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Lord Mackay of Ardbrecknish: My Lords, on a point of clarification, I understood that the noble Lord said clearly that the material from Georgia--I accept

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that it is a small amount--would be stored at Dounreay. How does that fit with the Answer the Minister gave to a Starred Question on 21st May when he said that the,

    "unirradiated highly enriched uranium will be processed into targets for production of medical isotopes"?--[Official Report, 21/5/98; col. 1761.]

Either it goes into storage or it is to be processed, it cannot be both.

Lord Clinton-Davis: My Lords, it is going into storage for the immediate future. What happens to it after that will depend on receiving the appropriate sanctions from the various authorities concerned. I thought I had made that perfectly clear.

Millennium Computer Compliance

5.20 p.m.

Lord McIntosh of Haringey: My Lords, with the leave of the House, I shall repeat a Statement which has been made in another place by the Chancellor of the Duchy of Lancaster on tackling the year 2000 date change problem within central government and the wider public sector. The Statement is as follows:

    "With permission, I should like to make a Statement reviewing progress on tackling the millennium computer problem within central government and the wider public sector.

    "Since my previous report to the House on 3rd March, I have conducted a further round of inquiries of government departments and their agencies and I am now also able to give a picture of progress in the wider public sector. I am arranging for the completed questionnaires received from departments in May and summaries of them and their reports on wider public sector bodies to be placed in the Libraries of the House and published on the Internet.

    "Overall, departments' plans have remained stable since the March review and very little change in scope has been found necessary. We can now identify target dates for business critical systems. Most of the returns show progress in correcting business critical IT systems. A few show dates uncomfortably close to the end of 1999, though they do not involve organisations that provide services direct to the public. The overall target dates and the completion dates for non-critical systems have moved by a larger margin. There are still cases where testing seems to have started without a sufficiently defined strategy and some plans still contain too little information about embedded systems and telecommunication systems. I am following up these issues with the departments concerned.

    "The majority of returns have shown little or no change in the overall cost estimates. Departments are now firming up their estimates and while some previously small estimates may have increased significantly, the overall costs have increased only slightly--now £402 million, compared with

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    £393 million in the previous round. Departments expect to meet these costs from their existing IT budgets and only a minority of returns indicated that it has been necessary to reallocate funds from other budgets. We do not expect operational budgets to be affected.

    "A majority of the returns indicated that departments and agencies feel they have adequate skills to undertake the work, although there is a heavy reliance on outsourcing and consultants. Although about a third of returns stated that shortages of skilled staff could impact on their year 2000 programmes, none of the departments reports significant loss of skilled staff due to the millennium problem, and where skilled staff turnover is normally high, there appears to be no difficulty in recruiting new staff. Most of the organisations reporting difficulties generally are small agencies but the Ministry of Defence and the Northern Ireland Office also reported that difficulties were being encountered in some areas.

    "The returns highlight that a number of departments and agencies are still experiencing difficulties in securing responses from IT suppliers about product compliance. I am asking all departments and agencies to continue to press for this information.

    "The returns indicate that many of the major departments have conducted a full risk assessment and have developed business continuity plans. This is a critical issue for all departments, and Ministers and I will be monitoring this closely.

    "My right honourable friend the Secretary of State for Northern Ireland has asked me to report on the position there. Baseline plans for the Northern Ireland Office and the Northern Ireland departments were published in December 1997. The current quarterly monitoring process shows that departments are making good progress and remain on course to meet the deadline of 31st December 1998 for the conversion and testing of systems, although a small number will not be ready until early 1999.

    "In response to the concerns expressed in this House, the Prime Minister has extended the remit of the Ministerial Group on the Millennium Date Change, which I chair, to include the wider public sector. It is, of course, the responsibility of the chief executives of these quangos, authorities and trusts to take effective and timely action in relation to the date change problem so as to ensure that there is no material disruption to the services which they provide and that appropriate contingency plans are in place.

