Examination of Witnesses (Questions 80
- 85)
WEDNESDAY 21 APRIL 1999
MR GEORGE
MCCORKELL,
MR PETE
SHARKEY and MR
BRIAN BARNES
Mr Leigh
80. Four very brief questions on preparations
for the euro. Can you tell us something about the challenges you
face; the costs being incurred in advance of a parliamentary decision
by you, preparing for the euro; whether we could avoid the difficulties
of a `big bang' approach by allowing payment to be made in sterling,
for a time; and whether there would be any sound technical reason
for delaying a decision beyond the 2000 Year, to avoid the millennium
bug, on the euro?
(Mr McCorkell) I think, in relation to the euro,
we are obviously working on euro compliance, as is the rest of
Government, and we created a project specifically to look at this
from the Department's point of view last year. That project has
been working across the Department and across Government to establish
(a) what the requirement is and what the options are, for implementing
that requirement. The analysis of that work, we are now in the
analysis phase of that work, and that is targeted to finish in
June. So, I think, in reality, to answer your list of questions,
then, to give some real answers, it will be June before I can
give some real answers. However, we do know that we will have
potentially significant work on each of our benefit systems, the
timing of the transfer to euro will be quite significant in that,
because, obviously, in our new contract with AFFINITY to replace
these systems they include euro compliance, so it depends when
the euro is introduced which ones we may or may not have to change
over. And we will be looking at all the options across that, but
it is likely to be June before I could give you reasonable answers
to those particular questions. I think we believe that this is
likely to cost more than the Year 2000 problem, the way it is
starting to shape up; is that right, Peter?
(Mr Sharkey) Yes; indicative. You might be interested
to know, we already receive euros, we are euro compliant, as far
as we need to be, because National Insurance contributions can
be received in euros, from 1 January 1999, as can VAT. You also
said about, instead of the `big bang', continuing to be paid in
sterling. I do not know if this is policy, there has been a lot
of discussion in the press, but there will be a period, will there
not, where it is not as if on Friday you can work in sterling
and on the Saturday it is all the euro, I think the length of
that period is up for discussion, but there certainly will be
a period where both sterling and euro, it is anticipated, will
be in circulation, and one would assume, from a departmental perspective,
both will be running in parallel. And, in some ways, whilst that
is good, in that it is not `big bang', in some ways it is easier
for the IT systems to do one one day and the other the other,
running two in parallel, and it might be quite difficult. But
there are lots of discussions going on around Government more
widely, and we are fully involved, as George said, in that, and,
as a Department, fairly well prepared in our thinking, we believe.
81. You said the cost is going to be more
than anticipated; what costs have you incurred so far, what were
the anticipated costs, and what do you expect the costs will be?
(Mr McCorkell) Again, I would prefer to give you
a note on it[7],
but the costs so far are relatively small, because we are in the
definition analysis phase, so it is likely to be the small team,
which is probably no more than three or four people, who are working
on doing the analysis, in order then to come up with the real
costs and the plan of action and the options for taking it forward.
82. But why did you say that you envisage
the costs will be greater, what were you meaning by that statement?
(Mr McCorkell) That is purely based on the indications,
because, clearly, the people who are working and starting to do
this analysis are getting a feel for the scale of the change that
we will have to make; they can, obviously, relate that to the
Year 2000 programme, that we have already been through, and say
"Well, changing all your systems for that sort of thing costs
this amount of money, and therefore this is purely sort of a judgement,
as work is ongoing, that the potential is for it to be more costly."
83. By how much, 50 per cent more, 100 per
cent more; you must have a rough idea?
(Mr McCorkell) I would not be prepared to put
any figure, I think it is very much just an indicative judgement
and, as I said, until the analysis is complete and——
84. What do you mean by an indicative judgement,
what are the indications?
(Mr McCorkell) All I can say is that, when people
who are starting to do this analysis and are collecting the information
and starting to work out the requirements, their personal feel
is this is bigger than the Year 2000; it is no more than that,
it is not a figure that you should base anything on.
(Mr Sharkey) Can I just say why the judgement
becomes from—the Year 2k problem was an IT issue that affects
business, the euro is a business issue that affects IT, and the
effects on the business are much greater. Year 2k only affects
the business where it goes wrong, in theory. The business issue
of the euro, which means all your business processes change, all
your stationery changes, all your rules change, and all that,
and the IT changes as well, in the same way, so the scale of the
problem is just much bigger, from a business, not an IT, necessarily,
perspective.
85. Is there any difficulty then with this
coming in at exactly the same time as the Year 2000, you did not
answer that point, or is that just a problem that you can live
with; if we decide to join the euro around 2000, or very shortly
after, is this going to be causing any problems, or not?
(Mr McCorkell) If you were to decide to join the
euro in the Year 2000, I would strongly recommend against it.
Mr Leigh: There is
an answer worth getting, I suppose. Thank you.
Mr Pond: I hope that
has not weakened your enthusiasm for the euro, Edward.
Chairman: Gentlemen,
that was extremely useful. Thank you very much for your time.
You have obviously spent a lot of time preparing for this morning.
It is a very important part of the Social Security field, in the
broadest sense, and the work that you do is much valued. If we
have been giving you what appeared to be a bit of a hard time,
it is only because, I think, really, speaking for myself, I do
not think that you get listened to enough, maybe that is because
you are not throwing your weight about enough, or maybe it is
because people to whom you are talking have got deaf ears; but
I think that the work you do is important. We are very grateful
to you for helping us with our examination of the Agency's work
this morning. Thank you for coming.
7 See Ev. pp. 29-30. Back
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