Ex-paymaster general calls for `millennium bug' tax break

A former Treasury minister will today call for the Government to give British firms a tax break to allow them to rid their computers of the millennium computer bug. The call is part of a package of measures which suggests levying a windfall tax on computer firms which are profiting from the problem.

Lord Cope of Berkeley, who was paymaster general for two years in the last government, has asked Gordon Brown, the Chancellor, to introduce an allowance which would permit firms to write off all spending on tackling the millennium bug against tax in the year the cost is incurred.

"At this stage of what is increasingly looking like a disaster scenario for the UK economy, a meaningful lead needs to be taken by the Government," he said.

The Government has attempted to increase awareness of the issue among firms by launching Action 2000. Margaret Beckett, the President of the Board of Trade, is to chair a Cabinet committee on the problem, which involves computers recognising the year as a two rather than a four-digit figure.

However, surveys have shown that many firms cannot afford to tackle the bug, raising the prospect of mass bankruptcies when systems fail.