Time

77. The short time between now and the century date change is the biggest constraint hindering organisations in their efforts to achieve millennium readiness, especially for those organisations which have yet to start their Year 2000 projects. Many systems will take months to fix and, given the pressures on resources and shortage of skilled personnel, many organisations need to concentrate on systems which are critical to business performance, health and safety or the environment. We recommend that the need for prioritisation should be a central feature of the advice Action 2000 delivers.

Awareness and Commitment

78. Many witnesses acknowledged that Taskforce 2000 has done much to make awareness high but, as survey results indicate, it is certainly not universal. Moreover, there are genuine concerns over whether awareness of the century date change problem has been widely converted into effective remedial action, particularly in SMEs. Many of our witnesses agreed that more needs to be done if those who have yet to appreciate the full implications of the century date change for their organisations are to be stimulated to take remedial action in time for such action to be effective. We recommend that Action 2000 increase the profile and reach of its Millennium Bug Campaign. A campaign of the scale of 'Aids Awareness' in the 1980s or the more recent Inland Revenue's 'Self Assessment' information campaign would be appropriate.

Open Reporting on Progress

79. Many witnesses felt that their ability to plan effectively their own millennium readiness projects was undermined by a lack of information on readiness, in other organisations. Although some organisations have been prepared to talk openly about their Year 2000 projects and their expected levels of readiness, most of our witnesses from the corporate sector were concerned that many of the organisations on which they depend have been too slow in providing reliable information on millennium readiness.

80. There is now little prospect of The Companies (Millennium Computer Compliance) Bill passing into law. This bill would have required all companies to report annually on the progress being made towards millennium readiness. However a similar, although not statutory, requirement has been placed on companies by the Accounting Standards Board. The Board's Urgent Issues Taskforce Abstract 20 requires directors to make specific and detailed disclosures of the potential impact of the century date change on their business and operations, and the company's general plans for addressing the potential issues that arise, in respect of all accounting periods ending on or after 23rd March 1998.[124] We welcome this: most companies will have to report on their year 2000 status at least once, and many twice, before the millennium.

81. Just as it is very difficult to obtain thorough and accurate information on the level of readiness in any one particular organisation, so it is almost impossible at present to obtain a clear measure of progress across either the public or private sectors. We have already recommended an effective reporting structure for those parts of the public sector not currently included in the Chancellor of the Duchy of Lancaster's reports (see para 27), but more information is needed in respect of private sector organisations, both as a whole and on a sector by sector basis. The various surveys that have been conducted to date, while providing useful information, frequently only provide a partial, or sometimes contradictory, picture. For Action 2000 to operate effectively and to target its efforts on sectors where there is greatest need, it will need to know which those sectors are. Moreover, contingency plans are more likely to be effective if those making the plans know what sort of contingencies should be planned for. Action 2000 told us that it "stands ready to contribute ... by gathering information on the state of preparedness, particularly in key sectors" and we welcome its commitment to undertake "systematic and regular surveys".[125] We recommend that Action 2000 commission a quarterly survey on progress in the business sector, broken down into categories including core services such as transport, telecommunications and other critical public services. We further recommend that the results of the survey be publicly and freely available.

Skills

82. Many of our witnesses said that shortages in some of the key skills needed for Year 2000 projects were, or would become, a major hindrance to making progress, especially for those organisations who have yet to start readiness work. Cap Gemimi told us that they expected that "demand for IT skills to fix the Year 2000 problem will exceed maximum available supply by April 1998".[126] A similar conclusion was reached at the DTI's skills conference last summer.[127] Other witnesses emphasised the fact that Year 2000 projects required skills in areas other than IT. These skills, such as project management, telecommunications engineers and electrical engineers are also in short supply. Taskforce 2000 suggested that the shortage was greatest in the skills needed to address the problem in embedded systems.[128]

83. As the skills shortage increases, with more organisations putting demands on the same skills pool, it is inevitable that the costs of obtaining these staff will increase. Indeed some witnesses told us that this was already happening and research shows that wage inflation in specific skills areas, such as COBOL programming and IT project management, is already between two and four times the average.[129] Thus, the more an organisation delays its preparations for the Year 2000 the more it will have to pay for appropriately skilled staff, if indeed, it can find them at all.

84. Both the Government and Action 2000 have acknowledged these skills shortages and the impact they could have on the ability of organisations to conduct effective Year 2000 projects.[130] Action 2000 told us that addressing the skills shortage would be one of its top priorities. Indeed, one of Action 2000's first initiatives was the creation of a skills project office, set up with funding from the DTI.[131] In his budget speech in March 1998, the Chancellor of the Exchequer announced an additional £100 million in 1998-99 to "provide training in areas such as computers and high technology skills, not least to help prepare for the millennium".[132] A substantial part of this sum is to go towards tackling the century date change problem; £40 million is to be spent on setting up a network of 'centres of excellence' in IT training and a further £30 million will be used to assist SMEs in developing skills to assess and prepare their systems. The Government expect, given support from business, to be able to train 20,000 'Bug Busters' by April next year. We welcome these developments but are aware that it will not be easy to train personnel to deal with the most complex aspects of the Year 2000 problem quickly.

Other Demands on IT Resources

85. Many of our witnesses argued that the skills shortage was exacerbated by other extraordinary demands currently placed on the same IT resources. The most frequently cited example was the introduction of European Monetary Union (EMU) on 1st January 1999, which, even without the UK joining in the first wave, involves many organisations, especially those in the financial sector, in complex alterations to IT systems. Taskforce 2000 told us that "the introduction of the Euro is having a major impact on resolving the Year 2000 problem ... we are doing the largest ever IT job we have ever done and the second largest IT job we have ever done at the same time"[133] and Lloyd's of London that "the introduction of the Euro could not have happened at a worse time".[134] Consequently, a few witnesses called for a delay in the introduction of the Euro. In view of our opt-out, this is not a matter for the UK-where financial institutions seem to be well-prepared for those changes that will affect their business. However, the BBA also told us that British banks would not be in a position to cope simultaneously with millennium compliance and preparations for EMU had Britain been proposing to join in the first wave. Apart from anecdotal assurances, there seems to be no definitive information as to the preparedness of their European counterparts which is a matter we recommend the Government takes up during its presidency.

86. Witnesses also pointed out that other legislation and regulatory changes could put considerable demands on IT resources, such as the forthcoming implementation of EU Directives on Data Protection or the changes to telephone dialling codes.[135] The BBA told us that "it is terribly important that over this next vital two years the public sector keeps the demand for systems changes down to a minimum".[136] We agree that it is important to keep demand for system changes down to a minimum.

125  Ev.p. 14. Back

126  Ev.p. 135. Back

127  Q. 138. Back

128  Q. 30. Back

129  Ev.p. 44. Back

130  Q. 64; Q. 138. Back

131  Q. 138; Q. 64. Back

132  Official Report, 17 March 1998, col 1103. Back

133  Q. 41. Back

134  Ev.p. 156. Back

135  eg. Ev.p. 170. Back

136  Q. 506. See also eg. Ev. p. 179. Back