the investigation.

The inquiry is taking a break for lunch now.

In the meantime, we'll continue breaking down the evidence we've heard so far this morning.