House of Commons - Science and Technology

Select Committee on Science and Technology Second Report

CHAPTER FOUR: SOLVING THE PROBLEM (continued)

IT Suppliers

64. It is vital that customers have information from IT suppliers regarding the state of compliance of products bought in the past and on possible upgrade or replacement equipment. Some companies, such as the Xerox Corporation, have made this information readily available.[102] Like the Federation for Small Businesses we wish to see more companies doing this. However, we do have a concern about the business terms upon which such necessary upgrades or replacements are made available to customers. IBM told us that "it is common practice in the computer industry ... that suppliers create products and then they produce up-grades for those products ... that is normal marketing practice and accepted in the customer base and we charge for those up-grades".[103] We accept that it is appropriate for IT suppliers to charge for upgrades when new or better products are actively sought by customers. We do not accept that it is right to charge for upgrades necessitated by non-compliance of existing equipment. Depending upon the age of the current system and the terms under which it was supplied, companies have an obligation to provide suitable upgrades or replacements free of charge. This obligation is morally impelling and sound business practice and we applaud those suppliers who have already committed to this position. Some of our witnesses suggested that there was also, in some circumstances, a legal obligation under the provisions of sale of goods legislation.[104]

Progress in Key Sectors

65. We were most concerned to ascertain the extent of progress towards millennium readiness in those sectors which provide services on which society depends such as food distribution, transport, health care, power and water supply, telecommunications and financial and emergency services. We sought evidence from a range of organisations from these areas. To a large degree we were reassured by what we were told. Sainsbury's, "one of the top ten users of computer systems in the UK", told us that they were confident that their preventative action, which involves the commitment of substantial resources, "will reduce the problem to manageable proportions" and that "major disruption is very unlikely".[105] Thames Water said that "the problems that the company faces ... are significant, but also quite within our capabilities to solve" and that they were confident that their compliance programme, begun in 1996, would be "completed in time to avert detrimental consequences".[106] We received similar evidence from BG plc (one of the two successor companies to British Gas), Railtrack, Shell UK, BT, the BBC, British Nuclear Fuels, the BBA, British Airways, the London Ambulance Service and others, many of whom told us that they planned to complete the majority of work on Year 2000 projects by December 1998.[107]

66. Nevertheless, not one of these organisations has yet completed their Year 2000 projects and all pointed out that projects were designed to reduce risks to manageable proportions rather than to achieve full compliance. Furthermore, most pointed out that while they were confident that their own systems would by adequately prepared in time, they were unable to predict whether other organisations on whom they were critically dependent would be.[108] This situation reinforces the need for adequate and integrated contingency plans to be drawn up and tested. Thus, while it is important that each organisation develop its own contingency plans, there is a role for Government to ensure that alternative arrangements are in place should there be any interruption in the ability of providers of essential public services to deliver.

Products Currently on the Market

67. It is reasonable to expect that electronic goods bought now will manage the century date change properly but we received much contradictory evidence over whether this was the case or not. IBM, for instance, told us that "the current models, versions and releases of IBM hardware and system software are Year 2000 ready today. In addition, more than 1,900 application packages are Year 2000 ready" and ICL that "all new and enhanced product releases produced by ICL are now millennium compliant".[109] In contrast the Federation of Small Businesses told us that they had no confidence that any PC currently on the market was millennium compliant-a view supported by Greenwich Mean Time, who told us that 47% of PCs currently on sale "may be described as non-compliant at the hardware level".[110] We received less evidence in relation to larger computer systems or embedded systems. On the latter, however, the Consumers' Association told us that "over the past two years, we have, as a matter of course, tested for millennium compliance every relevant domestic appliance which we have tested for our Which? reports. To date, we have not found any problems".[111]

68. We find it completely unacceptable that organisations and individuals purchasing goods today should be unable to rely on those goods to manage the century date change properly. We have drawn no conclusions as to whether particular goods are millennium compliant or not but it is clear that many have considerable doubts. Such doubts may lead some to postpone their own preparations for the century date change, thus compromising their own ability to achieve millennium readiness on time. Moreover, if those who choose to replace their existing non-compliant equipment with new versions find that such new equipment is also not compliant, their own millennium readiness will be compromised.

69. In January 1998, Action 2000, as part of its 'Millennium Bug' campaign, launched a 'Millennium Safe' logo. Businesses are encouraged to use the logo on their products "when they feel confident enough about their Millennium Bug projects or products to say in public that they are Year 2000 compliant".[112] We would have preferred to see such a scheme in operation well before January 1998. Moreover, we are not convinced that this scheme is robust enough. As the Chairman of Action 2000 said "businesses will, I stress, be choosing to use the 'Millennium Safe' logo-it does not mean a product or supplier is Government approved".[113] While we accept that there would be enormous practical difficulties in a Government-backed certification scheme which carried guarantees, such as the need for independent testing and the possibility of exposure to liability claims if products backed by certification failed to manage the century date change, the certification scheme does need to be adequately policed. SmithKline Beecham told us that "to our dismay, many third-party software packages have produced date errors when subjected to validation challenge tests, despite vendors' claims of compliance".[114] If usage of the Millennium Safe logo is not controlled it will not carry weight with those seeking validation nor will companies be encouraged to join the scheme as there will be no advantage in doing so. We recommend that trading standards officers should monitor use of the Millennium Safe logo and that suppliers found using the logo on non-compliant equipment should be penalised.

