August 24 1998 LEADING ARTICLE

 

THE CHIPS ARE DOWN

 

Hit the panic button now to avoid disasters in 2000

 

By now, most people in this country have heard of the millennium bug. They know, or think they know, what the problem is - that computer programs which mark years in only two digits will be unable to recognise the year 2000 and will therefore switch off, malfunction or delete all files on things like savings accounts, contracts, pensions and payrolls. They have also been told that fixing this is technically feasible. They do not expect to start the new century sitting in the dark without electricity, water or telephones, and with government machinery paralysed.

 

They are probably right. Doomsday scenarios tend to remain just that, scenarios. But with only 494 days left in a countdown that no one can halt, computers have begun to reject pension policies and goods with post-2000 sell-by dates - and there will be more of that once the 1999-2000 financial year starts in seven months. Action 2000, the body Tony Blair set up in March to address this "technical timebomb", says that only a quarter of companies have taken "realistic measures"; 500,000 small and medium firms may miss the deadline. And Government is nine months behind the private sector. The National Audit Office, in a survey optimistically titled A stitch in Time, has found such "disarray", particularly in local government, that it says that laggard bureaucracies have no time to tackle more than the "critical" systems. Yet Action 2000 set up working groups to identify the risks to core public services only in June.

 

In the home, enough could go wrong to make domestic life a misery - no central heating or microwaves and a car that either will not start, or will not stop because a malfunctioning chip has jinxed the brakes. Alert consumers will have noted that insurers' renewal notices have begun excluding these hazards; the industry says it has no obligation to insure against the "foreseeable". The simplest transaction - drawing cash or buying food - could be difficult. Traffic lights or train signals could go dead. And these are just the minor hitches.

 

There will be no point planning to get away from it all; if air traffic control systems either in Britain or on the desert island in question are unreliable, there will be no flights. Above all, it would be prudent to avoid being taken ill. As a Commons select committee reported last week, most GPs' surgeries, and more than a third of NHS hospital trusts, have yet to start work.

 

The reason why Y2K, as it is known in America, could create chaos at so many levels is that it is not just mainframe and personal computers which are affected. The more insidious, intractable and far less widely understood dilemma is that any digital control system that records time, down to the humble iron or toaster and up to the unmodified Russian and Chinese missile systems, has "embedded" chips. These can be hard to detect and cannot always be corrected. Even though no more than 5 per cent out of an estimated ten billion may be time-sensitive, it would take only a few to shut down a production line or cause the fatal malfunctioning in a bit of medical equipment.

 

There are no short cuts to a trouble-free Y2K. Each faulty line of code has to be located, changed and tested - a huge task, made harder by the existence of more than 2,000 programming "languages", some of which are unknown to any but the long-retired programmers who devised them. Depending on the business, a company could easily rely on ten million code-lines. Barclays, which thought in 1995 that reprogramming would cost it £3 million, has increased its budget to £250 million. A giant such as Unilever expects fixing its own systems to require 2.5 million man-hours; and its problems are not over then. It has 80,000 suppliers round the globe, and a fifth of them have barely started work. Uncorrected codes can reinfect revised systems. And as we report today on page 44, the Mafia is setting up bogus programming companies in order to gain access to corporations' computers and defraud them of millions of dollars.

 

In no country, even the US, is there confidence that breakdowns can be avoided. In the European Union, the risk is compounded by the need to convert systems for EMU by 1999, diverting effort from Y2K; a US consultant describes the timing of EMU as "one of the worst public policy decisions in history". The costs could be £54 billion in Britain alone, and £400 billion worldwide. Exactly how much is anyone's guess, for the sobering reason that even in the West, many companies have yet to identify all vulnerable equipment, let alone find the scarce technicians able to rewrite programs, and then test them. Few poor countries have got beyond first base; and as America's Information Technology Association observes, "everybody in the world is on board this Titanic".

 

Unless efforts are stepped up, the disruptions could trigger a severe world recession. Governments must strike a difficult balance, fighting inertia and complacency without causing public panic - an eve-of-2000 run on banks could make the direst prophecies self-fulfilling. Among political leaders, Tony Blair scores well on rhetoric, but the £97 million the Government has allocated is clearly inadequate. The best way to avoid millennial panic is a bit more panic now.