There is no "credible and coherent case" for the abolition of cheques before an alternative is fully tested, a government minister has said.

The view of Mark Hoban, Financial Secretary to the Treasury, was discussed during a Treasury Committee hearing into the future of cheques. The UK Payments Council is planning to phase out cheques by 2018, but only if viable alternatives are found.

The council's chairman said it had not explained this process well to users.
Tough questions

The Treasury Committee studied the planned abolition of cheques a year ago.
However, following 1,200 letters and e-mails to MPs on the committee from those uneasy about new technology, it has decided to reopen the inquiry.
At Wednesday's hearing, members of the committee tore into representatives of the Payments Council for its plan to phase out cheques.

It is an appalling mess. It is a scandal. This is even worse than a colossal error of judgement," said committee chairman Andrew Tyrie. Committee member David Ruffey said: "This has scared the pants off middle England."

A final decision to switch off the conventional cheque clearing system is scheduled to be made in 2016.

However, if the 2018 target date is deemed not feasible, either in 2016 or at an earlier review date of 2014, then the plan could be revised or the implementation date moved.

Letter Members quoted regularly from Mr Hoban's letter which criticised the process and said the government could intervene.

"Regrettably, the announcement was made without an assessment of the costs and benefits, or a plan or timetable for managing the process, or an indication of what alternative payment instruments might need to be created," the letter said.

"The result has been to create a great deal of uncertainty and alarm across the country."

This was particularly felt by the elderly, schools, clubs, charities, rural communities and small businesses, the letter said.

Mr Hoban added that the government was considering whether it might need to intervene to protect vulnerable people and businesses if cheques were withdrawn before suitable alternatives were in....Click HERE to read more on this story................

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