Auditor eyes loans company

The National Audit Office is planning a fresh inquiry into the Student Loans Company, which is expected to report by mid-July. It also investigated the SLC in 1993.

Sir Eric Ash, acting chief executive of the SLC, said he did not understand why Sir John Bourn, comptroller and auditor general, thought this necessary, but added: "He is welcome to look at anything we are doing."

The company is also being investigated by Coopers & Lybrand. But Sir Eric said he was "totally and utterly amazed" by Sir John's describing this investigation as a corruption inquiry.

Coopers & Lybrand is examining the legitimacy of expenses allegedly charged to the company by chief executive Ron Harrison, absent because of ill health, but Sir Eric referred to these as "pretty minor matters".

Student leaders are sceptical of assurances from the SLC that its backlog of loans is on the point of being cleared.

There were complaints that more than 35,000 loans had not come through before Christmas, but SLC officials said this week that a constant flow of applications was being dealt with, and only about 8,000 students had not received the necessary paperwork within the normal timetable. Loans are being cleared at the rate of almost 1,000 a day, they said.

The SLC this week launched an "overflow" phone service, taking the details of queries from students who cannot get through to the company. It is also investigating the possibility of a freephone system for students.

But following a meeting of the student loans consultative group, which includes student representatives of ten universities, Douglas Trainer, Scottish president of the National Union of Students, said: "The claims made by the company do not tally with local experience, where we see students in financial difficulties. There is a need for an independent public inquiry into the workings of the company."

The education policy committee of the Scottish Conservative Party has warned the Scottish Office that the SLC has "created political damage". The committee believes that students should repay loans through national insurance contributions, but says the SLC's view that it could continue to administer such a scheme will presumably "only be of interest to the Government if this organisation can very quickly create a sound track record".