    "Nevertheless, it is a matter of concern to this House that the public sector as a whole continues to operate effectively after the date change and the ministerial group will take a close interest in the progress being made there. Ministers have been in touch for some time with key organisations which they sponsor to emphasise the importance of tackling the date change problem and to help with advice and support. I have asked them to report on these organisations and I have placed a summary of their

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    responses in the Libraries of the House and on the Internet. I am also encouraging all non-departmental public bodies, organisations and other bodies in the wider public sector to publish their plans for millennium compliance.

    "The quality of the responses varies. They show that all the organisations covered are aware of the problem and are taking action, but there is clearly still a long way to go before we have a complete picture. Some of these organisations are small and the century date change has few if any implications for them. But others are critical to ensuring a satisfactory continuation of key public services over the millennium, such as the National Health Service and local authorities and they will need to re-assure the public that they will be able to do so. The National Audit Office report published last month stated that the framework for managing the remedial process in the National Health Service is in place but that tight control is needed to ensure success. I welcome the National Health Service Executive's statement that the millennium date change problem is its top non-clinical priority and I expect other wider public sector bodies also to treat this as a priority matter. There is not a great deal of time left to put systems in place if progress has so far been slow.

    "Ministers and I will be paying particular attention to monitoring progress in these key areas and reporting to the House regularly. The best way to reassure us all is for the bodies themselves to keep the public informed of their plans.

    "The importance of the year 2000 issue is also widely recognised in the European Union. At the meeting of EU Ministers for Public Administration at Lancaster House on 20th May, Ministers agreed to review progress at the next meeting in Vienna and to exchange information on the action that governments were taking to help ensure continuity of operations in public and private sectors. They invited me to take the lead and I have today started the process by sending the UK's contribution to this exercise to my European colleagues.

    "A new team has been formed within the Cabinet Office reporting to me and the President of the Board of Trade. This 'Year 2000 Team' has strengthened arrangements to drive forward action on the date change, both within government and through working with Action 2000 in the private sector. The reports we have so far show that the message is certainly getting across and provide some reassurances that action is being taken. They equally show that we cannot afford to let up the pressure and that we still need to monitor progress closely. This I will certainly do and continue to report to the House on a quarterly basis."

My Lords, that concludes the Statement.

5.28 p.m.

Lord Lucas: My Lords, I am grateful to the noble Lord for repeating that Statement. I am certain in my own mind that he is millennium compliant. I run on a

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rather older operating system and I await anxiously the update which the noble Lord and his colleagues have promised. However, that raises other matters.

The Statement, as made, gives me great cause for concern. It seems to me to show symptoms of overoptimism, a lack of critical awareness of the problem, a general acceptance of slippage and unsatisfactoriness, and no feeling of urgency or commitment to the process. The Government let our plans and preparations for dealing with the millennium bug lapse when they came into office and they still are not up to speed. I would have hoped by now that they would both have realised the magnitude of the problem which they face and also begun to understand what the symptoms of the Civil Service in failure mode are. This Statement shows them full-blown. It is a cause for much concern that the Government do not seem to realise that.

Let us take a short look at the schedule provided by the Government. I have only a couple of small pieces of paper compared with the great wodge of papers with which they will provide us. Even in that information there are major causes for concern. I refer to little things such as the British Embassy in Fairyland which presumably believes it will be millennium compliant in the year 2000. March 2000 is the date by which the Foreign Office thinks it will be able to bring its systems up to date.

The matter that causes me concern beyond any other is the approach of the Ministry of Defence. It is the largest of the ministries and has the largest problem in this area. Its target date is December 1999 for its business-critical and embedded systems. Are we to expect that our nuclear warheads will decide at the millennium that the world no longer exists, and make their own contribution to it? It is an awesome thought that the Government should even begin to consider such a deadline acceptable, let alone practical.

Local authorities are reported to be at varying stages of readiness. Given what we know of local authorities, that is not exactly comforting. It is said of the Department of Health and its various allies and offshoots that they will either have everything done by September 1999 or have effective contingency plans in place. Already the Government are anticipating failure in the National Health Service. What, in the context of an over-stretched, under-staffed service such as the NHS are we to anticipate by way of "effective contingency plans" if the operating systems of a hospital suddenly close down at midnight on 31st December or even earlier? I cannot see how the Government can calmly contemplate the concept of contingency plans coming into operation and think that acceptable in regard to the way in which the NHS is going forward.

