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Student loan system failure could happen again

Watchdog warns as SLC handles double apps

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An investigation into the failure of the Student Loan Company to properly process applications has revealed the disaster could be repeated later this year.

Spending watchdog the National Audit Office said that failures of oversight from the company's board, and from Mandelson's Department for Business, Innovation and Skills meant the difficulties and risks of the project were underestimated.

The NAO warned that the company is expected to process twice as many applications this year with no proof that it will be able to provide a decent service.

Amyas Morse, head of the NAO, said: “The question must be asked how the Company, given its failure in 2009, will deal with twice as many applications in 2010, when it becomes responsible for applications from both first and second year students. The Department and the Company must give the highest priority to achieving a radical improvement in the service..."

The NAO found the SLC launched its document scanning system without properly testing it. When it failed the contingency plan was both inadequate and implemented late. These failures led to a backlog of paper applications which the company failed to store in a way which meant they could be easily retrieved.

A new system is due to go live this month. The NAO said the SLC believed it had carried out enough testing and backup planning but it had "been over-optimistic in the past and it remains to be seen whether the system will operate satisfactorily in a live environment in peak months".

By the start of term all these problems meant the SLC had processed less than half of the applications. The company failed to tell students what was going on, an action which would have reduced pressure on its call centres. It also failed to talk to universities and colleges.

The NAO said the SLC board failed to oversee the process and was unaware of problems until it was too late.

The Customer First Programme board also lacked expertise. It was chaired by the Department, with a representative from the SLC and one from HMRC. It had no experience of delivering such a big centralisation project, no IT experience and no finance or human resources expertise. The NAO recommended recruiting better board members

The Department also failed to monitor the SLC. The company failed to deliver value for money. It took a third longer to process applications than the local authorities which it replaced.

More from the NAO available here. ®

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