New head upbeat over future of 'bruised' Student Loans Company

In his first interview in the job, Ed Lester said he had taken over an organisation that "did not have a great many friends in higher education", but that things had changed.

In September 2009, with less than half of applicants having received loans and 87 per cent of phone calls to the body going unanswered, the SLC had "effectively ground to a halt".

"It would have been difficult for things to have got much worse," said Mr Lester, who took over as interim chief executive last June.

His predecessor, Ralph Seymour-Jackson, and the company's chairman, John Goodfellow, left in May 2010 in the wake of a critical official report on the debacle, which found that there was still a "lack of focus and urgency" in addressing problems.

With the SLC set to play an even more pivotal role under the new fees system that comes into force in 2012, Mr Lester, who was appointed permanently in January, this week sought to reassure the sector that his organisation was now "a very different place".

The disastrous processing backlog occurred in the first year after the handling of applications switched from local authorities to the SLC, and was caused by, among other things, the failure of equipment used to scan documents proving applicants' eligibility.

This system has been rebuilt, while other changes include a new link-up with HM Revenue and Customs that allows the SLC to check parental income without the need for paper evidence, reducing the burden of paperwork dramatically.

Disabled students, who were particularly badly affected by the 2009 delays, are now dealt with by a dedicated team, and the contact centre and processing teams have doubled their capacity.

Although MPs on the Public Accounts Committee last December described the rate of improvement as "disappointing", Mr Lester said that the processing of applications in 2010-11 had been "better by a great deal".

In 2009-10, the SLC eventually managed to serve 1.14 million students. Numbers are rising by about 400,000 a year, and with part-time students accessing loans from 2012, they will continue to grow.

Under the new funding regime, the vast bulk of universities' teaching income will also flow via the SLC, which will have to handle far bigger loans and new interest rates.

Recent board minutes say that the "key challenges" include "the current state of the company's ICT infrastructure and its legacy systems", while the two main areas of risk are "part-time study and repayment changes".

But Mr Lester told Times Higher Education that by 2012-13, when the new fees regime is introduced, the company will be in its fourth year of assessing applications. Despite a "tight" budget, it plans to upgrade its website and IT systems, he added.

In January 2010, the company announced it was making 150 staff redundant, and board minutes from December highlight a "general malaise" among employees.

Mr Lester said that staff surveys had reflected previous uncertainty over the SLC's future. "There was talk of us disappearing...I think the fact that the SLC has gone from being an organisation that was potentially targeted in the bonfire of the quangos to one that is seen to be an integral part of the future is very encouraging and I think the staff see that," he said.

Mr Lester, who previously ran NHS Direct, said he had taken on his new job because he loved a challenge. He praised staff at the Glasgow-based organisation, which employs some 1,740 people.

"They were bruised in 2009-10, but interestingly enough very few of them left. They came back to face 2010-11 and I think that's tremendous," he said.

rebecca.attwood@tsleducation.com.