Customer First Programme: Delivery of Student Finance - Public Accounts Committee Contents

1  The Service provided by Company

The Customer First Programme

1. The Customer First Programme (the Programme) is an initiative of the Department for Business, Innovation and Skills (the Department), designed to centralise and modernise delivery of grants and loans to students from England. Its main aims are to: improve customer service (through faster and more consistent processing of applications); achieve financial savings; and enhance the governance of the system. Under the Programme, responsibility for assessing applications for student finance is being transferred, over three years, from local authorities to the Student Loans Company (the Company), an arm's length public body chiefly funded by, and accountable to, the Department. In 2009, the first year of implementation, the Company became responsible for assessing all first year students; by 2011 it will process all applications from students in England.[3]

2. The first year of the new system was not a success: the Company had major problems in processing applications and in customer service. In March 2010, the Comptroller and Auditor General concluded that the service had not achieved value for money.[4] Previously, at the joint invitation of the Minister of State for Higher Education and the Company's Chairman, Professor Sir Deian Hopkin had carried out a review of the service, which was published in December 2009.[5] In spring 2010, the Department commissioned consultants PricewaterhouseCoopers to assess the Company's readiness to deliver an improved service in 2010 and its progress in implementing the recommendations of the Comptroller and Auditor General and Professor Hopkin.[6]

Performance in processing main applications

3. By the start of the first term of the 2009/10 academic year, the Company had fully processed only 46% of the 385,200 applications from new students for student support (Figure 1). In 5,600 cases, students had applied in time for the Company's administrative deadlines of April and June 2009, but had still not been paid by mid-November. Even by the end of January 2010, 23% of all new applications had not been fully processed and paid.[7]
Figure 1: Comparison of performance in processing applications from new students at the start of term, 2008/09 to 2010/11
Academic year
(by local authorities)
(by the Company)
(by the Company)
Applications received 360,800 (100)385,200 (100) 396,600 (100)
Applications fully processed at start of term 228,000 (63)176,200 (46) 272,800 (69)
Provisional or interim assessment made 37,200 (10)76,300 (20) 21,500 (5)
Insufficiently processed to enable any payment at start of term 95,600 (27)132,700 (34) 100,000 (26)

Sources: C&AG's Report (Figure 8) for 2008/09 and 2009/10 data; Updating Memorandum

4. The Department and the Company told us at the hearing that they were confident the Company would markedly improve its performance in 2010 compared to the previous year, and that the majority of applications would be processed by the start of term.[8] Even where applications were received late and would not be fully processed in time for the start of term, the Company said it would make interim payments (of 75% of the full maintenance loan). This led the Company to conclude that every student ought to start university in 2010 with some financial support, even if they applied late.[9]

5. The Updating Memorandum showed that the Company had, by the start of the first term of the 2010/11 academic year, fully processed 69% of the 396,600 new applications (Figure 1). This means the Company had fully processed more applications, and a higher percentage of applications received, from new students by the start of the first term than achieved either by the Company in 2009 or by local authorities in 2008.[10] For another 5% of applications, the Company had made a provisional or interim assessment, meaning that these students would still be entitled to interim payments. However, 26% of all applications (just over 100,000) had not been processed sufficiently to enable any payment at the start of term.[11]

6. As at 10 October 2010, the Updating Memorandum showed that the average time to process an application from a new student in 2010 was 10.8 weeks. For 2009, the Comptroller and Auditor General found that new applications had taken 12.4 weeks on average, although this measurement was taken at the end of January 2010 (rather than October 2009, which would be directly comparable with October 2010). However, for 2010, the Company is still slower than local authorities in processing applications from returning students (8.7 weeks compared with 5.6 weeks).[12]

Performance in processing applications for targeted support

7. In addition to student loans and grants, the Government makes a number of targeted support grants available to students with particular additional needs. The largest of these funds is Disabled Students' Allowances, which is intended to help meet the extra course costs students can face as a result of physical or mental disability or specific learning difficulty.[13] By the end of December 2009, the Company had fully processed and made a first payment on less than a quarter (24%) of the 17,000 applications it had received for these Allowances. These applications took the Company on average 20 weeks to process.[14] At the hearing, the Company apologised to those disabled students who had been affected by the delays, and acknowledged that its service last year had been completely unacceptable.[15]

8. At the hearing the Company told us that the service in 2010 should be better, since the number of advisers handling these applications had been more than doubled to 52 in July 2010. It also stressed that those who had performed this role last year now had more experience, had been given enhanced training, and processes had been streamlined. Overall the Company assured us that disabled students would not be as disadvantaged by the system as they had been in 2009.[16]

9. The Company told us that its inexperience in dealing with Disabled Students' Allowances contributed to its problems in processing these applications in 2009.[17] This was despite the fact the Company had, since 2006, been running a pilot programme, in which it took over the student finance processing responsibilities from 11 local authorities. The Comptroller and Auditor General concluded that the Company had failed to design and test the pilot in such a way as to obtain useful lessons for running the full service on a national scale from 2009.[18]

