Lords battle banks' plan to phase out the humble cheque by 2018

Plans to phase out the use of cheques came under fire in the Lords yesterday, with ministers urged to use the government's stake in the bailed-out banks to ensure the form of payment continues to be offered.

The UK Payments Council, made up of the major banks, announced in 2009 that cheques would no longer be used by October 2018, as long as viable alternatives had been developed.

Treasury Commercial Secretary Lord Sassoon said the government believed cheques should not be phased out unless replacement methods of payment were available for all users.

But Conservative former chancellor Lord Lawson of Blaby said the government should encourage at least one bank to continue to offer cheques.

In reply to Tory Lord Naseby, the minister said: "Many users continue to rely on cheques, particularly small businesses, charities and the elderly.

"The government believes cheques should not be phased out unless suitable alternatives are in place for all users."

Labour Treasury spokesman Lord Eatwell asked how the government would assess the alternatives.

Lib Dem Baroness Kramer said in Germany, where cheques had been withdrawn, people kept large amounts of cash on their person or in their homes.

She said: "Will you make sure the Payments Council understands this is not one of the answers?"