Corporate report

SLC Annual Report and Accounts 2022 - 2023

Published 11 January 2024

1.   Chair’s Statement

There was a significant development in the year when Paula Sussex left after four years as CEO and was succeeded by Chris Larmer. This development was followed by a number of other movements in the senior leadership team. I would like to record my gratitude to Paula for her hugely successful tenure as Chief Executive of SLC and to the wider executive team who have maintained SLC’s course over the past year. My thanks also to our shareholders and my non-executive colleagues for supporting the leadership transition and to all colleagues in SLC for their commitment, hard work and contribution to our achievements this year.

Improving customer experience is one of my key objectives as Chair and I’m pleased that we delivered a range of improvements across our online services in FY2022-23. Our digital channels have matured, with smoother customer journeys and greater digital functionality. Customer satisfaction with Live Chat is particularly high, underlining this as a channel of choice for customers. Overall, we have achieved well above target customer satisfaction.

Our repayment’s function continues its strong performance too, this year achieving the highest ever number of verified customers. This is not just good administration, it is important because the better we do on maintaining accurate records of customers, the higher the repayments will be of student loans to the Government.

The enhanced ability for SLC customers to self-serve means that we can spend more time supporting customers with additional needs. We have this year taken significant steps in our journey towards improving Disabled Students Allowance (DSA) to provide a straightforward ‘single point of contact’ service. SLC is focused on ensuring a smooth transition to the new service and delivering service improvements in the coming year.

SLC is committed to providing great value for taxpayers’ funding. Our Evolve programme has delivered estimated benefits of £345.6m benefits against £139.4m invested ^{[footnote 1]}. This is well in excess of projected business case benefits. Over the last year, in line with financial service industry best practice, we established SLC’s first Financial Crime Prevention Unit. This strengthened company-wide risk assessment, data and gap analysis and fraud-prevention which will help us to maximise and safeguard the taxpayer pound.

Looking ahead we continue to face significant challenges. Cyber threats are increasingly sophisticated, and we have to maintain strong defences; high inflation erodes the amount we have to invest in new systems and we need to maintain an unrelenting focus on the customers we serve.

At its core, SLC is a technology enabled business. We continue to implement our Technology Strategy - to simplify and consolidate our technology platforms - to provide the best possible service to customers and shareholders. A priority in delivering the strategy is ensuring SLC can support the changes required for the new Lifelong Loan Entitlement (LLE). We are mobilising to deliver this generational shift in the provision of student finance, and student opportunity, with detailed discovery work being carried out in the coming year aligned to the ongoing upgrading and modularisation of our technology platforms.

With a new leadership team, we are moving into the 2023-24 financial year with strengthened ambition to deliver even more for our customers, shareholders and colleagues.

Peter Lauener,

Chair

2.   Chief Executive’s Foreword

I am delighted to introduce the Annual Report and Accounts as Chief Executive of the Student Loans Company (SLC), having taken over from Paula Sussex in December 2022. Paula led the transformation of SLC over four years, creating a step change in our customer experience, digital capability and in our reputation as a trusted delivery partner to our shareholders. I would like to put on record my gratitude to Paula, and to my SLC colleagues, leadership team, Board and Government sponsors for ensuring that SLC continued to deliver for our customers, shareholders and for each other through a year of transition.

SLC’s purpose, to enable people to invest in their future, is evident in everything we do. We have driven customer improvement through better customer engagement and experience, colleague improvement through development and recognition, and shareholder benefit through increased efficiency and safeguarding of taxpayer money.

In 2022-23, we delivered tangible customer and colleague benefits as a result of the investments we made to transform SLC into a digital, future-focused organisation. Colleagues have been able to access full customer data more easily and in one place through our Customer Engagement Management (CEM) platform and our customers have been able to seamlessly self-serve, which alongside our more modern and resilient technology, mean we have been able to ‘flatten the processing peak’ for the first time.

With teams across SLC working together, task queues peaked at just 92k in July 2022, compared to 228k in the previous year. This resulted in speedier processing for customers, up-skilled and cross-skilled colleagues operating in a more efficient environment, and student finance paid on time, all of which met shareholder priorities.

We recorded increased customer satisfaction levels across all of our frontline services, with well above target satisfaction in Operations and an improving picture in Repayments. The Repayments service has maintained its excellent performance with the highest ever results achieved for customers in a repayment channel and direct collection.

All of these improvements and benefits are made possible by SLC’s colleagues. We are committed to building a positive, supportive, and inclusive workplace where everyone is treated fairly and we are proud to have Investors in Diversity accreditation. At our People Star Awards, we celebrated success and recognised excellence across a broad range of categories. This included the new Inclusive Champion category which recognised colleagues who care passionately about creating and promoting an inclusive culture.

We continue to invest in colleague progression and growth with Career Pathways now established for all parts of the business and bespoke leadership development in Operations. We are also introducing greater flexibility and increasing our in-office presence as we embed new ways of working post- pandemic. For our Glasgow-based colleagues, this aligns with our move to a new purpose-built office at 10 Clyde Place in late 2023, which provides a working space to support collaboration and colleague interaction.

I am always delighted when our collective successes and the efforts of our employees are recognised externally. The Evolve transformation programme achieved an Infrastructure and Projects Authority Green rating, recognising successful delivery to time, cost and quality. Evolve is a major programme of investment in technology to modernise SLC’s systems. It has delivered substantial improvements including our new Customer Engagement Management platform, our enhanced Online Repayments System and digital channels that enable customers to interact with SLC more easily. Over the last year, we have continued to reduce our technical debt and, as Evolve concludes and we fully execute the Technology Strategy, we will ensure that SLC’s technology continues to underpin shareholder policy aims.

The UK Government’s education policy – Lifelong Loan Entitlement (LLE) – is central to that focus. The approach to LLE has been characterised by co-design with our UK Government shareholder, Department for Education (DfE), which has enabled SLC’s delivery expertise to actively shape policy development. We have also demonstrated that SLC is a trusted partner with our collaborative approach to counter fraud activity which has been driven by our Financial Crime Prevention Unit.

SLC is an organisation that I am immensely proud to lead. We are a complex organisation undergoing significant transformation at a time of financial and capacity constraints. But we have a strong, dedicated new Executive Leadership Team in whom I have huge confidence and together, we have the pleasure of working with colleagues who demonstrate resilience, purpose and commitment to continually improving how we enable student opportunity every single day.

Chris Larmer

Chief Executive Officer

 18 July 2023

3. Strategic Report

3.1 About SLC

SLC is a UK public sector organisation established to provide and administer student funding (in the form of loans and grants) to approximately two million new and returning students annually in Higher and Further Education across England, Northern Ireland, Scotland, and Wales.

It is a non-profit making organisation. The company is wholly in public ownership. Shareholders are the Department for Education (DfE) and the Devolved Administrations of Scotland, Wales, and Northern Ireland (DAs). Since 1996 SLC has been classified as an Executive Non-Departmental Public Body (NDPB).

As one of HM Government’s (HMG) key strategic delivery partners and DfE’s largest partner organisation by headcount, HMG relies on SLC to assess new and returning students and learners eligibility for student finance each year; manage a growing loan book of £203bn* on their behalf (£178.5bn at 31 March 2022); work in partnership with HMRC to collect repayments; and manage a total customer base of 9.4 million applicants, students and repayors. SLCs future developments, including the implementation of the Governments flagship policy on Lifelong Loan Entitlement, are set out more in our vision statement.

*The value of the Loan Book represents the face value of the total loan book at 31 March 2023, and not the value in accounting terms which is included in the DfE Consolidated Annual Report and Accounts, and not within the SLC Annual Report and Accounts

SLC, in conjunction with HMRC through whom most repayments are collected, services the entire loan book. The loan book is largely owned by HMG with a modest amount owned by private investors. The value of loans owned by HMG is recorded in the accounts of DfE.

SLC operates from four offices across the UK: these are in Glasgow city centre, nearby Hillington, Darlington and Llandudno Junction.

Key Facts

9.4m customers at 31 March 2023, including:

• 5.9m with loans in repayment;

• 2.0m with loans but not yet in repayment

• 1.1m sponsors; and

• 0.4m with applications but not yet paid

Circa 2.0m applications were processed in the 2022/23 Academic cycle.

