The UK Government has been urged to delay its plans to stop paying pensions and other benefits in cash.

Westminster's Work and Pensions committee, taking evidence in Inverness, heard an automated payment system might not be ready in time for the scheme's proposed launch in 2003.

From 1 April next year, all pensions and benefits are due to be paid into a bank or Post Office account, with over-the-counter payments being phased out.

The National Federation of Sub Postmasters (NFSP) said that for some small post offices this function has been a mainstay of their business, often helping to support the only local shop.

'People in the dark'

There are now fears that not only are the changes not ready to take effect, but that they could force many post offices out of business.

The House of Commons committee, which was meeting outside London for the first time, heard one NFSP representative claim this was one of the biggest changes to the welfare state since it began.

He added that recipients of benefits, postmasters and the banks simply do not know enough about it.

The committee will now seek a delay till post office accounts are up and running.