Enterprise and Lifelong Learning Committee, 03 Oct 2001

Meeting date: Wednesday, October 3, 2001

Official Report 247KB pdf

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Student Awards Agency for Scotland

I welcome from the Student Awards Agency for Scotland David Stephen, the chief executive, Graham Gunn, the head of information services and operational policy, and John Watt, the customer services manager.

Committee members have received a fairly substantial and useful memorandum from the agency outlining its work. Do our witnesses want to supplement that with a brief introductory statement before I open up the meeting to questions from members?

Thank you, convener.

There is obviously a limit to how much territory we can hope to cover in the time available this morning, so I invite any members of the committee who are interested to come to the agency, tour the operation and have a wider discussion of any items of concern.

I have a point of clarification on the memorandum that we sent to the committee. Until about two years ago, the agency was involved in policy development. Since I took over as chief executive, the policy function has been located in the higher education, science and student support division of the Scottish Executive enterprise and lifelong learning department in Glasgow. The agency is now very much the mechanics of the operation. Our involvement in policy is largely restricted to giving advice on the practicability of certain measures, such as how much they might cost and what they might mean in terms of manpower. There may be limits to how far we can go in answering questions that have a policy bent to them.

As you know, we are undertaking a lifelong learning inquiry. A theme that has emerged is the complexity, confusion, overlap and duplication of sources of funding for students. I understand what you just said about policy but, given your substantive role in funding, roughly how many different schemes for student funding—in your agency, in other agencies such as the Student Loans Company and, directly or indirectly, through the funding councils—do you reckon there are?

I have not counted how many there are altogether. The two main streams are higher education funding, for which we are responsible, and further education funding, which goes through the Scottish Further Education Funding Council and the bursaries that colleges administer. Individual learning accounts and modern apprenticeships, for example, are outwith what we could call the tertiary education ambit. There are quite a few such sources of funding. The Student Loans Company does not operate a separate scheme as such. It simply pays the loans that the Student Awards Agency assesses.

So the SAAS is essentially the administrative organ for loans in Scotland.

Yes.

The other point to emerge is the lack of ready-made information on what is available to students. Is there a database of all the funding schemes for students?

I think that there is information on the learndirect Scotland website. Our website gives comprehensive information on what assistance is available to those in higher education and it has links to other websites that people who stumble across our website can follow to find out more.

Is the information exhaustive, or does it relate only to what the SAAS provides?

Our website is exhaustive only in respect of what we provide.

Ken Macintosh may want to ask a question. It was his idea to invite the agency, which is the only quango not to have given evidence so far.

I feel like a host. I did not realise that I was responsible for this experience—I hope that it is not an ordeal.

I want to clarify two points. At the previous budget session, I wanted to ask for more details on defaulting on student loans and on the saving of £10 million a year. Is that saving based on the old system of mortgage repayment loans? Why has it suddenly been realised that £10 million a year will be saved?

Secondly, the figures for 2000-01 in the table on page 3 of your excellent briefing are not the same as those given on page 81 of the "Draft Budget 2002-03". For example, the running costs of the SAAS are given as £4 million in your briefing but as £2.7 million in the draft budget document.

The £10 million saving is difficult to explain. Prior to the introduction of resource account budgeting and resource accounting itself, if we loaned £1,000, that scored as £1,000 in the budget and appeared in the accounts as £1,000. However, under resource accounting, one must take account of the fact that a loan will be repaid at some point. Our economists and statistician colleagues run a complex model that considers, for example, the circumstances that graduates will be in and their possible earnings. From that model, they take a view on recovery rates.

When resource accounting was introduced, the value of a loan was scored at 50 per cent. Since then, additional modelling work has been done down south and in Scotland. The new-style income-contingent loans are collected through the Inland Revenue, so collection rates are significantly improved. Down south, the view has been taken that the cost of a loan should score at 40 per cent. In Scotland, we are still refining our modelling. We took a slightly more conservative view and thought that 45 per cent was probably nearer the truth in our circumstances. The shift from 50 per cent to 45 per cent meant that the saving was considered safe for the department to surrender.