SLC paid out £22.8 billion during the 2022-23 financial year, comprising:

• £10.3 billion maintenance loans;

• £0.05 billion maintenance grants;

• £11.5 billion tuition fee loans;

• £0.2 billion tuition fee grants; and

• £0.7 billion other grants.

Number of learning providers receiving payments:

• 631 HE providers;

• 432 Advanced Learner Loan providers (FE England); and

• 449 schools and colleges (FE Wales and NI) for Education (payments directly to students).

Uptake of digital channels:

• 4.3m customers registered for Online Repayment Services;

• 1.4m customers entered Chatbot;

• 128k live chats were handled with 92.5% customer satisfaction rating; and

• 122k secure messages were worked with 78% customer satisfaction rating.

Executive Leadership Team

SLC’s Chief Executive Officer leads a team of seven Executive Directors – the Executive Leadership Team (ELT) – each of whom lead a Directorate with a mix of employees from across SLC’s offices in England, Scotland, and Wales.

Chief Executive Officer

• Chris Larmer - Since 28 November 2022

• Paula Sussex - Until 27 November 2022

Deputy CEO and Chief Customer Officer

• David Wallace - Throughout year

Chief Financial Officer

• Audrey McColl - Throughout year

Chief Information Officer

• Stephen Campbell - Throughout year

Business Operations

• Executive Director - Chris Larmer - Until 27 November 2022

• Interim Executive Director - Jacqueline Currie - Since November 28 2022

Repayments and Customer Compliance

• Executive Director - Bernice McNaught - Until December 2022

• Interim Director Repayments and Customer Compliance (then changed to Change, Data and Repayments) - David Beattie - Since January 2023

Executive Director HE/FE Reform

• Derek Ross - Throughout year

People

• Executive Director - Morven Spalding - Until December 2022

• Interim Executive Director (previously CEO until 27 November 2022) - Paula Sussex - Until 22 December 2022

• Interim Executive Director - Chris Cooke - Since 12 December 2022

These directorates work collaboratively to ensure the effective delivery of shareholder and core business priorities.

Apply-to-Pay (“A2P”) Services

SLC provides a range of different services for students throughout the UK which vary according to the policy and operational requirements of each of the four Government administrations/shareholders.

For England and Wales, SLC manages the full end-to-end apply, assess, pay and repay process for undergraduates and postgraduates studying on a full-time and part-time basis. SLC provides the payment and repayment services for Scotland and Northern Ireland. Additionally, SLC also provides a contact centre service for Northern Ireland’s Education Authorities. They also use SLC-developed systems for assessing their students’ applications. In recent years, England, Wales and Northern Ireland have each developed varying finance products for postgraduate students, covering both master’s and doctoral degrees. These have added to the range of and complexity of loan products delivered by SLC.

SLC also manages a growing range of products for students in further education. These too are tailored to the differing requirements of individual shareholders – from Advanced Learner Loans in England, through to the Welsh Government Learning Grant. Northern Ireland and Wales both continue to offer an Education Maintenance Allowance.

SLC administers various targeted support grants designed to enable people with disabilities, childcare responsibility, adult dependants or other needs to overcome barriers to participation in higher and further education.

Additionally, SLC pays bursaries to students on behalf of many UK higher education providers.

During 2022-23, SLC paid out £11.5bn in tuition fee payments to universities and colleges on behalf of students and £10.3 billion in maintenance loans for living costs and grants directly to students and learners. These payments are made on behalf of the Devolved Administrations.

Repayment Services

SLC administers repayment services on behalf of all four UK administrations.

SLC services a growing loan book of “income-contingent repayment” (ICR) loans and works in partnership with HMRC to collect repayments through PAYE and self-assessment; the company directly collects repayments from those borrowers outside the UK tax system. SLC also provides a direct debit option for all customers, and actively encourages those borrowers who are nearing the end of their repayment term to use this facility, as it allows customers to manage their remaining balance in real- time and thus removes the risk of incorrect PAYE deductions which could otherwise result in customers over-repaying their loans.

SLC’s Vision Statement

SLC is widely recognised as enabling student opportunity and delivering an outstanding customer experience in the efficient delivery of the four UK Governments’ further and higher education finance policies.

This vision, set by the Board in 2019, is underpinned by five strategic goals:

• deliver an outstanding customer experience.

• be leaner, better, doing more for less.

• be a great place to work.

• be an enabler of opportunity.

• be a trusted delivery partner.

The vision and the five strategic goals aimed to succinctly describe the organisation that SLC sought to become over the medium-term, and since 2019, they underpinned SLC’s delivery of its annual mission “to enable people to invest in their futures through further and higher education by providing trusted, transparent, flexible and accessible student finance services.”

Our vision, mission and strategic goals have endured since we launched the Evolve Transformation Programme in 2019. The stability in strategic direction has underpinned SLC’s transformation, and delivered tangible benefits for customers, shareholders and colleagues.

Evolve has delivered £345.6m of cashable and non-cashable benefits for DfE and HMT against the £139.4m invested, via new technology platforms. Cashable savings are those which lead to a direct reduction in budget, non-cashable benefits do not deliver cashable savings, but will increase quality or avoid future expenditure. These include:

• Customer Engagement Management (CEM) which has resulted in 132 million pieces of customer data now being collated in one place and 12.5 million customers logging on to self- serve.

• Online Repayment System (ORS) which has been accessed by 6.3 million customers and resulted in 500,000 fewer telephone calls.

During 2023, SLC plans to launch a review of its strategic framework, including the associated vision and mission statements, goals and lenses. Our purpose, set by shareholders, will remain constant – to enable opportunity in order to help generations to fulfil their potential.

An Outstanding Customer Experience

Our goal is to deliver intuitive, supported and trusted service throughout our customers’ experience so that the vast majority of customers can easily progress their journey without having to contact SLC. We are delivering this through our CEM system and by providing our customers with the means to self- serve through guided choice, to enable them to use the best channel to meet their needs.

As we mature this system, CEM will cover more products and more customers. Increasingly, we will use CEM’s advanced customer analytics capability to develop a deeper understanding of customers’ needs, to predict trends and to continually improve our service based on feedback and understanding. As CEM and our capability to manage customer cases develops, we will be able to introduce case ownership to provide more specialist and tailored support to customers who need additional support.

A further aspect of tailored support is the improvements we are making to the DSA service to provide a ‘one stop shop’ for customers. As the DSA service is transformed over the coming years, customers will have a single point of contact for all elements of the service, enabling a simpler and smoother application process.

We aim to ensure that customers have access to trusted student finance expertise, and clear, comprehensive and easily accessible information, advice and guidance. We therefore maintain a strongly engaged and collaborative relationship with higher and further education providers, and other partners - such as the Office for Students (OfS) and the Universities and Colleges Admissions Service (UCAS).

We will continue to review the content and information on our systems so that all customers can access what they need to complete their applications easily, whatever their circumstances.

Our application and payment systems will ensure that customers are able to interact with us and self- serve in a fully informed way. If customers need help to progress their journey, they will have access to a greater range of resources and if they need to get in touch, they will be guided to the most appropriate channel.

As our customers enter the repayment phase of their journey, we aim to make it as simple and intuitive as possible for them to manage and repay their loans by providing an up-to-date online view of their account. We will provide this alongside online facilities that enable customers to manage their repayments easily.

Leaner, Better, Doing More for Less

Given the challenging fiscal environment, the need for SLC to do more for less has never been more important. Our goal is to deliver student finance safely through flexible, sustainable and secure technology to optimise delivery, reduce costs and help protect SLC and our customers’ data from cyber- attacks.

Last year, we saw continued growth in demand through all channels, with customers using new self- service options but also contacting us through traditional channels. To be able to do more for less, we need to help our customers to self-serve where possible which is why we are focusing on ensuring

channel optimisation. We increasingly need to drive efficiencies in our operating cost base to withstand the combined impact of increasing demand and complexity and escalating inflationary costs which, like all public sector bodies, we need to absorb.