The deadline for compliance in the nuclear industry is set at March 1999. Who is ever going to admit to that deadline slipping? How are the Government ever going to be told by civil servants or those who report to them: "No, we are worried about that. It looks like September", or, "It may be that we shan't make December". The Government will not know what is happening in that sort of area until it is far too late to do anything about it.

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I do not yet know the content of the raft of information that the Government will show us. I hope that the individual returns will allow us to see that departments are making progress. The Statement contains no example or hope to indicate that factual information will enable us to see that progress is being made. We are promised ministerial monitoring. But mere deadlines set at March and June 1999 cannot be monitored. There will have to be intermediate targets. I hope the noble Lord will confirm that there is a series of intermediate milestones that are being met. I hope that the noble Lord will confirm in future Statements that the Government will report on the meeting of those milestones, rather than offer woolly statements such as, "We think we shall get it done by June 1999", which is so far away that they can "factor in" any catch-up procedure that they might imagine without facing the reality; namely, that deadlines are slipping and completion may not occur.

The Statement suggests that the total cost of the exercise is £400 million. Will the noble Lord confirm that the actual total cost is in the order of £3 billion when the National Health Service, local authorities and other public bodies are taken into account? Will he also confirm that the Government intend fully to fund that cost, and in particular not expect the National Health Service to meet its immense liabilities out of its existing resources? The Statement indicates that some departments are falling behind and many are having trouble with suppliers not responding to their requests. Will the Government information to be placed in the Library indicate which departments are falling behind and which suppliers are not responding? If not, will the Government make that information available to us?

The overall concern is that the deadlines that have been accepted and adopted by this Government are far too late. They are March and June 1999 for critical systems, and September 1999 for embedded systems. There is no way in which those deadlines can slip and still allow the Government or anyone else time to deal with the problems that will result. It is essential that the Government tighten up on those deadlines and get matters completed considerably faster. It is essential that they start to put in place some plans for disaster control.

It is clear that some major system somewhere will fail at the millennium. Let us imagine what would happen if the national grid went down. It would not exactly delight people or help them celebrate the millennium. It may be that civil servants and Ministers rest comfortable in the thought that they will hold a good party for the millennium but will not book flights anywhere because it might not be safe. It is time for them to accept their responsibilities and make sure that the millennium works well for all of us. That includes setting out plans and arrangements to deal with the disasters that will occur and making sure that they have the minimum impact. This problem will not go away. It is a problem that we shall all have to face up to when the time comes. We look to the Government to take the matter far more seriously in the remaining few months before these pigeons all come home to roost.

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5.35 p.m.

Lord Razzall: My Lords, I, too, wish to thank the Government for repeating in this chamber the Statement made in another place. I am not sure that I entirely agree with the tone of some of the following remarks. However, this is clearly an important issue, as the Government rightly recognise. In the brief time available, I wish to ask the Minister a number of detailed questions and two of a more general nature.

The noble Lord, Lord Lucas, pointed out that on page 2 of the Statement there is a clear reference to the fact that the Ministry of Defence and the Northern Ireland Office are having difficulties in dealing with the issues and, in particular, in recruiting the required number of skilled staff. Bearing in mind the significant issues of timing to which the noble Lord referred, is the Minister in a position to give any indication as to what steps are being taken by those two ministries to deal with those difficulties? As we all know, the recruitment of skilled staff is a significant problem in the IT area in both the private and public sectors. It is slightly bland simply to say that those two key ministries are having difficulties recruiting staff. We should like to know what steps the Government, and those ministries in particular, are taking to remedy that defect.

Secondly, the Statement indicates that departments and agencies are still experiencing difficulties in securing responses from IT suppliers in relation to product compliance. That has been a perennial complaint. Will the Minister confirm that a major reason is that particularly in relation to older systems, where an IT supplier has bought in products from a third party supplier, often the IT supplier is not in a position to provide an answer as to whether or not the system is millennium compliant? That problem will not go away. Will the Minister confirm that this is not merely a case of suppliers saying that they are not prepared to provide the information; in many cases they are not in a position to know. That will clearly present a problem in both the public and the private sector.

