Government minister backs ‘reprieve’ for chequesCheques mustn’t be lost with no alternative

16 June 2011

Cheque being written

There is 'no credible and coherent case' for the abolition of cheques, an MP has said

Mark Hoban MP, Financial Secretary to the Treasury, has written to the chairman of the Treasury Select Committee to express his view that there is not a ‘credible and coherent case’ for abolishing cheques.

The UK Payments Council’s plan to phase out cheques by 2018 were first announced in 2009, but has since sparked serious controversy among consumers – such that the Treasury Committee has reopened its Future of Cheques inquiry. MPs received more than 1,200 letters and emails about the loss of cheques, which prompted them to look again at the issue this April.

In his letter, dated 14 June, Mr Hoban says: ‘Regrettably, the announcement [to abolish cheques] 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.’

He continues: ‘The result has been to create a great deal of uncertainty and alarm across the country, particularly among those for whom other existing forms of payment may be unsuitable – elderly or housebound people, schools, clubs and charities, rural communities, small businesses, and others.’

Which? readers keen to keep cheques

In a Which? Conversation poll back in November, an overwhelming 92% of those surveyed came out in favour of keeping cheques.

Over 1,300 Conversation readers took part, with 50% saying they had written a cheque the previous month and 76% confirming they had used one within the past year. Meanwhile, one in five people had recently sent a cheque to a friend or relative as a gift.

When we reported that the Treasury Select Committee would be reopening its inquiry into the fate of cheques, many people joined the discussion to express their relief. You can review their comments, and add your own, by reading the Cheques ban being reconsidered post on the Which? Conversation.

Government could intervene to save cheques

While Mr Hoban admitted in his letter that the number of cheques in use has declined from a peak of 4 billion a year in 1990 to 1.1 billion in 2010, he argues that ‘the volume of cheques used… is still likely to be significant.’

Referring to the central cheque clearing system, which the UK Payments Council plans to shut down in 2018, he said: ‘Whilst I accept that a complex system that is designed to process more than 4 billion cheques a year may become unsustainable at significantly lower volumes, there seems to have been no assessment of whether a redesign to accommodate lower volumes may be more cost effective than developing new alternatives.’

The UK Payments Council maintains that it has no intention of abolishing cheques until suitable alternatives have been created and adopted.

Arguing that any system intended to replace cheques would need to be widely available, widely acceptable and widely adopted by users, Mr Hoban commented: ‘The Government is keenly monitoring the progress of the cheque replacement programme and is considering whether it may need to intervene to protect vulnerable individuals and businesses, if there is any threat that cheques may be withdrawn without suitable alternatives being put in place for all.’

pound coins

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