Former Post Office minister Ed Davey has said that he was “lied to” about “serious flaws” in the Horizon IT system.

The Liberal Democrat leader told an inquiry into the Horizon scandal that “someone senior must have known the truth at some stage” about those flaws.

He stopped short of accusing Post Office executives of lying to him during his time as minister between 2010 and 2012.

Between 1999 and 2015, hundreds of sub-postmasters were blamed and prosecuted for losses caused by bugs in Fujitsu’s faulty IT Horizon system.

Mr Davey said that former chief executive Paula Vennells and former managing director David Smith “were the people passing the information” to the government “which was untrue”.

He stopped short of saying that they personally lied, but later said that someone senior must have known about the flaws.

Mr Davey said: “I now know I was being lied to, I follow this inquiry, and it’s pretty clear that what they told my officials was not true,” he said.

Under questioning from lead counsel to the inquiry Jason Beer, who said that lying involved an intention to deceive, Mr Davey said of senior Post Office executives:

“I cannot know what was in their minds and how the information came to them,” he said.

“But someone, I assume, senior, in Post Office Limited, must have known the truth, must have at some stage, understood that, and this is what I hope the inquiry will uncover.”

He added that what has emerged from the inquiry is that there “was knowledge of the Horizon system having serious flaws in it, within Post Office Limited, and that was not put forward to ministers, either myself or others”.

He added that Post Office Limited, as a body, “were misleading” the shareholder executive and ministers.

“Who was responsible within Post Office Limited is quite difficult for me to know,” he said.

“One assumes that it was the senior executives because they had a responsible role, and I assume were asking the questions, but it’s ultimately for this inquiry” to find out who knew about the flaws.

Earlier, Labour MP Pat McFadden said he had trusted Post Office assertions that its Horizon system was robust with “terrible consequences” for sub-postmasters.

Mr McFadden, who had this post between 2007 and 2010, answered a number of letters from MPs in 2009 who were concerned about sub-postmasters in their constituencies.

He told the inquiry that in every case the Post Office insisted that the Horizon system was robust and had been proven in court.

When asked by inquiry counsel Sam Stevens why in the face of growing numbers of complaints from sub-postmasters he continued to trust the Post Office, Mr McFadden said it was due to the “emphatic” nature of their responses.

Former sub-postmaster Lee Castleton, who was made bankrupt by the Post Office after a two year legal battle, told the BBC that he accepted the argument that Mr McFadden trusted the advice he was being given by the Post Office.

“You wouldn’t employ a plumber and then decide what’s wrong with a [broken] boiler,” he said.

However, he said the government could have ensured the Crown Prosecution Service was bringing prosecutions, and not the Post Office.

“I really do believe that the sheer amount of money and pressure that can be brought by a public body should always be checked by a third party,” he said.

Mr McFadden earlier said that it was not possible to unpick exactly who had drafted the letters that he signed insisting on the robust nature of Horizon.

But Mr Castleton said it was “unfair on the victims” that the “perpetrators of this seem to be surrounded in mystery”.

He added that he felt Mr McFadden was being “disingenuous” by saying he did not know who had drafted the letters.

“It’s clear that ministers were being given information by people, and those people would be known to the ministers,” he said.

At another point in McFadden’s testimony, the inquiry was shown a series of letters from MPs including Brian Binley and Jacqui Smith.

They raised concerns that random flaws in the Horizon system were causing discrepancies in accounts, with sub-postmasters having to spend their savings to pay the Post Office back.

The letters also questioned prosecutions brought by the Post Office against sub-postmasters.

However, the stock response that Mr McFadden signed at the time was that the Post Office itself was in charge of operational matters such as prosecutions, while the government was in charge of overall strategy.

When concerns were raised about Post Office, what the government would do is go to the Post Office to get a response, Mr McFadden said.

Mr McFadden said: “In every case they [Post Office] are insisting, in response to our requests, that the system is robust, that it’s been proven in court, there is no evidence to suggest there’s anything wrong with it [Horizon],” he said.

He said the business department didn’t have a “separate source” of information about Horizon except from the Post Office.

When asked later why the government did not speak to sub-postmasters themselves, Mr McFadden responded that it would not have been appropriate for ministers to question the decisions of courts.

Mr McFadden added that it was for the inquiry to determine at what point the “blind faith” of Post Office management in Horizon became “something more sinister”.

“Clearly those responses were wrong. The evidence being used in the court to prosecute the sub-postmasters turned out to be wrong, and was proven to be wrong in the cases that overturned these judgements many years later.

“What I’m not clear about is at what point in this story does blind faith from the Post Office in their IT system turn to something more sinister, where people are just not telling the truth? Now I don’t know at what point that happens, but I’m sure it’s something the inquiry will want to get to the bottom of.”

He added: “When I look back on this and I think of the terrible human consequences for the sub-postmasters who were prosecuted, even the ones who weren’t prosecuted but lost large sums of money or suffered damage in other ways, of course I wish I had asked more about this.”

“But I do believe, given the emphatic nature of the replies, and the Post Office’s use of court judgements as a proof point for the robustness of the system, at this stage in the process, I’m not sure it would have got any further.”

Mr McFadden was repeatedly asked why he didn’t do more at the time to check the Post Office’s version of events, and he said that one of the reasons he didn’t was that ministers cannot interfere in court judgements.