Former Liberal Democrat leader Sir Vince Cable has said he was initially unaware the Post Office prosecuted its own sub-postmasters, despite leading the privatisation of the group.

Sir Vince, who was business secretary between 2010 and 2015, was giving evidence on Wednesday to the inquiry into the Post Office IT scandal.

Under questioning from Jason Beer KC, he also admitted a share of responsibility for the scandal as the Post Office came under his remit while in government.

“This was an area of the department where clearly there was a policy failure,” he said.

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

The Post Office was able to both investigate and prosecute these sub-postmasters itself because of the way it is set up, a structure heavily criticised by campaigners.

Despite being in charge of the Post Office during his tenure, Sir Vince said he did not know this until “right at the end” of his time in office, which was around 2015.

Sir Vince said he was aware of more general issues with the Post Office at the time.

In his first meeting with then-Post Office chief executive Paula Vennells, he said he had “a spirited discussion when I raised the treatment of postmasters”.

He added in his witness statement that the Post Office was “authoritarian” and “dealt with us in an arrogant way”.

He also said in the statement that he agreed with former sub-postmaster Sir Alan Bates’s description of Post Office middle management as “thugs in suits”.

Sir Vince described the Post Office at the time as a “monopoly”, which he wanted to change.

He said he had wanted to “address the imbalance” between the Post Office and sub-postmasters by creating a “mutual structure”, which would have in effect given sub-postmasters control of the organisation.

He said he raised some of these issues with Ms Vennells but the mutualisation “unfortunately never came to fruition”.

Instead, the Post Office was privatised under Sir Vince’s watch.

Despite raising these general concerns, Mr Beer questioned why Sir Vince was not aware of serious problems with Horizon until 2015.

A letter from 2012 signed by Sir Vince to then-Labour leader Ed Miliband said he “remains fully confident about the robustness and integrity” of the Horizon software.

It was written in response to Mr Miliband’s concerns about a sub-postmaster. Sir Vince said he never saw the letter, despite it being written on his behalf.

“The problem was there were about several hundred letters, and emails, [that] would come in every day,” he said, adding that he was on international visits at the time.