A former Post Office branch manager’s young children were bullied and told their mum was a “liar” and a “thief” during the company’s IT system scandal, an inquiry has heard.

More than 700 post office operators were prosecuted between 2000 and 2014, based on information from the Horizon IT system, which was installed and maintained by Fujitsu.

Susan Hazzleton, 68, said her children, who were nine at the time, were taunted in the school playground when her Post Office branch in Chelmsford, Essex closed in 2001.

Her children were told that their mother was a “liar”, a “thief” and that she was “the reason the village doesn’t have a Post Office or shop any more”, Hazzleton said during the fourth day of evidence.

The former post office operator was accused of stealing £300 after auditors checked the accounts of the branch she had run since 1995. She was suspended, her shop closed and six weeks later she was arrested for theft.

“[The police] said I couldn’t go and pick the children up from school; they said they would collect them in the police car, take them to the station and they would have to stay there until they finished questioning me,” Hazzleton recalled.

“What mother wants that for her children?”

Thankfully, her children were able to stay with a family friend. The prosecution dropped the case 18 months later due to a lack of evidence.

Hazzleton said Post Office workers told her that no one else was having issues with the Horizon IT system like the ones that she told them she had been having.

She said that the shortfalls in her accounts began to “snowball” into the thousands in 2000 after she began using the Horizon system.

She said she called the Post Office helpline once a week but received no help. The call handler repeatedly told her: “It will work itself out”, the inquiry heard.

“I believed the people operating the helpline had no more idea about the computer system than I did,” she said.

After her evidence, the former judge, Sir Wyn Williams, leading the inquiry, indicated he was unhappy that the compensation scheme for those wrongly convicted did not apply to those who were acquitted as well.

Wendy Martin said the stress caused by the Post Office’s faulty IT system turned her into a ‘walking zombie’.

Wendy Martin, who opened her own Post Office in York in February 2015, said she was left feeling like a “walking zombie” due to the stress of dealing with repeated IT problems.

She told the inquiry: “I was open for just under two years and I probably slept five hours a week if that.

“I was getting so many kidney infections constantly that my doctor would leave my prescriptions in reception without me having to go in because I didn’t have time to go into the doctors.

“My staff were so stressed out that one of them left; she couldn’t deal with it any more. We were all just falling apart.”

She said there were issues with the Horizon computer system immediately after taking over the branch.

“I just know that we had gone from an office that worked to where I was coming home of a night and I just didn’t know where the cash figures would sit,” she said.

“I would check my figures and check the cash and it would show a discrepancy and I’d think, what have I done?”

Martin was never prosecuted but has still been left thousands of pounds in debt.

She added: “I’ve lost my business and that business was my retirement. I don’t have a retirement; I’ve worked for the Post Office for 16 years and walked away with nothing.”

The inquiry, which is expected to run for the rest of the year, is looking into whether the Post Office knew about faults in the IT system and will also ask how staff were made to take the blame.

On Wednesday, a group of cross-party MPs called on the government to fully compensate all victims.