70. We are also concerned that the Millennium Safe scheme has not been adequately promoted. Unless purchasers of services or products are aware of the need to ask if products are backed by the scheme or understand what the Millennium Safe logo means when they see it the scheme will be ineffective. We make below recommendations for a high profile advertising campaign on the part of Action 2000 (see para 73). We recommend that the Millennium Safe scheme is an integral part of that campaign.

Best Practice

71. Several witnesses stressed the importance of disseminating 'best practice' as a means of helping organisations tackle Year 2000 issues and, indeed, as the CBI told us, several organisations "have emerged as exemplars of best practice",[115] and have made public their processes for achieving millennium readiness. However, such information on best practice needs to reach all organisations, both to reduce the time and resources they need to devote to Year 2000 projects and to prevent unnecessary duplication of effort across different organisations. Action 2000 have already acknowledged this and guidance on best practice is included in its information pack. We welcome this but are concerned that not all those who need such information are in practice receiving it. We recommend that Action 2000 treat the dissemination of best practice as a key part of its campaign to stimulate organisations to take effective remedial action.

The Public

72. We have already discussed the impact on individual citizens of interruptions in the supply of goods or services on which they depend but there is also a "probably more widespread risk of malfunction in consumer equipment" which may cause little more than irritation.[116] As well as the numerous PCs in domestic use which could fail to manage the date change properly, many homes have a plethora of equipment with embedded microprocessors, such as fax machines, some telecommunications equipment, video recorders or central heating controls. The Consumers' Association asked 500 people to test their video recorders, watches and fax machines; 187 replied and, of these, five had found problems with their watches, ten with their video recorders and two with their fax machines.[117] However, no comprehensive study has been undertaken to assess the level of impact that the century date change is likely to have on equipment in peoples' homes. The Chancellor of the Duchy of Lancaster told us that the Government were considering performing sample audits on homes. We recommend that this is done in order to establish public confidence.

73. Given the statutory time limit of six years for those seeking redress, the Consumers' Association argued that "it is ... important for consumers who bought equipment four years ago to be aware of the opportunity to test that equipment and seek any necessary redress now".[118] We agree. We recommend that Action 2000 conduct a high profile campaign disseminating widely, in clear and non-technical terms, the information needed to test domestic equipment for millennium compliance.

International Implications

74. Businesses in the UK economy are not only dependent on each other as suppliers, customers and service providers, but also on many companies and organisations overseas. However, several witnesses told us that, although it was difficult to obtain reliable information about the rate of progress in addressing century date issues in other countries, there was anecdotal evidence to suggest that most countries, with the exception of the United States and the Netherlands, were behind the UK in terms of both awareness and action. This is a matter of extreme concern to UK businesses, as both the Prime Minister and the Minister for Small Firms have acknowledged, especially those which conduct a substantial amount of overseas trade.[119] The UK Government has no authority to compel organisations in other countries to take remedial action but it does have a role in monitoring progress overseas and in raising awareness through Government to Government contacts with other nations. We were pleased to note that the Minister for Small Firms raised the matter in the European Union Telecoms Council and welcome her commitment to take similar steps in other fora.[120] We endorse the Government's decision to put the matter on the agenda of various international summits, including this year's G8 meeting and the recent Europe-Asia summit. We recommend that the Government continue to take every opportunity to raise century date change issues with foreign Governments and to put the matter firmly on the agenda with our neighbours and trading partners all around the world.

75. In his speech on 30th March 1998, the Prime Minister acknowledged that there was also benefit from co-ordinating international activity and assisting other countries in taking action, saying that "we need to be able to take an overview of international activity ... and then co-ordinate efforts across the international spectrum ... once awareness is raised, countries will need expertise to identify and solve their critical problems".[121] We agree and, therefore, support the Government's proposition that the G8 countries set up a council of experts.

76. Developing countries may have particular difficulties in achieving millennium readiness although, as the Department for International Development told us "the scale of the Year 2000 compliance problem in developing and transitional countries is not well understood".[122] The World Bank surveyed 128 of their borrowing member countries and found that, of the 78 who replied, only 12 claimed to be prepared and only 15 others claimed to be aware of the problem. We are concerned that developing countries' attempts to achieve millennium readiness should not be compromised by the provision of non-millennium compliant equipment from the UK. The Department for International Development assured us that "equipment currently being supplied under UK aid through the Crown Agents is millennium compliant". There may be problems with equipment that has been supplied as aid in the past but, as ownership has passed to the recipients, the UK can only encourage developing countries to address readiness issues on old equipment.[123] We welcome the Government's decision to contribute £10 million, earmarked for assisting poor countries to identify and resolve century date change problems, to the World Bank's Trust Fund for Information Development. We, like the Prime Minister, hope that other countries will be able to contribute.

102 Q. 321. Back

103 Q. 238. Back

104 Sale of Goods Act 1979, as amended by the Supply and Sale of Goods Act 1994. Back

105 Ev.pp. 160 and 161. Back

106 Ev.pp. 159 and 160. Back

107 eg. Ev.p. 138. Back

108 Ev.p. 140 Back

109 Ev.p. 58 and 158. Back

110 Ev.pp. 68 and 164. Back

111 Ev.p. 222. Back

112 Speech given by the Chairman of Action 2000, 22 January 1998. Back

113 Speech given by the Chairman of Action 2000, 22 January 1998. Back