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Under the Customer First Programme, delivery of grants and loans to Higher Education students in England is being transferred from local authorities to the Student Loans Company (the Company), a non-departmental public body of the Department for Business, Innovation and Skills (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 this 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.
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.
On the basis of a Report by the Comptroller and Auditor General,[1] this Committee took evidence from the Department and the Company on 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[2] 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.
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