Alongside increasing productivity and continuing to focus on controlling headcount, we are using intelligent systems and automation to drive further efficiency. We are building on business process automation capabilities like robotics, continuing to develop frontline LEAN capabilities and building on our approach to benefits-tracking.

SLC is increasingly building longer-term strategic relationships with technology delivery partners. As we further de-couple and modularise our systems, we will have increasing scope to ensure contracts with these partners deliver specific outcomes for us.

We aim to increase the accuracy and integrity of our data and use it to improve operational efficiency and performance and also to drive up repayment collections and hence yield. We will continue to drive a culture of continuous improvement and automate high volume, low complexity activity. We have created a Data Centre of Excellence which has responsibility for data across the organisation. This will enable greater analysis of our data to provide insight, helping to increase loan book yield, and deliver better value for the taxpayer.

A Great Place to Work

Developing SLC as an inclusive and diverse Employer of Choice is vital in achieving our corporate objectives, especially given the challenging recruitment market we operate in and the ongoing economic challenges.

SLC strives to maintain a skilled, motivated and engaged workforce, aligned to current and future organisational needs. Key building blocks of our People Strategy are Career Pathways and increased flexibility, through which we aim to enhance colleague experience, and opportunity.

SLC also strives to maintain robust engagement and organisational health. Our colleagues are engaged – 2,500 colleagues responded to the last Employee Engagement Survey in November 2022 and many take the opportunity to connect through colleague networks. However, colleague feedback is robust on the areas we need to improve, with pay being an issue which dominated feedback. We are clear that if we are to retain and recruit the people we need, we must create fair pay and reward at SLC. This will be a multi-year undertaking and we will continue to work with colleagues in DfE to develop our pay case.

Core to maintaining a skilled, motivated and engaged workforce is a focus on our Equality, Diversity and Inclusion (EDI) objectives including our aim to close our Gender Pay Gap. We aim to build and maintain a diverse and inclusive workforce, to cultivate and promote a workplace culture where everyone is included, and to work together towards an empowered and engaged workforce. This is another multi- year undertaking and in 2023-24 we will revise and refresh our EDI strategy.

We will relocate within Glasgow city centre to a new, purpose-built office during 2023-24. This will provide a modern working environment with the space configured to suit flexible working, with fewer fixed desks and more collaboration space. Importantly, it will also help us progress towards our net zero ambitions.

Enabler of Opportunity

Our goal is to be recognised as an enabler of student opportunity, delivering strong social value on behalf of our shareholders. This will continue to be based on a clear understanding of our objective to provide student finance reliably and securely, helping customers to invest in their futures and supporting the long-term economic growth of the UK economy. Enabling opportunity for our customers who need additional support is particularly important and is why we are focusing on making the greatest improvements for this customer group.

The most significant change that we will deliver to enable opportunity is LLE. From 2025, LLE will provide eligible English individuals with a loan entitlement to the equivalent of four years of post-18 education to use over their lifetime. It will be available for both modular and full-time study at higher technical and degree levels (levels 4 to 6), in colleges and universities from 2025. This flagship Government policy will fundamentally change learning in England. As noted above, DfE will be working with SLC as a trusted delivery partner, asking us to put in place the student finance systems to support the new LLE accounts that will underpin these new learning opportunities.

Enabling opportunity by providing access to student finance each year is dependent on reliable and secure technology. As part of the Evolve Strategy, SLC began a major programme of investment in technology to modernise its systems. We are now seeing substantial progress, including the delivery of Online Repayment System and Customer Engagement Management.

All of our customer improvements are technology-enabled, and executing the Technology Strategy – to transform, simplify, remediate and enable our IT estate – is central to underpinning our ability to fulfil our mission, both now and in the future.

Trusted Delivery Partner

Our goal is for shareholders to see us as a trusted partner in the efficient and agile delivery of Government policy and for taxpayers to trust us with their money.

SLC and the policy teams within DfE and the Devolved Administrations increasingly work in a collaborative and joined-up way. This is underpinned by robust governance of the policy development and commissioning process tied to clearer, achievable delivery timelines. Closer collaboration enables fuller consideration of the practical dimensions of delivering new policies cost-effectively, on-time and with the intended outcomes both for our shareholders and for our customers. We will continue to support shareholders in simplifying and rationalising the policy landscape wherever possible, better aligning policy intent with efficient and effective delivery that is aligned to tested and hence proven user needs.

We will continue this successful co-design approach with LLE, leveraging the opportunity LLE provides to simplify products and rationalise policy, as we continue to press the case for simplification.

SLC and DfE will continue to work towards greater autonomy, as outlined in the 2022 Framework Document, with the Board continuing to enhance its assurance role. We will work to increase SLC’s ability to make decisions which make a difference for, customers, shareholders and colleagues, including by extending CEO discretion to act in cases where students have been incorrectly assessed as qualifying for support.

In delivering our core mission, our goal is to be competent in ensuring we maximise the use of, and safeguard, the taxpayer pound. To deliver value for money for the taxpayer, in the year ahead and beyond we are focusing on operational efficiency to reduce costs, consistently driving best value from commercial activity and fully embedding our new Financial Crime Prevention Unit (FCPU) to minimise loss from fraud.

Also core to safeguarding the taxpayer pound is ensuring that we manage risk effectively, not just within our own business but in third-party suppliers and across the student finance system. SLC’s risk framework has continued to mature as our Enterprise Risk and Compliance team embed our three lines of defence model. The Annual Business Plan provides further detail on the outcomes that we want to achieve in FY2023-24.

Our Future Strategy

SLC’s Corporate Plan outlines our strategic objectives and how we plan to achieve our vision of widely enabling student opportunity while efficiently delivering the four UK Governments’ further and higher education finance policies.

The strategy continues to execute our five strategic objectives. Chief amongst these is to deliver an outstanding customer experience by continuing the deployment of CEM and the Customer Experience (CX) strategy. As capacity comes free through increasing automation, we will increasingly focus on customers who need additional support.

SLC will continue to reduce the company’s technical debt as the Evolve transformation programme concludes and SLC continues to implement the technology strategy. Crucially, by 2024-25, we must build the systems that will underpin the UK Government’s flagship education policy LLE, which will replace the current offer to Student Finance England customers studying in FE or HE undergraduate, part-time or full-time, with a new, single, streamlined system of student finance which will be available over the normal working lifetime of most individuals. SLC is the Department’s key delivery partner and is actively co-designing the policy and implementation plan with DfE.

From 2024-25, SLC will be laying the foundations for a revised three-year strategy based around driving organisational efficiency and capitalising on the transformation that has been successfully achieved to date.

Developments in our Business and External Environment

Alongside increases in customer numbers and greater complexity of customer applications, we continue to experience a range of factors which make it a challenging environment to deliver better customer, shareholder and colleague outcomes.

Whilst the post-COVID recruitment market has stabilised, we continue to experience recruitment and retention issues which we are seeking to address, in part, through a multi-year pay strategy. Delivering fair pay, on a cost neutral basis, is an imperative for SLC to ensure we retain the corporate knowledge and skills we need to continue to drive the positive outcomes of our transformation.

But pay alone is not enough and we continue to position ourselves as an employer of choice by offering flexible and, like many other progressive organisations, attractive hybrid working practices, career development and progression and colleague benefits including generous pension provision. A key aspect of being an Employer of Choice relates to EDI – we will set a new strategy and objectives for 2023-2026 which will build on the progress we have made and seek to accelerate further.

The challenge to drive efficiency and reduce costs is ever-present and is a core focus. For SLC, reducing cost enables us to be leaner and more effective overall by reducing the cost to serve our customers and increasing value for taxpayers. It also enables us to free up resource to support those customers who need us most.

For SLC, the introduction of LLE will ultimately represent a fundamental change to our business and technology model, which is currently centred around products, as we develop a new model shaped much more around a customer’s personal account.

LLE will be introduced progressively from 2025, providing individuals with a loan entitlement to the equivalent of four years of post-18 education to use over their lifetime. It will be available for both individual modules and for full years of study at higher technical and degree levels (levels 4 to 6). This will facilitate flexible study – allowing individuals to space out their studies, transfer credits between FE and HE institutions, take up more part-time study and retrain throughout their lives to respond to market demand for skills.

