MP's publish report on delivery of student finance

The Rt Hon Margaret Hodge MP, Chair of the Committee of Public Accounts, today said:

“There must be a step change in the performance of the Student Loans Company if students are to receive the efficient, effective, value for money service to which they are entitled.

“The first year of the new system was chaotic. By the start of term in Autumn 2009, fewer than a half of loan and grant applications from new students had been fully processed. The Company failed to communicate about the problems with students. The worst point was in September 2009 when nearly nine-tenths of telephone calls to the Company were left unanswered.

“Many students had to do without their financial support for weeks if not months. For students with disabilities the failures were even greater. The Department also failed in 2009 to manage and monitor the programme effectively. Even as serious problems emerged, officials did not take prompt action. We are disappointed and concerned that no official seems to have been held to proper account.

“The Company has improved its performance in 2010 but not by enough and we shall return to this issue in Autumn 2011 when we shall expect to see a substantially better service”

Margaret Hodge was speaking as the Committee published its 8th Report of this Session which, on the basis of evidence from the Department for Business, Innovation and Skills (the Department) and the Student Loans Company (the Company), examined the Customer First Programme’s performance in 2009 and how it could be improved. In October 2010, the Department provided the Committee with an Updating Memorandum which included information on the Company’s performance in 2010 in processing applications for the 2010/11 academic year. The National Audit Office re-performed the analyses to verify the reasonableness of the Department’s figures.

Under the Customer First Programme, delivery of grants and loans to Higher Education students in England is being transferred from local authorities to the Company, a non-departmental public body of the Department. In 2009, the first year of a three-year phased implementation, the Company began assessing applications from new students; by 2011 it will be responsible for applications from all students in England.

Performance in processing applications and communicating with students in the first year was completely unacceptable. There were failures in the Company’s management and the Department’s oversight, and when these problems became apparent they were not tackled with urgency. As a result, many students waited weeks or months for their financial support. Students with disabilities were particularly hard hit.

Fewer than half of all applications were fully processed by the start of term, and the Company took on average a third longer to process applications than local authorities did the previous year. The Company answered fewer than half the calls it received in 2009; in September 87% of calls went unanswered. Disabled students suffered disproportionately in 2009, as the Company devoted too few staff to processing their applications.

The Company also demonstrated a number of IT failings in 2009: most importantly, it did not sufficiently test its crucial document scanning – the failure of which was the catalyst for the failure of the entire system.

The Department’s risk management and performance monitoring were all found severely wanting in 2009. The Department underestimated the risks in centralising the service, the Programme Board lacked skills and experience, and there was poor communication between the Programme Board, the Company’s Board, and the Department.

The failings in this service highlight wider weaknesses in the Department’s oversight of its devolved services. We are disappointed and concerned that responsible officials appear not to have been held to proper account for their failures. There are also a number of lessons – for example, in piloting programmes and testing IT systems – which should be studied by other departments.

In 2010 the Company has improved its performance, although the rate of improvement has been disappointing. We expected better. Over two-thirds (69%) of applications from new students were fully processed by the start of term, the Company’s contact centre has outperformed its targets for answering calls, and management information and governance arrangements have been overhauled. However, a quarter (26%) of applications were not sufficiently processed for students to receive even an interim payment by the start of the first term, which was only a limited improvement on the 34% of applications unprocessed in 2009. and uncertainties remain over the Company’s ability to deliver and maintain a service that provides value for money.