Prime Minister's speech about the Millenium Bug
Monday 30th March 1998
Since the election, more and more of you have been telling me about the Millennium Bug. This culminated in a letter from Unilever warning that it could cause a worldwide recession. They quoted an example, which many of you will know, of an aluminium smelting plant in New Zealand, where a programmer had failed to allow for the leap year in 1996. The plant worked perfectly well until the end of 1996, but then, at midnight on 31 December, this small computer fault caused the plant to shut down completely. Shortly after, as Tasmanian time reached midnight, a sister plant failed in exactly the same way. It took one million New Zealand dollars to get them started again.
We face a similar problem in the run up to the year 2000. But rather than being in just one company on the other side of the world, the problem is ticking away simultaneously inside many computers, mainframes and electronic systems all over the world.
This has happened because, to save memory space, many software programmers recorded years using the last two digits rather than all four 98 rather than 1998. That means they cant tell the year 2000 and the year 1900 apart it sounds trivial but it means that any of these systems could fail.
These failures have already started to happen. I was told last week about a manager who noticed recently that his plant had made three batches in a week of a product that was normally made only once every three months. The Millennium Bug had struck. The use-by date on the product was January 2000 but the computer had interpreted that as January 1900. It had therefore decided the products were 98 years beyond their use-by date, thrown them away and ordered another batch.
So the problem starts now, but will gather pace up until the year 2000. And it is serious because there are few, if any, areas of modern life that are not touched by IT. If we don't tackle this problem, the economy will slow as many companies divert resources to cope with computer failures and some even go bust. If we do, we can avert major problems and enhance our reputation as a safe country to invest in.
That is why today's conference is so important and I thank Midland Bank for having the foresight to organise it.
I would like to take a few minutes to explain what the Government's role in all of this is. Government cannot solve this problem alone. Nor indeed does it carry the lion's share of the task. We will only move forward through the efforts of people like you, running businesses and other organisations. But Government is about leadership and we can help in three ways:
* First, raising awareness of the need for action in the private sector;
* Second, dealing with the specific problems in the public sector;
* Third, ensuring the national and international infrastructure is as ready as it can be.
The Private Sector:
Government has much to learn from how business is dealing with this problem. The best companies have been working on year 2000 plans for the last few years. But the rest need to catch up with the best.
The Government's first role is therefore to raise awareness and provide help. That is why we set up the Action 2000 campaign, chaired by Don Cruickshank and why he launched the Millennium Bug Campaign in January. In a short time, Action 2000 has already achieved much:
* A national publicity campaign backed up by a website
* A hotline and advice for small and medium businesses
* Co-operation with the BBC on raising awareness of the issue
* Encouragement to large companies to support action up and down their supply chains.
This is having an effect. Awareness of the year 2000 problem amongst companies is now nearly 100%. But I am concerned that over 25% of businesses have not yet taken action.
We must turn awareness into action, and we must do it now. We are therefore announcing today that the budget for Action 2000s campaign will be raised to ??17m. We are also announcing that Business Links are making the Bug a priority. With Action 2000, they are training their staff to provide advice to companies, including guidance about which programmes and consultants to use.
But we need to do more. This is a unique problem and most of us dont have the expertise to deal with it. Already, a shortage of 50,000 people is building up in IT, particularly in bug skills.
In the Budget we announced an extra ??100m for high technology skills. Today I am announcing that a substantial part of this extra money will go towards tackling the Millennium Bug. We will use ??40 million to set up a network of centres of excellence in IT training. A further ??30 million will be used to help small and medium companies develop skills to assess and fix their Year 2000 problem. We will offer a grant worth on average ??1,300 for each trainee sent on accredited short courses. Provided we get the right response from business, it will be possible to train 20,000 Bug Busters between now and April next year. This will make a real contribution to dealing with the Bug, and to bringing people into employment and then into long term careers in IT.
The Government has listened to what business wanted. We already have advice at the national level. Companies will now be able to get high quality local advice from Business Links. And between now and next April, we will train 20,000 bug busters. We will continue to be open to suggestions as to what the Government can do. But the rest is up to you.
The Public Sector:
However, your efforts would be in vain if they were not matched in the public sector. Your supply chain is only as strong as its weakest link. For your businesses to be year 2000 compliant, you have to have confidence that, for example, the Inland Revenue or the benefits system will also be.
The Government takes this task very seriously. One of the first things which David Clark, the minister responsible for public services, did on coming to office was to ask for an update of the Governments year 2000 plans. He found that although not much had been happening at ministerial level, on the ground, many public organisations were motoring ahead. Since then, we have been working to match that effort with ministerial drive, to make sure that all parts of the public sector match the standards of the best.
Margaret Beckett is chairing a key Cabinet sub-committee -MISC4 - to co-ordinate action on the Millennium Bug, across public and private sectors.
David Clark is chairing a group focusing on the public sector and is reporting quarterly to Parliament.
We are making thorough progress and are announcing today our first recommendations:
First , we are bringing together a central team to co-ordinate the governments work on the year 2000 problem. This will be located in the Cabinet Office and report directly to both Margaret Beckett and David Clark. It is made up of some of the best people in Whitehall and from business and will co-ordinate activity and chase progress across government.