Key Risks and Issues

SLC has detailed plans to remediate its most complex and pervasive risks, these are captured in the Governance Statement. Risks are discussed in each directorate and collectively by the Executive at the Executive Risk Forum five times a year. Consolidated risk reports and assurance reports covering specialist risk categories are provided to the Audit and Risk Committee four times a year. They journey for each significant risk is summarised as follows:

Post Covid-19 Pandemic Operating Model Risk Description

Failure to identify and implement an effective employee proposition and operating model in a post-covid environment.

2022-23 Journey

Following the successful completion of the initial phase of hybrid working and the return of colleagues to the office in 2022, the risk has reduced to within target levels. Focus, however, remains on ensuring that the model continues to support staff wellbeing and organisational cohesion.

Information and Data Handling Risk Description

Inappropriate handling and processing of data may lead to a breach of legislative or regulatory requirements.

2022-23 Journey

The risk remains stable, with material progress to a more mature compliance position ongoing.

Cyber Security Risk Description

A successful cyber-attack may lead to data loss and business disruption.

2022-23 Journey

SLC continues to monitor threats and build/maintain mitigants via an ongoing programme of work in response to the constantly evolving threat landscape which makes this an enduring key risk.

Systems Access Management Risk Description

We fail to maintain our ability to mitigate and prevent user error, malicious activity or internal fraud across SLC systems.

2022-23 Journey

The risk reduced in the year following the successful completion of a project to improve associated controls.

Staff Attraction and Retention Issue Description

Challenges retaining subject matter experts with deep knowledge and key technical skills may compromise SLC’s ability to deliver against key business objectives.

2022-23 Journey

Staffing levels across the frontline have improved following a period of targeted recruitment. Retention and recruitment of specialist and technical roles, however, remain a significant challenge with impacts across the business.

In addition, we continue to assess the scale and complexity of building the LLE service and focus on building our resilience and capability to respond to financial crime risks.

3.2 Performance Analysis

SLC measures performance against a set of key financial and non-financial performance indicators.

Shareholders confirm SLC’s role, core responsibilities and priorities each year in the Annual Performance and Resource Agreement (APRA). This also confirms the company’s annual budget and outlines a set of key performance measures and targets which shareholders expect SLC to meet – the APRA measures and targets.

Despite a growing number of customers, a growing loan book and an ever more complex set of tailored finance products, SLC has yet again achieved a significant level of success against the APRA targets set by shareholders.

3.2.1 Operational Performance

A range of improvements have been delivered across online services throughout 2022-23, as SLC builds on the foundations laid by CEM.

The introduction of CEM has helped colleagues to provide customers with more detail around the status of their application and helped them to provide clearer guidance on the next course of action a customer is required to take and to successfully manage customer expectations. This, along with improvements in the identification and verification through the introduction of one-time passcodes and a more streamlined Interactive Voice Response experience has contributed to improved satisfaction on the telephony channel.

In addition, services such as Chatbot, Live Chat and Secure Message have provided alternative channels of communication for customers, expanding choice and encouraging self-service as well as automated routes in response to customer demand.

SLC has continued to focus on finding new ways to improve and simplify the customer experience and journey: to be better for customers, better for colleagues, better for shareholders and to deliver tangible outcomes and value.

Case Study: Reducing the Evidence Burden for Customers

SLC introduced the Evidence Reduction Working Group in 2022. The remit is to fundamentally and holistically consider opportunities to remove or reduce the evidence burden for customers submitting applications for student finance.

During 2021 the company received approximately 89,000 birth certificates, (an increase from 57,000 in 2020). SLC’s customer panel and user-research demonstrated that many customers perceive the need to send physical evidence documents by mail as antiquated and not in line with other modern day financial services. Other government bodies are also moving towards digital evidence and improved data sharing. Additional issues had arisen from customers not renewing their passports, due to the pandemic travel restrictions or economic reasons.

In July 2022, SLC implemented digital upload changes for UK nationals supplying birth certificates for England and Wales. Since then, 75% of these documents have been provided by digital upload rather than by post. This has reduced the risk of security breaches and reduced handling costs to both the customer and SLC.

Customer Satisfaction APRA Target Results

SLC commissions independent surveys of customer opinion on a variety of topics each month. As part of each survey, customers are regularly asked to rate the company’s overall service with a mark out of ten. These scores are aggregated as a 12-month rolling average and expressed as a percentage.

	2022-23 Target	2022-23 Result	Comment
How applicants and students and their sponsors rated the company’s overall service	75%	81.4% Green	Applicants, students and their sponsors’ satisfaction significantly improved during 2022-23, up from 79.1% in 2021-22.
How those in repayment rated the company’s overall service	62%	54% Red	Repayers’ satisfaction also improved (from 54% in 2021-22) but remains below target. Analysis shows that a high number of those repayment respondents who provide the lowest scores also use the survey as a vehicle to express dissatisfaction with the terms and conditions of their loans, something that is not within SLC’s control, and a trend that has become more prominent this year as the cost- of-living has increased.  The repayment service itself has remained highly efficient and performed well during 2022-23 in reducing contact demand, complaints, and exception work. SLC has plans for further service improvements that may support incremental increases in repayment customer satisfaction over the coming year.

Frontline Lens

This lens covers SLC’s two customer-facing services, application processing (Apply-to-Pay) and repayments.

Apply-to-Pay

SLC has again delivered for our customers and shareholders with another successful student finance application processing cycle for the academic year 2022/23.

SLC paid out £22.8 billion on behalf of the Devolved Administrations to students and learning providers during the 2022-23 financial year, comprising: £10.3 billion in maintenance loans, £0.05 billion in maintenance grants, £11.5 billion tuition fee loans, £0.2 billion tuition fee grants and £0.7 billion other grants; (‘other grants’ includes various targeted support products such as Disabled Students’ Allowance and Childcare Grants).

This year we handled over 2.5m customer contacts, approximately 10% more than the previous cycle. We handled around 5m customer tasks – 7% higher than in AY 2021/22 – and the average time for task completion improved by approximately 3 days.

Case Study: Flattening the Peak

For the first time ever, SLC ‘flattened the peak’ with task-queues peaking at just 92k in July 2022, compared to 228k in the previous year. This was achieved through collaborative action across the organisation, aligned to the dynamic allocation of resource:

For the 2022/23 academic cycle, SLC established a shared resource model between its Operations and Repayments Directorates, aligned to the design of the then new “Student Finance Officer” role. This was a significant change to how resources are optimised flexibly across the business. It provided the ability to augment operational capacity by up to 70 FTE, delivering additional application processing capacity from June to October.

CX Interventions focused on improving the customer experience and reducing cost by driving up self- serve. Key achievements were improving the online experience, creating self-serve channels, reducing customer effort and burdensome evidence requirements, enhancing self-service functionality, increased self-help guidance and delivering targeted communications to influence customer behaviour.

Over one million targeted communications were sent across AY2022/23 to support, guide, and retain customers within self-service. Some prompted customers to complete outstanding actions, for example, providing their National Insurance number, bank details or eligibility evidence. These contributed to the overall achievement of having more students in a ‘ready to pay’ position by September than in any previous academic year.

SLC’s People Directorate reviewed the onboarding process and ensuring that staff are successful in transitioning into their new roles through effective training, maximising the speed-to-competence. SLC’s Technology Directorate also contributed, successfully implementing a consolidated set of activities and enhancements which significantly improved the resilience and stability of systems and technology services during the peak processing period both for our frontline Operations colleagues and for our customers (more on this below).

The ‘three pillar’ operating model that SLC introduced in 2021 for the Operations Directorate has continued to mature and evolve, as we build a modern, responsive, and sustainable customer operation. The two new support pillars (“Operational Resource Planning and Support” and “Operational Service Excellence”) are successfully deploying core capabilities and owning activities that enable the key “Operational Delivery” pillar to focus on achieving an outstanding service to our customers. An extensive process of consultation has been completed to significantly rationalise over 100 different customer-facing roles into three streamlined and consistent positions; these enable greater flexibility for multiskilling and career development while laying the foundations for the transition from task- to case- management.

The quality of the outcomes provided to customers who had a task processed or who contacted SLC has remained strong and above APRA targets, and this is reflected in significantly improved customer satisfaction scores (as reported in the Customer Lens above).

