Lord Arbuthnot says the Post Office had mounted a "behind the scenes deception process" to cover issues with the Horizon IT system and were "stringing MPs along" - although it wasn't entirely clear to him by 2014 that was the case.

Those comments came after a discussion of how in 2013, the Post Office agreed to a scheme to mediate between the organisation and individual sub-postmasters who felt they had been wronged.

Lord Arbuthnot said there was initially no indication that people who had been convicted would be excluded from that scheme.

However, by 2014 the Post Office was arguing that his constituent Jo Hamilton - who pleaded guilty to fraud offences it was later established she did not commit - shouldn't be eligible for the scheme.

Lord Arbuthnot says he “believed from the beginning” she was innocent and would not have consented to the scheme if it was going to exclude her and others in her position.

Image source, Reuters

By mid-2013, Lord Arbuthnot was continuing to be assured by the Post Office that it was not possible for the Horizon system to be remotely accessed.

This is an important point because the inquiry has heard evidence that accounting errors may have arisen from these interventions.

Had he known at that point remote access was possible, Arbuthnot says it would have been clear that there had been "a large number of miscarriages of justice".

Arbuthnot says the Post Office never told him or even hinted that there there were any issues with Horizon -he was told the system "continues to be robust, that the convictions were safe and there there was no remote access".

He adds that he did not learn that the Post Office had been made aware of the issues until the Court of Appeals hearing in 2020 - more than seven years later.

Jason Beer jumps to a conversation between Lord Arbuthnot and Paula Vennels in January 2014, where she had said Second Sight would not be advising on the prosecutions because they were forensic accountants and not lawyers.

Lord Arbuthnot says he thought that Second Sight could have the "complete openness and transparency" and access to any documents they considered were relevant.

Focus now turns to the Post Office briefing in response to Second Sight's 8 July 2013 interim report.

It mentions how Michael Rudkin, a former sub-postmaster, claimed that during a visit to Fujitsu's site in Bracknell in 2008, was shown the ability to access live branch data and directly adjust transactions in the Horizon program.

The Post Office response says that neither the organisation or Fujitsu had any record of Rudkin attending the site - but does acknowledge a "test" environment at facility, and suggests he could not have witnessed a live transaction environment.

Arbuthnot says at this point in time, he understood that the Post Office was denying remote access to Horizon accounts was possible.

The inquiry is shown a letter from Ron Warrington - an investigator at forensic accountants Second Sight, which was brought in to look at issues with the Post Office's IT Horizon system - sent to Lord Arbuthnot.

The Post Office did not want the report into problems with Horizon to be published until they had been given a chance to respond in full, the inquiry hears.

However, the email reveals Second Sight's "exasperation" and getting them to "answer the blasted questions".

Warrington told Lord Arbuthnot he thought they feared "career death" if they admitted there were failings, and instead supplied highly technical responses which appear "to have been crafted so as to avoid actually giving any answers"

Azadeh Moshiri
Reporting from outside the inquiry

Image source, BBC News

Nikki Arch is back at the public inquiry, and I've caught up with her during a break.

She was a sub-postmaster at the Chalford Hill post office in Stroud, and told the BBC she's lost her business and a home because of the scandal, and was spat at by people in her community.

Nikki says today has been difficult listening.

Sitting in the inquiry room, she heard Jason Beer, the inquiry counsel, read out notes from a meeting between MPs and former Post Office chief executive Paula Vennells, as well as three other senior Post Office figures.

She heard the notes record Vennells talking about the "temptation" present for sub-postmasters while they handled large quantities of cash.

Nikki says as far the Post Office were concerned, sub-postmaster "were guilty from day dot".

"It’s been 24 years, I can't afford to be too angry, but it’s hard."

Paula Vennells has previously said she was "truly sorry for the suffering" caused to sub-postmasters, their families and "all those whose lives were torn apart by being wrongly accused and wrongly prosecuted as a result of the Horizon system".

Nikki has only known Lord Arbuthnot for the past year, but was aware he was fighting on the victims' behalf long before that.

She says when no-one else would listen, Lord Arbuthnot did. She said, "It gives you so much self-worth when someone like that gives you the time of day."

Inquiry counsel Jason Beer brings up a telephone call between Lord Arbuthnot and Post Office chief Paula Vennells in 2013.

The notes - which are shown on the screen - indicate that Vennells had said the Post Office was nervous about MPs wanting individual case resolutions, instead of the broader approach adopted by Second Sight.

Beer points to an email from Second Sight to Bates, which says that evidence had emerged disproving the Post Office's claim that there was no remote access to individual branches or Horizon to allow the manipulation of records.

Arbuthnot says he cannot exactly remember what was said on the call 10 years ago, but says it was a "very important issue, and I would have thought it probably was."

