On 7 November 2017 Mr Steve Lamey, then Chief Executive of the
Student Loans Company, was dismissed without compensation for
gross misconduct in public office including breach of four of the
seven Nolan principles and failure to adhere to Treasury’s
Managing Public Money guidance.
The National Audit Office (NAO), given the circumstances
leading up to Mr Lamey’s dismissal, has investigated how the
Department for Education (the Department) oversaw the company
during his tenure, which it has published in a report
today.
At the time of Mr Lamey’s appointment, the Department for
Business, Innovation & Skills (BIS) had concerns about his
appointment. This led to the Company appointing him with an
extended probationary period, however BIS and the Department did
not believe this would effectively address their
concerns. BIS suggested additional measures to
Ministers, such as identifying a non-executive director of the
company to work with the chair to oversee Mr Lamey's performance,
but not all of its suggestions were implemented.
In May and July
2017, two employees formally made allegations about Mr Lamey
which included concerns about his
management and leadership style. The Department and Company chair
treated both individuals as whistleblowers. The individuals told
the NAO that the Department contacted them within hours of making
the formal allegations and provided good support. The Department
and Company jointly commissioned two separate investigations into
the allegations.
In October 2017, a disciplinary hearing found that Mr Lamey
had breached: the Nolan principles of public life; Managing
Public Money guidance; the Company's code of conduct and values;
and provisions in the framework document setting out the terms of
the relationship between the Department and the Company. The
specific findings of the hearing included that Mr Lamey had
failed to protect a potential whistleblower and had a management
and leadership style which amounted to a failure in leadership.
Mr Lamey appealed against the decision. The appeal upheld the
initial decision to dismiss.
There were many
changes in the Company during 2016 including a transfer of
oversight from BIS to the Department for Education, the
appointment of a new Chief Executive Officer and a restructuring
of the executive leadership team. The
Department did not reassess the appropriateness nor effectiveness
of its oversight arrangements in response to these
changes.
The NAO further
found that accountabilities, roles and responsibilities for the
Department's oversight of the Company are not up to date and lack
clarity. The Department’s oversight
arrangements did not identify problems with Mr Lamey's actions
and the Company gave Mr Lamey a positive appraisal in March
2017.
The Department aims to complete the first phase of a review
of its oversight and the governance of the Company by June 2018.
The Department has not yet set terms of reference or a timescale
for phase two, which is likely to examine the Company's operating
model for the longer term. The Department is
also reviewing its relationships with all of its arm's-length
bodies, which it aims to complete in early 2019.
Further information about the NAO’s investigation is
available in the report: https://www.nao.org.uk/report/investigation-into-oversight-of-the-student-loans-companys-governance-and-management-of-its-former-chief-executive [link
will go live at 00.01 Friday 11 May]
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Notes for editors
1. The NAO conducts
investigations to establish the underlying facts in circumstances
where concerns have been raised with us, or in response to
intelligence that we have gathered through our wider work.
2. The Student Loans
Company administers loans and grants to students at universities
and colleges across the UK. It processes around 1.8 million
applications a year, and has over 8 million customers repaying or
due to repay loans totalling over £100 billion. The Company is
funded primarily by grant-in-aid. The Company is a
non-departmental public body which until June 2016 was sponsored
by the Department for Business Innovation & Skills. From July
2016 the Company has been sponsored by the Department for
Education.
3. The National Audit
Office do not audit the accounts of the Student Loans Company but
has exercised its value for money access rights to carry out this
investigation.
4. This investigation
describes the events surrounding Mr Lamey’s appointment and
dismissal. It sets out the Department’s role in oversight of the
Company and how it responded to the concerns raised by the two
Company staff. We have not re-investigated the allegations made
by those staff. We have also not evaluated the original decision
to dismiss Mr Lamey or the findings of the subsequent appeal.
5. The Nolan
Principles, the 7
principles of public life, apply to
anyone who works as a public office-holder. This includes people
who are elected or appointed to public office, nationally and
locally, and all people appointed to work in sectors that deliver
public services.