Apply-To-Pay APRA Performance Metrics

Target	2022-23 Result
Right First Time - Processing Quality to be ≥ 92%	92.2% Green
Right First Time - Contact (non-outsourced only) Quality to be ≥ 92%	95.4% Green

Comment
Both Quality Assurance targets were again exceeded, against a backdrop of extensive ongoing change within the Operations Directorate

Repayments

A key goal is to ensure that all repayments due are returned to HM Treasury, by making sure that customers who are due to repay comply with their terms and conditions and by ensuring that fraud and error are minimised.

Against a backdrop of a challenging operating environment and increasing number of customers, SLC has again exceeded its repayments targets for 2022-23.

Efforts to increase the number of customers who have verified their residency and employment status have been successful, with the final percentage of verified customers for 2022-23 reaching 91.5% against a target of 90%, the highest percentage that SLC has ever recorded. Each 1% increase in this rate equates to circa 60k additional customers being verified and an additional circa £27m being repaid to the Exchequer.

SLC takes a responsible approach to all debt collection activity and is mindful that customers may find themselves in difficult circumstances. The company strives to ensure fair and supportive treatment of customers with additional needs and those facing financial hardship. During the year, all frontline colleagues undertook training to support customers with additional needs. SLC has provided a new service enabling customers to set up direct debits online. Over 37,000 customers set up direct debits in 2022-23 with over 70% using the new online service rather than the telephone channel option. A further new service now enables customers to update their bank account online – with approximately 1,300 customers using this facility since its launch in August 2022.

These improvements have contributed to an overall inbound call reduction as more customers have been able to self-serve: calls reduced to 801,000 (from over 1.2m prior to the online repayment service being available).

Repayment Performance Metrics

Target	2022-23 Result	Comment
Percentage of borrowers from past cohorts who are compliant with their repayment obligations. (“Past cohorts” means all Income- Contingent Repayment (ICR) borrowers with an SRDD* before April 2023) to be ≥ 90%	91.5% Green	A second record year for Repayments’ performance.

*Statutory Repayment Due Date: the date when former students become liable to potentially begin repaying (contingent upon their income). This date is usually the start of the tax-year that follows the end of their studies.

Corporate Lens

Managing Change

One of SLC’s strategic goals is for shareholders to see us as a trusted partner in the efficient and agile delivery of Government policy and for taxpayers to trust us with their money.

SLC and the policy teams within DfE and the Devolved Administrations increasingly work in a collaborative and joined-up way. This is underpinned by robust governance of the policy development and commissioning process tied to clearer, achievable delivery timelines. Closer collaboration enables fuller consideration of the practical dimensions of delivering new policies cost-effectively, on-time and with the intended outcomes both for our shareholders and for our customers. We will continue to support shareholders in simplifying and rationalising the policy landscape wherever possible, better aligning policy intent with efficient and effective delivery that is aligned to tested and hence proven user needs.

We will continue this successful co-design approach with LLE, leveraging the opportunity LLE provides to simplify products and rationalise policy, as we continue to press the case for simplification.

SLC manages an overall change agenda which is comprised of seven portfolios, namely Policy, Technology, Repayments, Corporate, Evolve, Operations and HE / FE Reform.

Each portfolio submitted a “RAG status” to the relevant portfolio board for approval on a month-by-month basis, and subsequently reported this to the Executive Leadership Team and Board.

Change Portfolios

The overall assessment of the performance over the full year for two of SLC’s seven portfolios, Policy and Evolve, were set as APRA targets:

	2022-23 Portfolio Annual Rating	Comment
Policy Portfolio	Green	Online services for the 2022/23 academic cycle were all launched on- time, including scheme changes relating to customers facing hardship as a result of the invasion of Ukraine. Several services for the 2023/24 cycle also launched before the financial year-end. The DSA Reforms Procurement project was also a significant success this year (see Case Study below).
Evolve Portfolio	Amber	Several CEM projects, eg extending and increasing self-service capability to postgraduate customers were successfully delivered during 2022-23.  The amber status reflects that due to capacity and funding constraints, not all projects have progressed to schedule, including a delay to the Sponsor Journey Redesign project. Nevertheless, Evolve came close to its benefits realisation target for 2022-23 with a total of £79.1m realised (£27.1m DfE Cashable and £52.0m HMT Cashable) against the target of £82.0m (£27.4m DfE Cashable and £54.6m HMT cashable).

Case Study: Disabled Students’ Allowance (DSA) Reforms Project

Every year SLC helps millions of people realise their ambition of going to college or university, including more than a quarter of million students with a disability. DSA is crucial for helping disabled people participate in higher education, but it can be challenging for them to access. SLC is in the process of making the DSA application journey easier with a number of significant improvements.

Last year, SLC undertook one of the most complex procurements in its history in order to provide a more straightforward ‘single point of contact’ service for customers in receipt of DSA. We also, for the first time, introduced contractual controls to ensure consistent quality of service – one DSA supplier in each region managing the end-to-end support.

It was imperative that some legacy suppliers were able to form part of any future DSA supply-chain to help maintain continuity to the DSA service provision. The commercial strategy was designed to ensure inclusiveness for SMEs, hence the use of a procurement mechanism open to all suppliers and a Lot structure that segmented the service into areas more accessible for smaller entities. The robust commercial process ensured no challenges were made during the procurements and resulted in a successful completion and conditional award to two suppliers, each covering two lots.

Technology

2022-23 was the second year of the execution phase of SLC’s Technology Strategy. The strategy set out the roadmap to a target enterprise architecture. This will simplify and consolidate existing platforms and decouple the architecture to reduce total cost of ownership, increase flexibility and to enable long term sustainability.

Technology Strategy Execution

Historically SLC developed systems directly in response to policy-need on top of existing software. These legacy systems have increased cost and limited the ability to support the needs of a modern digital business.

The Technology Strategy underpins the shift from a product to customer centric organisation and is being delivered through four key areas:

Transform, Simplify, Remediate and Enable.

A strategy diagram with four key actions - Transform, Simplify, Remediate, Enable - each linked to an aspect of technology improvement and supported by three corresponding icons.

In 2017, SLC identified legacy risk across ten key business applications. Since then, work has been undertaken and is ongoing as part of the technology strategy to remediate this risk. Significant progress has been made in the execution of the Strategy through both technology-led and business transformation activity:

• The core technology building blocks are now in place;
• Improvements to skills, processes and governance have been implemented;
• The risk associated with legacy systems has been managed effectively;
• Significant portfolio deliveries have been supported; and
• The strategic design has commenced.

Strategic Partner Programme and New Ways of Working

SLC has adopted a change in approach to how we work with our suppliers. During the last 12 months the Strategic Partner Procurement Programme has successfully completed, with the final two (of four) strategic partner contracts awarded to: Tata Consultancy Services (TCS) who were appointed in April 2022 to deliver a range of technology change and integration services, and Eviden (was Atos) who were appointed in October 2022 to deliver a range of customer software delivery services. We now have 3 strategic partners of scale on long term contracts (TCS, Eviden, Capgemini), that are aligned to our platforms and technologies. The Partners provide a range of technical services and capabilities that are being used to deliver and support new technologies; deliver enhancements to critical business applications and services; uplift or decommission of legacy services; support the delivery of improvements to SLC’s digital services and customer interface and the associated technology infrastructure; and streamline processes and change the way we deliver and support some technology services, thus ensuring that we deliver long-term value and efficiencies for SLC. This is all part of our wider Operating Model enhancement work, with continued investment in our people at the core, to build and develop the necessary technical skills and capabilities SLC needs for the future.

Case Study: Providing Systems Stability During Peak

In response to the SLC’s cross cutting Business Objective ‘Flattening the Peak’, for the academic 2022/23 cycle, a consolidated set of activities and enhancements were implemented. These were aimed at improving the resilience and stability of technology services during the processing peak period (late summer into Autumn) and driving improvement in how services are delivered for Operations colleagues and customers. Particular focus was placed on enhancements to key legacy systems which had the highest incident volumes in 2021. This combined with newly introduced technologies resulted in significant reductions both in the number of system incidents logged during peak and also in contact-centre lost hours. Contact-centre lost hours were 92% down year on year, and also 69% lower than in 2018-19 when the majority of staff were office based.