"Remote access would have completely undermined the Post Office's position".

If Fujitsu or anyone else could manipulate sub-postmaster's accounts, then "how can you prosecute that sub-postmaster for something which could not be provably down to the sub-postmaster?" says Arbuthnot.

The inquiry is shown minutes from the 2013 meeting where Lord Arbuthnot and former sub-postmaster Alan Bates were given a briefing on the issues uncovered by forensic accountants at Second Sight, whose investigation was ongoing but had recorded early findings.

They were told seven issues had been identified. In short, they were: transaction anomalies; "rogue" transactions; missing transactions; training and support issues; loss of audit trails; accounting issues at the end of the trading period; and, the contract between Post Offices and its sub-postmasters.

Arbuthnot tells the inquiry he felt these were all things which required further work, but Bates was more critical of Second Sight's summary.

In a later letter written shortly after that meeting, Bates said it was clear to him that Second Sight had uncovered wide-ranging issues and could not see why they were reluctant to label them systemic failures. It had long been his belief these specific issues amounted to a system which was not fit for purpose.

Arbuthnot said he lacked technical understanding of Horizon but felt both the Post Office and Second Sight had to address Bates's concerns.

Image source, PA Media

The Post Office did not react well to his letter to then Post Office chair Alice Perkins, Arbuthnot says, and in his witness statement he describes a "strong push back" from the organisation.

In a meeting days later, Perkins, said the organisation "didn't believe anything was wrong with Horizon", Arbuthnot's statement says.

"They were very concerned that any opinion being formed by [forensic accountants] Second Sight at this stage was being communicated; that Second Sight should not be expressing an opinion", it continues.

At this point, Arbuthnot says the Post Office threatened to pull out of a meeting with Second Sight - which it didn't end up attending.

Speaking at the inquiry, Arbuthnot says he was "surprised" by this reaction, as he thought his letter had been "rather a nice one".

The focus moves to a March 2013 letter from Lord Arbuthnot to the former Post Office chair Alice Perkins, which closes with Arbuthnot expressing his "gratitude and admiration" of how the Post Office was handling the investigation.

Inquiry counsel Jason Beer asks when and how the first "seeds of doubt" around the Post Office arose in the mind of Lord Arbuthnot.

The former MP replies by saying that he had "initial fears about the Post Office's approach to the truth in telling people like [his constituent] Jo Hamilton that you're the only person that was involved".

He adds that there was a "degree of legal battlefield" and a "degree of delay" in providing the documents that the Post Office had promised to give forensic accountants Second Sight.

"There was a slowness, a secrecy, a general slowing of everything down that worried me," he says.

The inquiry has resumed after a break and lawyer Jason Beer KC is continuing to go over some known issues with Horizon and unsuccessful prosecutions, which the Post Office was aware of.

Lord Arbuthnot again confirms he was not told about these issues in meetings with senior Post Office figures in 2012.

"I was not told 'here is a list of bugs you ought to take into account' - they failed to do that", he says.

At a mid-2012 meeting Arbuthnot was once again assured the Horizon system was not flawed.

He also says he left the meeting feeling he had been given the impression remote access of the system was not possible.

What actually went wrong with the Horizon IT system?

It is the responsibility of those running Post Office branches to balance their accounts, which had previously been done on paper, but in 1999, Fujitsu's Horizon was introduced.

Almost immediately there was an increase in the number of staff experiencing accounting shortfalls which they could not explain.

Many reported that the Horizon system made it look like money was missing when it wasn't.

Jason Coyne, an IT expert, was instructed to examine the computer system in 2003 and reported "concerning discrepancies".

Coyne said there "was clearly defective elements of its hardware, software and interfaces, and the majority of errors noticed in the fault logs could not be attributed to the sub-postmaster".

Coyne said the Post Office data was "unreliable" but he was ignored, sacked, and then discredited.

Just before the Inquiry heads into a break, chair Sir Wyn Williams asks Lord Arbuthnot whether the role of Fujitsu - the company behind the Horizon IT system - was mentioned at all in these discussions.

"It's hard to remember precisely when Fujitsu's role came up," Lord Arbuthnot replies. He says he recalls it was raised before this time, but cannot remember exactly when.

Were you given a summary of the role the software company had in providing information which permitted the Post Office to either prosecute or take disciplinary action against sub-postmasters?, the chair asks.

"No I don't think I was," replies Lord Arbuthnot.

The inquiry is shown notes from a meeting where nine MPs were present or represented with Paul Vennells and three other senior Post Office figures.

According to the notes, Vennells spoke about how sub-postmasters are stewards of large quantities of cash, and spoke about “temptation”.