My third more detailed point seeking amplification on the Statement is this. Considerable weight is given to the importance of non-departmental public bodies. We are all aware of the importance of the non-departmental public bodies, quangos or whatever one wishes to call them, as an interface between the Government and the population. The obvious reference is to the National Health Service and local authorities, but there are many other such bodies.

As a former member of a local authority, I have no doubt whatsoever that this is not only a question of how the problem is dealt with; it is a question of whether or not resources are available in those bodies to deal with it. I should welcome confirmation from the Minister, without going into the necessary judo or wrestling that goes on between government budget-setters and those bodies each year, that the necessary resources will be made available, if necessary, by the Government to ensure that non-departmental public bodies are in a position to deal with this problem. There will be no point in the Government saying in the year 2000: "Of course, it was nothing to do with us. The Chancellor

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always said that he would stay within the spending limits set by the previous government and therefore we were not prepared to make any more money available to those bodies to enable the problem to be dealt with".

Those are my three specific questions on the Statement. Perhaps I may make two points of a wider nature. The Statement obviously covers only the operation of the problem, the prospective solutions to the problem and action taken by the Government towards solving it in the public sector. But, as we all know, there is still a significant problem in the private sector. Even in these days of new Labour, presumably the Government do not take the view that the private sector is nothing to do with them. I should be grateful for the Minister's confirmation that, in the Government's view, the private sector is taking adequate action to ensure that products and buildings will be millennium-compliant in time.

I should like to expand a little on a point made by the noble Lord, Lord Lucas. We tend to assume that the millennium bug is all about whether our British Gas bill will turn up on time; whether business as we know it will come to a stop; or, dare I say it, whether the noble Baroness, Lady Rendell, cannot finish her latest novel because her PC has crashed. It will not only be about that, of course; it will be about such questions as whether our air traffic control systems work satisfactorily and whether people will feel safe travelling on planes on 1st January 2000; what will happen to our weather satellites; whether GCHQ's supply of information will come to a standstill as a result of a millennium failure. The Government could perhaps give a more explicit assurance that they are satisfied that those items which are significant for the safety of the individual and of the Realm will be dealt with in time. As an aside, I suspect that the example of the national grid was a bad one, if the experience in New York 10 years ago is anything to go by.

5.45 p.m.

Lord McIntosh of Haringey: My Lords, I am grateful to both noble Lords for their responses to the Statement. Perhaps I may say first to the noble Lord, Lord Lucas, that I am far from being millennium-compliant. My real-time clock is okay, but I have had to do various things to my BIOS clock, and there are still swathes of software on which no corrective action has been taken. The noble Lord is too kind to me in that respect. The liveware is still going.

I was taken aback to some extent by the tone of the noble Lord's observations, which contrasted with those of Mr. John Redwood, in another place, who described the Statement as being truthful rather than, as the noble Lord, Lord Lucas, said, over-optimistic. The noble Lord spoke about our having let previous government action lapse. That simply is not true. The previous government action, which I have studied in some detail, involved the setting in place of CITU and the CCTA and preliminary action on the central government sector. Even at that time, under the previous government, it involved a deadline for compliance of January 1999, with a compliance date for financial systems of April 1999 at the Government's financial year-end. The noble

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Lord complained about 1999 deadlines, but they were already in place under his government before we came into power. Immediately, on 21st May last year, the Chancellor of the Duchy of Lancaster wrote to all departments seeking much wider information than that which had been requested by the previous government. That has been followed up, as is evidenced by the Statement, by action in the wider public sector, in the National Health Service, local authorities and NDPBs.

In response to the point made by the noble Lord, Lord Razzall, we recognise, and have always recognised, that the private sector is the Government's concern. Action 2000, which is controlled by the Cabinet committee MISC 4 chaired by the President of the Board of Trade, is specifically designed for that purpose, although I hope it will be agreed that our approach has not been one of bullying the private sector but of trying to help it. I shall return to some of those issues in a moment.

