The Customer First Programme: Delivery of student finance

The service provided to students applying for finance in 2009 did not achieve value for money, according to a report today by the National Audit Office. There were major problems in the processing of applications – with fewer than half new applications being fully processed by the start of term – and in communications with applicants.

In 2009 the Student Loans Company took over the processing of loan and grant applications for new students from England which had previously been carried out by local authorities.

According to today’s report, the Company’s document scanning system was launched before being fully tested. Its failure was critical, and the Company’s contingency plan was both flawed and implemented late. The Company took 33 per cent longer to process applications in 2009-10 compared with local authorities in 2008-09, and only 46 per cent of new applications had been fully processed by the start of term. From February 2009, applications arrived more quickly than the Company could process them and, by September 2009, 241,000 applications had been received but not fully processed. This led to a dramatic increase in the volume of calls, with the Company receiving over four million in September – 87 per cent of which were unanswered. The Company had failed to communicate key messages to applicants that would have helped to reduce unnecessary calls.

The customer service provided by the Company in 2009 was poor. Half the students responding to an NAO survey said they had to send in the same paperwork more than once, while 17 per cent said the Company had told them it had lost some of their documents. Overall, from February 2009 to January 2010 the Company answered fewer than half of the calls to its contact centre.

The NAO has also raised concerns about the Company’s performance in managing Disabled Students’ Allowance. By the end of 2009, only 4,000 of 17,000 applications had resulted in a payment, taking an average of 20 weeks to be processed. For other ‘targeted support’ grants (Childcare Grant, Adult Dependants’ Grant, and Parents’ Learning Allowance), the Company does not collate information to measure how long it takes to process applications.

The Department for Business, Innovation and Skills and the Student Loans Company underestimated the challenges in centralising this service. Neither the Department’s monitoring of the Company nor the Company’s Board’s oversight were effective, the NAO has reported.

Substantial risks remain to the successful delivery of the service in 2010, which provides a focus for the NAO recommendations. While the Department and Company still expect to secure savings of around £20 million a year from 2011-12, this benefit would be outweighed greatly by continued poor service in administering over £5 billion of loans, grants and allowances.

“The Department for Business, Innovation and Skills and the Student Loans Company underestimated, and therefore did not do enough to mitigate, the significant risks in integrating the student finance service previously carried out by 130 separate local authorities. Both bodies failed to grasp the magnitude of problems that were developing in 2009 as applications for loans, grants and allowances piled up and applicants struggled to contact the Company by telephone. In particular, students with disabilities were supported badly.


“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 and, in so doing, to restoring the confidence of applicants and stakeholders. They will have to manage substantial risks.”

Amyas Morse, head of the National Audit Office, 19 March 2010

Notes for Editors

  • The Customer First Programme was established in 2006 to centralise the processing of student support. Its main aims are as follows: improving customer service (through faster processing and greater consistency); achieving financial savings; and improving governance. The Student Loans Company began processing applications for new students for the 2009 10 academic year (the first of a three year phased introduction) in February 2009. Local authorities will continue to assess applications from students who started university before this date until the 2011 12 academic year, when the Company will process all applications.
  • Established in 1990 to administer student loans, the Student Loans Company is a non-departmental public body, chiefly funded by and answerable to the Department for Business, Innovation and Skills. The Company’s service for students from England is known as Student Finance England. The Secretary of State for Business, Innovation and Skills has statutory responsibility for delivery of student finance and the Department for Business, Innovation and Skills retains overall accountability for the Programme.
  • This report follows the Hopkin Review (December 2009) that had been commissioned by the Department and Company ( The NAO report endorses the recommendations of the Hopkin Review, and goes further by interrogating performance and financial data, surveying students and evaluating ongoing risks.
  • Press notices and reports are available from the date of publication on the NAO website, which is at Hard copies can be obtained from The Stationery Office on 0845 702 3474.
  • The Comptroller and Auditor General, Amyas Morse, is the head of the National Audit Office which employs some 900 staff. He and the NAO are totally independent of Government. He certifies the accounts of all Government departments and a wide range of other public sector bodies; and he has statutory authority to report to Parliament on the economy, efficiency and effectiveness with which departments and other bodies have used their resources.


Mark Anderson

PN: 18/10