The Treasury Select Committee will reopen its inquiry into plans to phase out cheques after being inundated by public concern and unconvinced by evidence put forward by the Payments Council.

Doubts about the rigorousness of the Payments Council’s cost-benefit analysis and argument that cheques were doomed to inevitable decline as well as public reaction to the idea has prompted the reopening of the inquiry.

Treasury Committee Chairman Andrew Tyrie MP said that the Council had failed to consider the “millions of people” who are not comfortable with using more modern payment methods.

“Since our last inquiry we have been inundated by letters from the public telling us they rely on cheques,” he said. “Many charities, small business and vulnerable people depend on cheques.”

The Committee has requested that the Payments Council go away and “do some number-crunching” on the cost-benefits of phasing out cheques after Tyrie said he was “shocked” by the lack of such evidence provided by the Council at the last inquiry.

The Institute of Fundraising has been leading the charity sector charge against the plans, claiming that it could have a detrimental impact on charities that rely on cheque donations for income.

Louise Richards, director of policy and campaigns at the Institute, welcomed the news, saying that the organisation had feared that cheque abolition may happen through the back door.

She said that in the absence of any alternatives to cheques being put forward, the Institute would like to see the abolition date put back "at least ten years". The Institute will be calling on members to lobby their own MPs against the bill, due for second reading in parliament in June, and expects to be called to give evidence as part of the enquiry.

The Committee announced today that it would reopen the inquiry, which began last February and followed the announcement in December 2009 that cheques would be abolished by 2018.

Payments Council under the microscope

In this new inquiry it is seeking evidence on what impact the abolition will have on particular groups in society. More broadly it is seeking public opinion on the Payments Council itself, asking for submissions on the topics of whether the Council is accountable, delivering on its core objectives and how it operates within the industry it regulates. 

Richards said that while she welcomed the consultation on the Payments Council, she is worried that the consultation  may take the place of real change.

"We really want them to show they've been listening to us," she said. 

Submissions on the subject must be received by the Committtee by 6 May 2011.