The noble Lord, Lord Lucas, referred to departments--in particular, the Foreign Office and the Ministry of Defence--where the deadlines are later than they should be in 1999. I agree with him. I do not believe that those deadlines should be allowed to approach so closely to the millennium date when they cannot be changed without there being dangers in the slippage. There is a list of examples in the documentation of slippage of more than three months in those dates. The individual returns, which are available in the Library--I can give the noble Lord a copy now if he would like one--recognise the danger of slippage and set that out department by department. They also set out intermediate targets, which are what the noble Lord asked for. There are departments that will have to do a good deal better than they have reported to us. However, we are not just requiring them to report; we are taking action to ensure that their work is speeded up. That is why we have set up the special team within the Office of Public Service for that purpose.

I think the noble Lord is a little unfair about the National Health Service. The National Audit Office report, published on 15th May, says, as is said in the Statement, that the framework for managing the remedial process is in place. I accept that that is only the first point, but I do not think that that is a reason for panic about the National Health Service. Later this month we shall be able to publish a management paper, produced by the Audit Commission, which covers the National Health Service and local authorities and goes beyond an analysis of the scope of the problem to giving practical help to individual National Health Service Trusts and to individual local authorities, with a series of do's and dont's of testing, case studies and so on. I agree with the noble Lord, Lord Razzall, that the key to this is to avoid overlap and to make sure that the lessons that are learned by the lead authorities are rapidly made available to other authorities.

The noble Lord, Lord Lucas, asked me about the £400 million, rising to £3 billion. These are different figures. The £400 million applies to central government departments and agencies; the up to £3 billion figure, which the Prime Minister gave on 30th March, is the figure for the wider public sector. I do not claim that any of these figures are accurate; there is no way in

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which they can be. Estimates from individual, large private companies show how much those companies vary one from another and in total.

The noble Lord asked me whether we would fully fund all of these costs or whether they would be met from existing resources. The Statement made clear that in the bulk of cases the costs will be met from existing IT resources and that in fewer than one-fifth of cases will public authorities and departments have to raid money from other budget heads. We are not fully funding them; no, they will be fully funded from within existing budgets.

The theme of the noble Lord's comment was that the deadlines are too late. I do not take that view. Where they are late, as they sometimes are, we will do something about it. But our theme must be help rather than bullying.

The noble Lord, Lord Razzall, asked about staff shortages in the Ministry of Defence and the Northern Ireland Office in particular. Both those departments are using outside consultants and bringing in contract programming skills for these purposes. Indeed, the Ministry of Defence is bringing in programmers from outside this country. I have no doubt that it has the security elements well in hand.

The noble Lord talked of the difficulty of obtaining information from IT suppliers and referred to the problems which suppliers themselves face in analysing older equipment. That is right. There is a run on people who are skilled in Basic, and Cobol from 15 or 20 years ago. However, in general, for most of the public sector, first, all our purchases have been millennium compliant since September 1996 and, secondly, over the period of time we are considering, the normal replacement cycle will deal with the majority, though not all, of those problems.

I believe I answered the other questions of the noble Lord, Lord Razzall, out of turn. If I have not, I shall write to him.

5.51 p.m.

The Earl of Balfour: My Lords, perhaps I can ask one question. As a Minister, can the noble Lord, Lord McIntosh, consider the problem of where mistakes are made in a computer. We all realise that it is easy to feed in the wrong number. But it appears to me, from all my research, that only the most senior management personnel are permitted to correct even a number such as a date or a reference.

For example, it took me two-and-a-half years to obtain the correct field numbers for my farm in Scotland. That resulted in part of the set-aside subsidy not being paid to me, though it was no fault of mine. A mistake in council tax takes around six months to correct and, from what I can gather, at the present time only the most senior management personnel can alter a mistake even though it may be something as simple as a reference number. That makes life extremely difficult

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and perhaps some less senior people may be permitted to make those alterations in view of the problems that may arise at the millennium.

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