Second , we are spending what is needed on the problem. Many of you have told me that each time you look at your Year 2000 work, your estimate of the cost grows. Its the same for us. Our initial estimate for the cost in central government alone was ??370m. The latest estimates now show this figure as nearly ??400m. This estimate excludes the wider public sector such as NHS Trusts and local government. Estimates which put the total public sector cost at up to ??3 billion are reasonable although with the same possibility that they will increase.
So resources are being found. But we are not complacent. Without careful preparation, there could be major disruption to essential government services. The Audit Commission has looked at how things are going; when their assessment is published in May, it will show that some hospitals and local authorities are behind schedule. Frank Dobson has made clear this is a board-level responsibility, so all NHS board members must pay attention to this issue. By tomorrow night, every NHS organisation will have reported to the Department of Health with their plans and budgets for the Year 2000. The Audit Commission will be publishing regular reports. I hope that future ones show everyone is making rapid progress.
And we will be open about Whitehalls progress too. We recently published on the Internet a full set of departmental plans. We want to encourage open scrutiny and feedback. We would welcome businesses views on the plans, so please get in touch if they can be improved.
The National and International Infrastructure:
The Year 2000 team will have a key task in co-ordinating work in the public sector. But just as important will be co-ordinating the work of public and private sectors in preparing the national infrastructure for the year 2000.
Here I am talking about those companies and organisations which are vital to our day to day lives. Whether the gas, water and electricity companies, the Benefits Agency or the transport system. These are the parts of the infrastructure that we cannot afford to fail in the next two years.
MISC4 is there to address these issues. This will involve a thorough review of the key parts of the infrastructure, based on dialogue with senior managers. We have this week commissioned a study into the risks the country faces in the run-up to the Year 2000. That research will inform action at the local, national and international levels.
We need to act locally, because each area of the country faces different risks. For example, Tyne and Wear have already set up a Working Group with the emergency services and the utilities to deal with the potential problems in their area. John Prescott and Sir Jeremy Beecham, the Chairman of the Local Government Association, are today writing to every local authority leader asking them to do the same. The key here is co-ordination at a local level and I expect every chief executive, if they have not already done so, to start work this week.
We need to act nationally. Last week, Don Cruickshank hosted the first meeting of the National Infrastructure Forum. This brought 70 organisations together to share their experience and start to build a co-ordinated plan both for preparing their organisations and for dealing with the links between them.
It is no coincidence that one of the conclusions of that Forum was that these key organisations are some of the furthest advanced. But it would be foolhardy not to prepare for the possibility of failures. Every organisation must put in place contingency plans in case failures occur in its own systems or in other peoples.
There are well established safety net arrangements for coping with civil emergencies. We will make sure that they are properly geared up to deal with any major problems which could be caused by the Millennium Bug.
Finally, we need to act internationally, because in a global economy other countries problems are our own. We have identified five priority areas where international connections are particularly important: power, telecommunications, finance, defence and transport. And we want to help poorer countries address the problems the Bug will cause for them.
I am pleased to say that Robin Cook and Clare Short have been working on a strategy for the international infrastructure, which we are announcing today:
First , awareness raising. Global awareness of the problem is patchy. In a recent survey by the World Bank, only 37 out of 128 borrowing member countries said they were even aware of the Millennium Bug. Deutsche Morgan Grenfell point out that only six countries have established national awareness-raising campaigns like Action 2000. We need to do far more and the UK can lead here.
I have already raised the subject at last months European Conference involving EU countries and those wishing to join. We are putting the Millennium Bug firmly on the agenda at this years G8, the European Union Summit and this weeks Europe-Asia Summit ASEM. This will ensure the worlds leaders are fully aware of the problem and have discussed its implications.
Second , co-ordination. We need to be able to take an overview of international activity, where the gaps are, and then to co-ordinate efforts across the international spectrum. We propose that the G8 set up a council of experts to do this
Third , action. Once awareness is raised, countries will need the expertise to identify and solve their critical problems. Developing countries will be particularly hard pressed. We want a dedicated fund in the World Bank to provide expert training and advice to developing countries the global bug busters that are needed. We have kicked off the fund with a 10 million contribution. We hope our partners in the G8 and the EU will be able to contribute too.
So, the Millennium Bug is a serious issue. Most people dont realise how serious until they start to deal with it. However, I believe that in Britain we are getting to grips with it. We are working with our international partners to make sure that the world can be as ready as possible for the year 2000. It is clear from those contacts that this is not just a threat, but an opportunity for Britain. Many of our companies are ahead of the game, and will not only suffer less than their counterparts, but also improve our reputation as safe partners to do business with.
I urge you all through todays conference and by taking action when you go back to the office tomorrow, to start to prepare for that challenge within your company and with your suppliers. For my part, I pledge that the Government will do all it can to help you prepare and to prepare itself for the year 2000.
This is one deadline that is non-negotiable. Normal processes will not meet it. But by treating this as an emergency, we can make Britain one of the worlds best prepared countries for the run up to the new Millennium.