Monthly Systems Incidents Logged By Operations During Peak

	2021	2022
July	1738	209
August	2,414	175
September	2,290	185

Cyber Security

SLC established a new Cyber Assurance Team in August 2022 to ensure that technical and security controls are applied to new and upgraded technology services from their introduction and throughout the life of the services. Additionally, a new Security Major Incident team was formed in November to remediate enterprise impacting incidents, and SLC completed cyber-security incident response exercises with the Business Continuity Team.

SLC remains vigilant in light of the cyber-attack threats following UK Government guidance in response to the challenging global context and has enhanced monitoring in place to assess this and other potential threats.

Technology Performance

Last year, SLC‘s Technology Group began reporting monthly on the number of green service days – that is days on which there were no priority incidents or system outages – as a percentage of the total number of days. The percentage for the whole of 2021-22 across the business was 88.5% (up by 2% on 2020-21), and has now further increased, to 89.8% for 2022-23.

Target	2022-23 Result	Comment
Percentage green service days to be ≥ than 87%	89.8%  Green	Above target, and improving on 2021-22, itself an improvement on 2020-21

Public Money

SLC works within the budget agreed with shareholders and has budget variance metrics against the three standard Government budget classifications of administration, programme and capital.

SLC has further strengthened financial discipline, introducing quarterly financial challenge meetings and a risk-based forecasting model to help manage volatility in expenditure to within APRA tolerances.

SLC met the target for two of its three APRA measures for budget variance, with both Administration and Programme within “green” tolerance. The 12% underspend against the Capital budget meant that SLC missed this target, however the result is a clear improvement on 2021-22, when the underspend was 41%.

Budget Variance APRA Targets (non ringfenced cash)

	2022-23 Target	2022-23 Result
Administration Budget Variance	Between a 2% underspend; no overspend	£0.3m (0.8%) underspend against £42.2m budget - Green
Programme Budget Variance	Between a 5% underspend to 1% overspend	£1.4m (0.7%) underspend against £213m budget - Green
Capital Budget Variance	Between a 5% underspend to a 5% overspend	£4.4m* (12.3%) underspend against £36m budget. - Red

*The capital underspend arose due to SLC having fewer capital projects planned for FY 22-23 than originally anticipated at the time of the last Government Comprehensive Spending Review.

Case Study – Commercial

To safeguard the taxpayer pound, SLC has strengthened the Commercial Team and its working practices. With the appointment of a new Commercial Director, SLC centralised all commercial activity and resources and created a network of Commercial Business Partners.

The implementation of the new Operating Model and business partnering has brought all commercial activity together under one function. The refreshed approach has driven a step change in recent audit ratings (Government Internal Audit Agency (GIAA) and National Audit Office (NAO)) and improved credibility with our shareholders.

This year the Cabinet Office Capability benchmarking score for SLC increased to Good and is now working towards Better.

Better for Colleagues – the creation of a Commercial specialism has enabled us to focus on the implementation of the Commercial Career Pathway, improving skills and capability and developing a talent pipeline.

Better for Customers - improved alignment between the business and commercial teams has led to improved outcomes in support of key milestone dates within customer-improvement projects. The introduction of the Commercial Business Partner model has increased the level of expertise available to support the business.

Better for Shareholders (and Taxpayers) – improving the internal control environment within which Commercial operates ensures SLC third party expenditure meets public sector regulations, and can demonstrate fairness, transparency, and value. A collaborative approach has led to significant savings in supplier negotiations.

Risk Management

SLC established a new FCPU in 2022-23, aligned to the Three Lines of Defence model, strengthening company-wide risk assessment, gap analysis and fraud-prevention. Strong links are being built with external stakeholders and new technology will deliver ongoing monitoring of customers and payments.

The launch of the Governance, Risk and Control (GRC) Enterprise Risk Management module began this year with the Operations Directorate running a pilot in March 2023. Output and learnings from this will be used to inform the subsequent phased launch for remaining directorates from May 2023. The roll- out will deliver more accurate and timely risk and control information and will help the company to make better and more precise decisions, saving money, generating efficiencies and being able to demonstrate ongoing compliance.

The Key Control Questionnaire (KCQ) was successfully brought in-house in early 2023, enabling improvements in both the design of the question set and data quality, in conjunction with policy owners. The KCQ supports the Governance Statement within this year’s Annual Report and Accounts.

People

During 2022-23, SLC has built a strong internal talent acquisition capability. The creation of an internal team of recruitment specialists supports the transition of SLC’s recruitment to be focused on candidate journey and a strong employer brand. Since inception the team have filled 927 roles; the Emerging Talent Programmes have recruited 62 participants bringing the total to 102.

The company continued a strong focus on learning and development for colleagues during 2022-23, with management courses including Managing Effectively in a Blended Way, Management Essentials, Building Better Together, Active Management and Workday. Around 470 current or future leaders received tailored courses to build the skills, knowledge and behaviours to deliver for colleagues, customers and shareholders.

SLC received the highest level of recognition under the Government’s Disability Confident scheme – “Disability Confident Leader”. The accreditation process involved several assessments, including independent validation by an external organisation, where the company was commended for improving

support for colleagues through its remote mental health first-aid service, and for continually reviewing policies to ensure they are inclusive, accessible, and allow for discretion to help break down potential barriers and facilitate the development of colleagues with disabilities.

As a Disability Confident Leader, SLC has an opportunity to progress and strengthen its commitment to developing an environment and a culture that enables colleagues with disabilities or long-term conditions to thrive in the workplace.

The company has an established commitment to EDI, and publishes an EDI Annual Report alongside the statutory gender pay gap report, both at www.gov.uk/slc. Gender analysis on SLC Board Members, Directors and staff is included within the Remuneration and Staff Report.

APRA Target – Employee Engagement

	2022-23 Target	2022-23 Result
Annual Survey Result (Employee Net Promote Score)	> 6.6	6.1 - Red

SLC’s employee engagement survey took place in November 2022. The Employee Net Promote Score as established by the question ‘How likely is it you would recommend SLC as a great place to work is 6.1 for 2022-23. This is lower than the target of 6.6, and a reduction in the 2021 score of 7.0. Analysis of the data has identified the most significant driver for the reduction in overall sentiment to be pay and reward.

3.2.2 Financial Performance and Position

SLC is primarily funded through Grant-in-Aid, received from DfE as SLC’s sponsor department. DfE receives appropriate apportionments of this funding from the three Devolved Administrations:

• The Welsh Government
• The Scottish Government
• Department for the Economy, Northern Ireland

This funding is also analysed through the “parliamentary lens” – that is, by Admin, Programme and Capital, as defined in HM Treasury’s Consolidated Budgeting Guidance (CBG).

DfE confirmed SLC’s budget in the APRA letter, which provided analysis of the funds through both the business and the parliamentary lenses.

Grant-in-Aid Funding

As part of the Government’s Budgeting Framework, Grant-in-Aid funding is allocated each year from the original Departmental Expenditure Limit (DEL). This consists of two separate budgets: net resource spending (resource DEL) split into Administration and Programme expenditure; and net Capital expenditure (capital DEL).

Resource DEL is further split into cash and non-cash. The cash element for Resource DEL in 2022-23 was £255.2m (2021-22: £232.8m). The non-cash element covers items such as depreciation and amortisation. The non-cash element of funding amounted to £43.0m in 2022-23 (2021-22: £44.0m).

Grant-in-Aid Funding for Delivery of SLC Core Activities and Change Projects

	2022-23 DEL Administration £’000	2022-23 DEL Programme £’000	2022-23 DEL Capital £’000	2022-23 Total £’000
Non-ringfenced (Cash)	42,174	213,000	36,000	291,174
Ringfenced  (Non-cash)	10,750	32,250	-	43,000
Total	52,924	245,250	36,000	334,174

	2021-22 DEL Administration £’000	2021-22 DEL Programme £’000	2021-22 DEL Capital £’000	2021-22 Total £’000
Non-ringfenced (Cash)	40,706	192,059	39,995	272,760
Ringfenced  (Non-cash)	11,000	33,000	-	44,000
Total	51,706	225,059	39,995	316,760

In addition to DEL funding, SLC receives Grant-in-Aid funding for Annually Managed Expenditure (AME). This covers expenditure which cannot be fully controlled. The AME element of funding granted from DfE amounted to £1.4m charge (2021-22: £1.1m charge). This excluded any budget in anticipation of the final outcome of the pension valuations post transfer to the Civil Service Scheme, due to the difficulty with estimation of the outcomes.