10. According to the Updating Memorandum, as at 8 October 2010 the Company was taking on average 17.8 weeks to process and pay applications from new students for Disabled Students' Allowances. Of the 16,000 applications from new students it had received for the 2010/11 academic year, 5,200 (33%) had been approved, with first payments being made in respect of 3,300 (21%).[19] This was an improvement over the performance in October in the previous two years but a lower proportion than had been processed and paid by the end of December 2009.[20]

11. The Company's targets for processing these applications have also been made tougher, with 95% of applications expected to be processed within the target times for two key stages of processing (assessing whether a student is eligible, then assessing the support to which they are entitled). In the period February to December 2009, the Company had achieved 45% (first stage) and 15% (second stage) of applications processed before its then 15-day targets.[21] For both stages, the target was reduced from 15 working days for the 2009-10 financial year to 10 working days for 2010-11.[22] In the year to date, the Company has missed both targets, achieving 80% for the first stage and 92% for the second stage; although in September 2010, the latest month for which there were complete data, this had improved to 100% and 93% respectively.

12. It was impossible to assess the Company's performance in 2009 regarding other forms of targeted support, such as Childcare Grant and Parents' Learning Allowance. While the Department had set targets for processing applications, the Company did not collect the management information that would allow its performance to be assessed against them.[23] For the 2010-11 financial year a new target has been introduced for Childcare Grant (95% of applications to be processed within four weeks of receipt), and the Company is now measuring its performance against it: in September 2010 it was meeting this target in all cases.[24] The Updating Memorandum stated that other forms of targeted support (such as Parents' Learning Allowance) are now included within the six week target for processing main student finance applications.[25]

Performance in handling customer contact

13. The Company runs a contact centre that handles calls from applicants and their sponsors. In the 12 months to the end of January 2010, more than half (56%) of all calls to the Company went unanswered. At its worst, in September 2009, the Company received some 4 million calls (as many as it had received in the whole of the previous year), of which 87% went unanswered.[26] The Company had set a performance target of answering 55% of calls within 60 seconds, which was far behind industry benchmarks. In addition, in measuring its performance, the Company excluded callers who were unable to connect to the queue.[27] In 2009 it also did not assign enough staff to its contact centre to cope with forecast peak demand.[28] Assessing the Company's readiness to cope with peak demand of calls in 2010, PricewaterhouseCoopers suggested the contact centre was still under-resourced, and recommended its peak time staffing be increased by 100 telephonists to meet the predicted volumes.[29]

14. The Company apologised to those who had received poor customer service in 2009 and accepted its performance was completely unacceptable.[30] The Company told us it had increased its number of telephonists, added another 600 telephone lines, and improved its system of interactive recorded messages. The Company has also toughened its target and aimed to answer 80% of all calls, and would include those who do not get through in its measure of unanswered calls. The Department told us that the management information it was now receiving presented a more accurate picture of customer service at the contact centre. As at late July 2010, the Company had answered 90% of all calls in the year to date.[31] The Updating Memorandum showed that this performance was maintained through the peak period for calls, with the Company answering 96% of calls in July, August and September.[32] However, the Company's target still falls short of accepted best practice, which is to answer 95% of all calls.[33]

3   C&AG's Report, para 1.2 Back

4   C&AG's Report, para 18 Back

5   Review of the delivery of financial support to students in England by the Student Loans Company for the academic year 2009/10 and plans for academic year 2010/11 (Hopkin Review), Professor Sir Deian Hopkin, December 2009,  Back

6   Independent Health Check Review of Student Finance England , PricewaterhouseCoopers report for the Department for Business, Innovation and Skills and the Student Loans Company, April 2010 Back

7   C&AG's Report, paras 5-6,2.15-2.16 Back

8   Qq 10-11, 15 Back

9   Q 141 Back

10   Ev18; C&AG's Report, Figure 8 Back

11   Ev 18 Back

12   Ev 18; C&AG's Report, Figure 6 Back

13   C&AG's Report, para 2.17, Appendix 2 Back

14   C&AG's Report, paras 2.18, 2.20 Back

15   Qq 16-17 Back

16   Qq 18-20 Back

17   Q 22 Back

18   C&AG's Report, para 2.2 Back

19   Ev 18 Back

20   C&AG's Report, para 2.18, Ev 18 Back

21   Ev 18; C&AG's Report, Figure 11 Back

22   Ev 18 Back

23   C&AG's Report, para 2.22 Back

24   Ev 18 Back

25   Ev 18 Back

26   C&AG's Report, paras 10, 2.25  Back

27   C&AG's Report, para 2.24 Back

28   Hopkin Review, p 18 Back

29   Independent Health Check Review of Student Finance England, PricewaterhouseCoopers report for the Department for Business, Innovation and Skills and the Student Loans Company, April 2010, p 8  Back

30   Q 15 Back

31   Qq 70-71, Q 121 Back

32   Ev 18 Back

33   Committee of Public Accounts, Twenty-fourth Report of Session 2009-10, HM Revenue & Customs: Handling telephone enquiries, HC 389, para 2 Back

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Prepared 7 December 2010