On the second point, the figures for 2000-01 that we have tabled are actuals as opposed to budget figures. The earlier figure would have been the budget figure. The £4 million is the outturn. The increase has been caused by a higher than normal pay award and the fact that we have had to undertake fairly significant developments of our information technology systems in the past three or four years.

As you are no longer responsible for policy, what is the main body responsible for setting policy for student awards, hardship funds and the systems that are used?

Policy is made by ministers, of course. Policy advice is provided by our colleagues in Glasgow in the higher education, science and student support division.

Policy is therefore set by the enterprise and lifelong learning department rather than through SHEFC.

That is correct.

Page 5 of your submission outlines your future plans and mentions working with the SLC to amend the loan payment system. I recently went to see the SLC. It is a UK-wide body and it, too, is developing, under its modernisation programme, a one-stop shop system. I am concerned that the SAAS is developing a separate one-stop shop at the same time as another agency is developing another. Is that what is happening?

Not entirely. It is intended that the SLC will continue, on a UK basis, to perform the functions of loan account administration and loan collection. That is not at issue.

There is some confusion in the public mind about what the SLC does and what the SAAS does. Some of that confusion comes from the fact that people apply to us but then receive a cheque with SLC on it. All we propose to do is to add one step to our processing system, so that we issue the cheque. After that, all the data will go to the SLC and the system will continue much as it does at the moment.

The SLC is developing a modernisation programme. However, since devolution, differences have arisen in student support systems north and south of the border. At the moment, we do not feel that it would be sensible to tie ourselves into an organisation whose systems are geared towards dealing with approximately 1.2 million students in England and Wales but that has a much smaller customer base of about 120,000 students in Scotland.

I was just—

Ken, I am sorry, but we have to watch the time because two other members wish to speak. Would you make this your last question?

Certainly. I just wanted to say that I would have hoped that the SAAS and the SLC could work together to introduce systems that operated in parallel rather than being separate. I know that the SLC is concerned, because the issuing of the cheque is a vital step for its systems—it is the means by which it gathers the information that then makes its collection system work. If the SAAS were to issue the cheque and then pass the information to the SLC, the SLC could lose information and administration would become more awkward.

We have been discussing that concern with the SLC. At the moment, it is true that its system generates a loan account by physically issuing a payment. We will be working alongside the SLC; we hope that the SLC will be able to create the loan account on receipt of what is, in effect, a journal entry from us. We will still be giving it all the information that it gets at present. The arrangement is by no means a done deal but it is something that we hope to achieve to improve the service to the public.

Before I bring in David Mundell, I remind members that we have to finish this agenda item by 11.20 am or by 11.25 am at the latest.

I will be brief. The clerks briefing paper does not mention the Benefits Agency, but its activities have been shown—certainly by the inquiries in which I have been involved—to have had a major impact on lifelong learning. What is your relationship with the Benefits Agency? Do you discuss the overall funding picture? Benefits play a key part in that, especially to the income of people in part-time learning.

John Watt will be able to say more about that than I can. We have regular discussions with the Benefits Agency and we exchange information. By and large, students in higher education are not eligible for benefit but, as you rightly say, people in especially vulnerable groups are. In conjunction with the Benefits Agency, we have tried to iron out what happens in certain circumstances—for example, when a student has to leave a course because of temporary illness. We have to ensure that such people do not fall through a gap between the two systems.

Our main dealings with the Benefits Agency are to do with fraud detection—if a student is trying to claim benefit at the same time as they are receiving student support.

I want to return to Kenneth Macintosh's initial question. Because repayment rates from students have been better than expected, you have been able to make a £10 million saving this year. However, you said that, although in England a 40 per cent rate for scoring the value of a loan has been adopted, you have chosen a slightly more conservative 45 per cent rate. Does that mean that, if you find that things are better than expected, you will be able to move to the 40 per cent rate, with the potential for more savings?

That is possible. The whole area of resource accounting and budgeting is complex and new and we are feeling our way through it. In theory, the answer is yes. However, if we find that we have been too optimistic, the rate could go up.

Thank you. Your written and oral evidence has been extremely helpful.