The Grant-in-Aid of £291.2m is the budgeted figure for FY 22-23 this is £7.6m more than the £283.6m shown in Changes in Tax Payers Equity which reflects actual expenditure ( £6.2 lower than planned ) and excludes the AME charge of £1.4m above.

AME Expenditure

	2023 £’000	2022 £’000
AME recognised in SOCNE
Pension service (income)	-	-
Gain on settlement at transfer of pension fund (see note 15)		-
Pension interest charge/ (income)	(50)	58
Pension administration expenses	431	628
Provisions movements	1,098	426
Impairment	-	9
	1,479	1,121

Non-Grant-in-Aid Funding

SLC continued to receive other income amounting to £1,132,000 (2021-22: £993,000) from those universities and colleges that choose to have SLC administer their bursaries and scholarship payments under the Higher Education Bursary and Scholarship Scheme. Further income was received from third parties in relation to the historic sales of Mortgage Style Loans; this amounted to £85,000 (2021-22: £103,000).

Year-End Outturn

The overall outturn was £321.4m (2021-22: £293.0m), an underspend of £6.2 against our non- ringfenced cash (2021-22: £14.8m) and an underspend of £6.6m ( 2021-22: £8.7m) against our ringfenced cash, a total of £12.8m ( 2021-22: £23.7m) against the APRA budget, as shown below:

Final budget outturn position of net expenditure

	2022-23 Budget £’000	2022-23 Outturn £’000	2022-23 Variance £’000
Non-Ringfenced (Cash)	291,174	284,960	6,214
Ringfenced (Non-cash)*	43,000	36,413	6,587
Total DEL	334,174	321,373	12,801

The non-ringfenced cash underspend consists of a small underspend against our administration budget of £0.4m, an underspend on programme of £1.4m (this is within agreed tolerances as set out in SLC’s APRA where permission to incur additional expenditure may be sought to maintain performance), and an underspend of £4.4m on capital as noted in section 3.2.1.

Ringfenced non-cash budgets were underspent by £6.5m. This aligns to the underspend in capital budget and reflects a lower number of projects being capitalised than had originally been anticipated.

The table below reconciles the net expenditure for the year as shown in the Statement of Net Expenditure with the outturn for the year, as noted above, in respect of our budget position as reported to DfE.

Reconciliation to Statement of Comprehensive Net Expenditure (to the nearest £100,000)

Reconciliation to Financial Statements	2023
	£’000
Total Expenditure per SOCNE:
Staff and restructuring costs	129,400
Depreciation, amortisation and impairments	36,600
Other administrative expenses	126,400
	292,900
Non Grant-in-Aid income (note 3)	(1,500)
Capital Expenditure	31,700
Add back: AME income recognised on SOCNE	(1,700)
Total Outurn	321,400

Staff and Restructuring Costs

Total Staff costs have increased by £9.2m (7.9%) of which £4.2m relates to the pay awards for October 2021 and October 2022 and a slight increase in average headcount. £3.9m of the increase, relates to changes (+2.3%) in Employer’s National Insurance and Pension contributions and a further £1.4m relates to an additional non-consolidated payment made to staff in October 2022 to help alleviate cost- of-living pressures. More successful recruitment has seen a reduction in Agency costs, £1.0m (2021-22 £1.9m)

The use of contractors decreased by £0.8m mainly in the Technology Group (TG) Directorate; this is the result of the cost efficiencies being driven from the TG Strategic Supplier partner programme and less reliance on contractors due to more successful recruitment of TG resources as a consequence of the Digital Data and Technology (DDAT) pay framework.

Depreciation, Amortisation and Impairments

Depreciation charges of £36.6m (2021-22 £38.6m) are in line with capitalisation policies on both existing assets and additions net of disposals in 2022-23. There is a reduction of £2.0m in the charge for the year reflecting a lower asset base.

Other Administrative Expenses

Technology underpins SLC’s ability to support its customers. Technology service delivery costs have increased by £4.7m compared to 2021-22. This is due to a continued increase in the use of Cloud technology and the need to secure specialist technical skills not available in-house. Technology, Licences, Voice & Data costs increased by £5.4m. This was due to both price and volume increases across licences, software and hardware maintenance costs to deliver and maintain core SLC operating systems. For example, with the core Customer Engagement System, customer usage volumes have been increasing, driving additional cost. Another example is the company’s core ERP system as more third- party suppliers require access to complete timesheets.

Professional services increased by approximately £0.4m. The majority of this related to increased spend on debt collection agencies which recovered £7m more student debt.

In total, our premises costs have increased by £1.7m compared to 2021-22. Utilities costs increased significantly from April 2022 and are partially offset by savings from Service Charges and Property Maintenance Costs.

Financial Risks and Challenges

Ongoing external pressures such as inflationary fluctuations have created a significant gap between the total funding required to manage SLC operations and to deliver shareholders’ priorities for 2023-24, and the amount of funding that has been formally allocated to SLC by DfE in the APRA letter. We are reviewing our priorities on an ongoing basis and are engaging with DfE regularly on our in-year financial performance. To mitigate the risk of overspending, we have put in place additional budget and spending controls.

3.2.3 Summary of key items from the Financial Statements

Pension Scheme

As stated in the Remuneration and Staff Report, SLC is a member of the Civil Service Pension Arrangements and makes the Alpha and Partnership schemes available to all its employees. The pension schemes are unfunded, that is, no financial liabilities or asset management rests with SLC for these Schemes. Employee contributions are salary related. Details of the scheme can be found at www.civilservicepensionscheme.org.uk

Transfer arrangements from the previous SLC scheme are not yet complete, therefore in the 2022-23 financial statements the pension surplus of £2m as at 31 March 2022 has been revalued as at 31 March 2023 reflecting the latest actuarial valuation issued by Mercer on 19 April 2023. This now shows a deficit of £16.9m. This change has been caused mainly by an increase in discount rates along with decreases in deferred benefit revaluation and inflation. Note 15 also summarises the agreed future funding arrangements for this scheme. The transfer has now formally been agreed by all parties to proceed in FY23-24 (Nov 23) - after which the SLC scheme will cease to have any assets or liabilities and be wound up in due course.

Special Payments (audited)

Each year, SLC has a specific delegated authority of up to £150,000 for special payments against running costs. These are most frequently ex-gratia compensatory payments relating to customer service. These payments are limited to £500 per case for ex-gratia special payments (or £5,000 for direct financial losses) SLC remained within this delegated limit, incurring costs of £107,248. Four of these related to ex- gratia payments which includes 3 payments SLC was required to make after appraisal by an Independent Assessor (IA). The remaining payment related to a court order.

IAs are appointed by the UK and Welsh governments to consider appeals and complaints by student finance customers where SLC’s process has been exhausted.

Special payments more than £500 or direct financial losses over £5,000 require specific approval from DfE and sit outside of SLC’s delegated authority limit. Payments totalling £133,832 were made in FY22-23. Of these, one fruitless payment of £55,104 related to a supplier who went into liquidation and voluntary exit payments totalling gross £68,086 (net £54,000) were paid.

Fees and Charges (audited)

SLC does not receive any fees and charges other than those relating to supporting the bursary and scholarship schemes as detailed in note 3 to the accounts.

Contingent Liabilities (audited)

At the year-end there is one personal injury claim that has not been fully litigated. The best estimate for this claim is £5,000. As of 31 March 2023, SLC had a legal case estimated at £0.1m which is included within the legal provision, this case was dismissed by a court order dated 25 April 2023 and is now deemed a contingent liability.

Remote Contingent Liabilities (audited)

Under IFRS, contingent liabilities that are considered to be remote are not disclosed, but their narrative disclosure is required by the FReM. Remote contingent liabilities occur where the possibility of future settlement is very small.