Lord Arbuthnot tells the inquiry it wasn’t entirely clear at the time if the the Post Office was alleging its branch managers were likely to be tempted into committing crimes because they had access to money.

The meeting note also records the Post Office representatives as saying every prosecution of a sub-postmaster up that point had resulted in a finding in favour of the Post Office. Both Lord Arbuthnot and Beer are in agreement that this fact wasn't true.

Beer goes on to asks Arbuthnot about whether Post Office officials had disclosed a long list of cases which found bugs within the Horizon IT system, and goes through a number of specific cases in which postmasters had been acquitted.

Arbuthnot repeatedly says "no".

Arbuthnot held a meeting with Post Office officials in 2012, which resulted in them offering to give independent forensics accountants access to the Horizon system, and fund the investigation.

The offer came from Paula Vennells, by then chief executive of the Post Office, the inquiry hears.

"It was something we wanted but when Paula Vennells offered it, we bit her hand off, as it were," Arbuthnot says.

Inquiry counsel Jason Beer asks: "What did you understand was being offered?", to which Arbuthnot answers, that "there would be a deep dive into the workings of Horizon".

Image source, Post Office inquiry

The inquiry hears how in early 2012 Lord Arbuthnot brought together sub-postmasters and other MPs to discuss what he was increasingly convinced was a national scandal.

By February 2012, he was “deeply sceptical” about the Horizon computer system and feared there had been a “closing of ranks” around it.

He tells the inquiry he felt saying the system was “robust…was clearly the line to take”, and described the mentality in the Post Office around it as “groupthink”.

In an early 2012 meeting with Alice Perkins, the chairman of the Post Office, and another senior executive, Lord Arbuthnot was told Horizon had been independently audited - but he remained doubtful it had been properly investigated.

Beer brings up a letter that Arbuthnot wrote to Ed Davey, business minister from 2010 to 2012 in the Tory-Lib Dem coalition government, in which he drew attention to the fact that Horizon was to blame for the losses being laid at the door of the sub-postmasters.

Arbuthnot agrees he was making clear this was a country-wide issue.

"Did Davey ever reply to you?" the lawyer asks. Arbuthnot replies: "I don't think he did... probably because he was told Paula Vennells was replying to me herself."

The inquiry is told how in December 2011, Lord Arbuthnot wrote again to the Post Office and the government saying the situation with the Horizon IT system had not been rectified and needed further investigation.

He received a response the following month from Paula Vennells, then the Post Office's managing director. She became chief executive of the Post Office in April 2012 and held the role until 2019.

Vennells told him: “There has been no evidence to support any of the allegations [from former sub-postmasters] and we have no reason to doubt the integrity of the system, which we remain confident is robust and fit for purpose.”

In his witness statement, Lord Arbuthnot describes that response as being “given the brush off”.

Continuing his questioning, Jason Beer displays a letter Lord Abruthnot sent to Moya Greene in 2011, then chief executive of Royal Mail group.

It referred to the fact that the sub-postmaster who had replaced Paul Bristow - the second Horizon-linked case he had become aware of - had also been dismissed.

Lord Arbuthnot says he was concerned about the number of staff being told "you are the only person this is happening to".

"That struck me as being profoundly wrong because they were not the only people it was happening to.

Image source, PA Media

Lord Arbuthnot of Edrom is the first of two witnesses we are hearing from today.

The Conservative peer is a long-time campaigner for the sub-postmasters, and was portrayed - positively - by Alex Jennings in the ITV drama Mr Bates vs The Post Office.

Formerly the Tory MP for North East Hampshire, he first became involved with the issue in 2009 when approached by Jo Hamilton, one of his constituents caught up in the scandal.

He went on to lead a group of more than 140 MPs who advocated on behalf of constituents who had been impacted.

Arbuthnot currently serves on an independent advisory board of parliamentarians and academics which oversees compensation related to the scandal.

He called for a judge-led inquiry in 2019, and has been vocal in his criticism of the Post Office’s handling of the issues stemming from the Horizon IT system for a number of years.

Image source, Post Office inquiry

The inquiry is also shown a response to Lord Arbuthnot from MP Pat McFadden, then a junior minister in the business department.

Lord Arbuthnot was told that under 2001 reforms, the Post Office was given greater commercial freedom and the government had an arm’s length role.

His concerns, the letter said, were a matter for the Post Office and the government had been assured the “integrity” of the Horizon computer system was not in doubt.

He tells the inquiry he was frustrated because there was “potentially an injustice".

Lord Arbuthnot continues: "Since the government owned the Post Office, I had assumed they would be in a position to sort it out - but they were saying ‘no, not me guv’."

He felt the government was refusing to take the responsibility that come with ownership - especially given the importance of post offices in communities.