The Payments Council has been told by the Treasury Committee to draw up a new cost-benefit analysis of the impact that phasing out cheques would have on charities, hard-to-reach communities and small businesses.
The committee is carrying out an inquiry into the Payments Council's decision to phase out the use of cheques by 2018. Its chair, Labour and Co-operative Party MP John McFall, said at a hearing this morning that he was not convinced that the Payments Council had put forward enough evidence to support its decision.
McFall told Paul Smee, chief executive of the Payments Council, that the cost-benefit analysis the organisation had provided "seemed to have all of the benefits and none of the costs". He said he did not believe cheques were in terminal decline, and warned that Parliament could intervene on the issue.
McFall asked Smee to draw up an externally verified cost-benefit analysis and return to the Treasury Committee when this had been completed.
Giving evidence to the committee, Louise Richards, director of policy and campaigns at the Institute of Fundraising,warned that some charities relied on cheques for more than 70 per cent of their income.
"A lot of them rely on an older supporter base," she told MPs. "These people might be unlikely to use other forms of giving."
Richards said the institute had agreed that some of its members would be prepared to test out any alternatives to cheques once they had been developed.
Teresa Perchard, policy director at Citizens Advice, said she believed there would still be a lot of cheques in use by 2018. But she said she agreed with the Payments Council that cheques were in decline, and supported the idea of setting an end date.
Smee said the Payments Council would work closely with charities and other groups to make sure an alternative to cheques met their needs.