Student Loans Company

Viscount Younger of Leckie Excerpts

Tuesday 21st November 2017 Lords Chamber

[Lord Hunt of Kings Heath]

To ask Her Majesty’s Government what steps they are taking to improve the performance of the Student Loans Company, in the light of the dismissal of Steve Lamey, the Chief Executive.

[Viscount Younger of Leckie (Con)]

My Lords, the performance of the Student Loans Company remains strong, with customer satisfaction rates for applicants currently stable at around 85% and for borrowers in repayment at around 72%. So far in this academic year, the SLC has processed over 1.4 million applications for student funding and has paid out approximately £2.5 billion in maintenance funding and £2 billion in tuition-fee payments to providers. The SLC board acted swiftly to appoint a highly experienced individual as the interim CEO.

[Lord Hunt of Kings Heath (Lab)]

My Lords, the noble Viscount says that the company’s performance is strong, but it has long had a reputation for poor performance, bureaucracy and overcharging on student loans. The last chief executive, Steve Lamey, was appointed to improve performance, and it looked as though he was doing so. This year he had a performance appraisal in which the chairman commended him for re-energising the business, but two months later he was suspended and was sacked this month. Can the noble Viscount confirm that the reason for his dismissal, as recounted in the Times, was that he publicly informed people about the problems with the company? Will the noble Viscount publish the findings of an internal investigation in which 52 of the 58 allegations against Steve Lamey were dismissed?

[Viscount Younger of Leckie]

First, the performance of the Student Loans Company has improved year on year for the past six years. I cannot go into the precise details of Steve Lamey’s dismissal; I can only say that his behaviour as a leader and a manager fell below that expected of the position that he held.

[Lord Maude of Horsham (Con)]

My Lords, when an experienced and robust operational leader is brought in to turn round what had been known to be a failing organisation, is told consistently that he is doing an excellent job and is then summarily dismissed, principally on the basis of allegations put forward by staff who had themselves been given poor performance ratings, what does my noble friend think is the prospect of attracting to the Civil Service other experienced, serious and badly needed operational leaders?

[Viscount Younger of Leckie]

With reference to Mr Lamey’s dismissal, there was a thorough process of looking at the details of the allegations. In fact, there were two internal inquiries, one run by the Government Internal Audit Agency and the other by Sir Paul Jenkins. They both concluded that there were allegations that needed answering. In terms of the future, it is very important that the process to replace Mr Lamey as soon as possible is robust. We are delighted that Peter Lauener has agreed to take over as the interim CEO. However, the future process must be robust and we must make the right appointment.

[Lord Addington (LD)]

My Lords, would it not be a good idea if the empire of the Student Loans Company were slightly restricted, as it is now a very big organisation? Is this a good opportunity to remove the disabled students allowance from it as we could probably get better results if we had a more focused attitude towards that?

[Viscount Younger of Leckie]

I do not agree. For some time, the Student Loans Company has had a strategy that includes an initiative to improve the SLC performance across the board and with a focus on user experience for borrowers and staff engagement. The DfE and the SLC are working very hard on this.

[Lord Adonis (Lab)]

My Lords, do the Government have a response to yesterday’s report by the Higher Education Funding Council for England into the governance of Bath University, which found very serious failings? Does the Minister agree that the position of the vice-chancellor—paid this year £468,000—is now untenable after the findings of HEFCE?

[Viscount Younger of Leckie]

The noble Lord has raised the issue of Bath on a few occasions and I understand his concern. However, this is not something for the Government to iterate too much on—the House will remember the point made about institutional autonomy during the passage of the then Higher Education and Research Bill. However, we say very strongly that universities must look carefully at what they pay not just their vice-chancellors but their senior leaders. That is something that the Office for Students will be looking at earnestly when it is set up.

[Baroness Finn (Con)]

My Lords, will my noble friend confirm that, in the case of Mr Lamey, none of the investigations, hearings or appeals was conducted by an individual who was truly independent of the Civil Service establishment and the Student Loans Company, and that what happened here was, on the face of it, a breach of natural justice which states that no one shall be the judge in their own cause?

[Viscount Younger of Leckie]

As I said earlier, there were two thorough internal investigations. The initial allegations were raised in May, and here we are in November. That time was needed for both internal investigations to go through the thorough process of looking at the issues, and then a decision was made on 7 November.

[Lord Elystan-Morgan (CB)]

My Lords, about a year ago at Question Time I was told that it was the Government’s estimate that, for one reason or another, only about half of then current student loans would be repaid. What is the Government’s best estimate of that at the moment?

[Viscount Younger of Leckie]

Following the rising of the thresholds—from £21,000 to £25,000 and up to £45,000—our estimate is between 30% and 45%. Previously, it was about 30%.

[Lord Cormack (Con)]

My Lords, can my noble friend please explain why adulation was so quickly followed by condemnation? It is deeply disquieting. We live in an age where allegation seems to be taken as condemnation more roundly, so can we please have a proper explanation? Perhaps my noble friend will deposit the necessary papers in the Library.

[Viscount Younger of Leckie]

I can certainly do that for my noble friend. However, there was no indication in the recruitment process for Mr Lamey to indicate any cause for concern. That is the whole point: he was appointed on the basis of his references and the particular process. Issues were raised only as part of the two internal investigations that came about; that was when the problems arose.