The Student Loans Company (SLC) is planning to introduce new IT systems worth up to £139 million in the next financial year after admitting to MPs that its current infrastructure is “old and constrained”.
In a report on Friday, MPs on the Public Accounts Committee (PAC) criticised the SLC’s ability to recoup student loan repayments and to provide an online service to borrowers due to out-of-date technology.
Margaret Hodge, chair of the PAC, said: “Borrowers are still receiving a substandard service. They still have to use premium-rate phone lines to contact the Student Loans Company, online services are inadequate and the IT is no longer fit for purpose.”
The government introduced student loans in 1990, and the debt collection system is operated by the SLC and HM Revenue & Customs (HMRC) for the Department for Business, Innovation and Skills (BIS). The value of the student loan book was £46 billion in 2013, and is expected to rise to £200 billion in 2042 (at 2013 prices).
0845 versus 03 numbers
At present, students have to call an 0845 number - costing 41p a minute from a mobile - to contact the SLC. After the PAC hearing, the SLC confirmed that it plans to stop using these premium-rate lines by April 2014, however, MPs believe that it has been “slow to reach this position”.
The SLC admitted that most of the revenue from the premium-rate number went to the provider, and that it brought in just £78,000 to the SLC in 2012-13.
MPs were also shocked at the cost of switching from the premium-rate number to a cheaper 03 number.
“£900,000 is our estimate of changing to the O3 number,” SLC chief executive Mick Laverty told the PAC.
Inadequate online services
Meanwhile, MPs said that the online services for borrowers to update their personal details were inadequate. For example, they have to print, manually complete and post, or scan and email change of circumstance forms, instead of being able to submit information directly online.
“The Student Loans Company told us that new IT and ways of working, due to be introduced in the next financial year, will address these issues,” the PAC said.
The SLC started a pilot in January to enable a “small number of people” to get an online statement.
At the hearing, Laverty said that the SLC was unable to prioritise debt in terms of age or value very easily until now, because its systems were “old and cumbersome”.
According to Laverty, the existing technology “cannot cope” with things like international phone number prefixes, so staff at the SLC are printing off lists to chase up repayments manually.
“The telephony system that we are bringing in in March will allow us to do that [automatically],” he told MPs.
“The difficulty we have at the moment is that the telephony system that automatically phones people who are in arrears or owe us money and routes the call to one of our collection team cannot deal with overseas international prefixes and time zone requirements.”
Severe technology constraints
Laverty described the SLC as having “severe technology constraints”.
“The systems that the Student Loans Company uses are old and have not been improved for a significant amount of time. They need to change before we have to start collecting the post-Brown income-contingent loans, because, quite simply, we cannot cope with the new product,” he said.
However, Laverty said that the SLC has taken steps to rectify this. After having a business case signed off in October 2013, the organisation is in the process of appointing a supplier to refresh all its IT systems.
The Treasury, Cabinet Office and BIS have approved a business case for £139 million, with an initial cap of £90 million. This means that any spend over £90 million will require the SLC to go back to the Treasury for approval.
“We will progressively improve our IT capability over the next couple of years. We are making some advances at the moment. Some of our products are partly digital, but a lot of what we do is still a very manual-based system, because that is the system that the Student Loans Company has used for a number of years, and it is the only system that the technology can cope with at the moment,” he said.
To justify the value of the systems upgrade, Laverty said that it is “more than an IT replacement project”.
“It is a business transformation project. We could replace the current infrastructure, digitise and automate a lot of what we currently do and you would get a significant benefit - not least, it will be on a safe and secure platform,” he said.
“What we are actually planning to do, working with BIS and the Government Digital Service (GDS), is review everything we do end to end and see if we can improve the processes, then digitise and put it on a safe platform.”
For instance, the SLC is considering the acceptance of electronic signatures.