The chairman of the Payments Council insisted yesterday that  abolishing cheques is the right thing to do, but admitted the Council has not managed the debate well.

At a Treasury Committee meeting yesterday, Richard North, chair of the Payments Council, came under fire from MPs for the way it had handled the process of proposed cheque abolition.

He was told by Treasury Committee chair Andrew Tyrie that the announcement in 2009 that cheques would be phased out by 2018 had been “a colossal error of judgement”. Conservative MP David Ruffey said the Council was guilty of “rank incompetence” over its handling of the issue.

North stood firm on the Payments Council’s path, reiterating earlier statements that cheques will only be abolished if adequate alternatives are found and implemented before the proposed abolition date.

“I think this is the right thing to do, but we could have managed it better,” said North.

The Treasury Committee evidence meeting came a day after Mark Hoban, financial secretary to the Treasury, wrote to Tyrie saying that the Payments Councils proclamations have created “a great deal of uncertainty and alarm across the country”.

The government will consider intervening in the process, Hoban said, if it appears vulnerable individuals and businesses may be left worse off as a result of any change to the payments systems.

Until an efficient, flexible and easy-to-use alternative system is developed and “widely adopted by users”, Hoban wrote, “I do not believe that there is a credible and coherent case for abolishing cheques.”

This intervention by the Treasury has been welcomed by charities, many of which have been calling for a review or halt to the process of phasing out cheques.

Catherine Deakin, policy and public affairs officer for Help the Hospices, said her organisation was “thrilled that the Treasury has listened”.

“We have been concerned at the lack of progress in the development of a suitable alternative and have been campaigning on behalf of our member hospices for the timeline to be reconsidered and for the abolition of cheques not to take place until suitable alternatives are identified, fully developed and widely available,” she said.   

“Each year hospices have to raise more than £550m from charitable donations. A significant amount of these donations are made by cheque. For some of our member hospices donations made by cheques account for more that 75 per cent of their charitable income.”

Treasury decided to reopen its investigation into the Payments Council’s cheque plans in April after an uproar from the community about the proposed abolition.

• See video of the Committee evidence session online here.