At the year-end SLC had no remote contingent liabilities.

3.2.4 Performance against key non-financial requirements

Supplier Payment Policy

SLC aims to comply with the Government’s Better Payment Practice Code for the prompt payment of SMEs. 94% (2021-22: 91%) of all invoices including SMEs were paid within the normal trading terms of 30 days, with 44% (2021-22: 35%) being paid within 5 days.

Environment, Sustainability and Corporate Responsibility

SLC will publish their sustainability strategy and targets during 2023-24, we will use this as a platform to broaden and enhance reporting that helps demonstrate SLCs commitment to sustainability and ensures we conform the requirements of FReM. This new sustainability strategy will set reduction targets and objectives for the company for the next 3 years and will be supported by SLC’s Sustainability Working Group.

SLC has already adopted several energy and carbon reduction projects over the last five years, such as replacement of the water-cooling towers in Bothwell Street, replacement of data centre chilling

equipment with chillers which provide free air cooling when the ambient outside air temperature is below 15 degrees and fitting new LED lights and new lighting controls across parts of our estate.

In late 2023 SLC will relocate within Glasgow city centre to a new, purpose-built office at 10 Clyde Place, providing a working environment configured to suit SLCs post Covid-19 ways of working. It will also support SLC’s net zero carbon aspirations as the building is net zero carbon and rated BREEAM (Building Research Establishment Environmental Assessment Method) excellent by design.

Energy Use

Energy use, energy savings and associated carbon emissions data for 2022-23 are detailed below. SLCs Gas and Electricity consumption is captured from electricity and gas bills, our resultant emission figures are calculated by the GCC annual return spreadsheet provided to us, waste figures come from our Total Facilities Management provider (including percentage of waste recycled or converted to energy) as part of their monthly reporting. Business travel data is provided by SLC commercial and finance and comes from expenditure and contract detail/analysis.

Estate Energy Use	2022-23 KwH	2021-22 KwH	2020-21 kWH	Year-on-year % movement (2021-22 to 2022-23)	Year-on-year % movement (2020-21 to 2021-22)
Electricity	5,550,598	5,222,439	5,051,904	6%	3%
Natural Gas	3,942,188	6,338,731	5,771,143	-38%	10%
Total Estate	9,492,786	11,561,170	10,823,047	-18%	7%

Energy use across SLC’s estate has decreased by 18% this year compared to 2021-22. This is mainly due to replacing ageing inefficient heating and cooling systems in Darlington. Gas powered air conditioning was swapped for electricity powered air conditioning.

Emissions

More detailed figures are now available than in previous years. SLC’s figures for 2022-23, as provided in its Greening Government Commitments (GGC) return, are shown below.

Estate Emissions	2022-23 CO2 tonnes	2021-22 CO2 tonnes	Year-on-year % increase (2021-22 to 2022-23)
Electricity	1,171	1,207	-3%
Natural Gas	722	1,161	-38%
Total Estate	1,893	2,368	-20%
Fugitive Emissions *	0.04	0.07	-43%

*Fugitive emissions are gases and vapours that are accidentally released into the atmosphere such as emissions from air conditioning units.

Business Travel Emissions	2022-23 Km travelled	2022-23 CO2 tonnes	2021-22 Km travelled	2021-22 CO2 tonnes
Fleet	140,480	24.51	113,062	21.93
Non-Fleet	60,947	10.14	20,158	3.72
Public Transport	364,165	12.92	61,953	4.24
Domestic flights	110,726	14.40	10,625	0.87
Total Business Travel	676,318	61.97	205,798	30.76

Business travel emissions have increased by 229% compared to 2021-22 as business travel starts to return to pre-pandemic levels. The total cost of business travel in 2022-23 was £273,000 including accommodation costs, which is an increase of £197,000, 259% from 2021-22.

Waste Minimisation and Management

In 2022-23 SLC generated 244 tonnes of waste of which 112 tonnes was ICT waste (excluding waste reused). In 2021-22, SLC produced 152 tonnes of waste; forty-nine tonnes of which was general waste, no waste was sent to landfill as we moved to a new supplier where all waste is either recycled or incinerated to generate energy.

Over the past year, our generation of waste has increased by 92 tonnes to 244 tonnes. The cost of waste disposal in 2022-23 was £50,759 (2021-22: £51,000). This is due mainly to colleagues returning to SLC offices.

Finite Resources

Water consumption increased across the estate to 6,537m3 for 2022-23 (2021-22: 1,995m3), with the increase attributable to greater footfall across the estate after the pandemic.

ICT and Digital

SLC Technology Group work with a Secure Recycling partner, CCL North, who collect IT equipment SLC no longer requires. Items are securely erased before refurbishing, reusing, or dismantling into components to maximise recycling ensuring nothing is sent to landfill. CCL North hold accreditations in quality management, environmental management, and information security management.

Paper Usage

Paper Usage	2022-23 reams	2021-22 reams	Year-on-year % increase (2021-22 to
2021-23)
A3	3	0	100%
A4	589	759	-22%
A5	0	0	-

As noted in the table above, there has been a 22% decrease in the use of A4 paper. This is primarily driven by a reduction in our reliance on printed documentation and a greater use of electronic media.

CSUPs	2022-23	2021-22
Number of items	50	305

SLC has reduced the use of CSUPs by 84% from 2021-22. We are working towards reducing this further to zero waste.

Office Usage

SLC employs staff in 4 locations with a total of 2,334 desks. The move to 10 Clyde Place will see desk capacity reduce in 2023-24.

Commercial

SLC recognises the wider benefits that can be delivered through public procurement and robust contract performance. Where appropriate, the company considers the three key aspects of Social Value throughout the procurement lifecycle:

1. Economic – e.g. tackling economic and workforce inequalities through employment, training or work-experience opportunities for local people.
2. Environmental – e.g. reducing negative environmental impacts by raising awareness among staff, suppliers and communities.
3. Social – e.g. connecting our communities and reducing inequalities and supporting local community initiatives.

We have embedded Social Value considerations into our procurement processes to help us to create and nurture a vibrant, healthy, innovative, competitive and diverse marketplace of suppliers that includes and encourages small businesses, charities, co-operatives and social enterprises. We have adopted the UK Government’s Social Value Model which contains five key themes and eight associated policy outcomes which are considered in the context of each procurement activity and applied where relevant.

There is a balance between these factors and the overall need to achieve value for money. The scope to take account of social value will be in line with UK policy.

Modern Slavery Act

In line with section 54 of the Modern Slavery Act 2015, SLC is committed to the highest level of ethical standards and has a zero-tolerance policy towards modern slavery and human trafficking. The Company is committed to acting ethically and with integrity in all business dealings and to taking steps to ensure that modern slavery and human trafficking do not exist in any part of the business or its supply chains. SLC’s statement on modern slavery can be viewed at www.gov.uk/slc.

Overall, the nature of SLC’s business means that the risk of modern slavery and human trafficking in its directly managed business activities and the first line of its supply chain is relatively low. Nevertheless, the Company continues to review its operations to identify areas where the risk could arise, and considers what policies and safeguards are in place to prevent this.

Statutory guidance states that organisations should publish their Modern Slavery Statement within six months of their financial year-end and accordingly SLC’s statement for 2021-22 was approved by the Board in July 2022 and then published online.

Anti-Fraud and Anti-Corruption

SLC is committed to combatting fraud and corruption in all its activities, consistent with SLC’s commitment to the Nolan Principles of Public Life. The company’s Internal and External Fraud Policies sets out its overall position, with due regard to relevant law and guidance. SLC has a dedicated FCPU.

In addition, the company maintains related policies, for example, in relation to Money Laundering, Whistleblowing and Gifts and Hospitality, supplemented by regular training for SLC employees. SLC’s Head of FCPU acts as the company’s Money Laundering Reporting Officer and the Company Secretary is SLC’s Whistleblowing Officer.

Declaration and Signature

This Strategic Report forms only part of the annual company accounts and reports that SLC publishes online at www.gov.uk/slc. Directors have had full regard to the considerations set out in Section 172 Companies Act 2006 when fulfilling their duty to promote the success of the company, these being:

• The likely consequences of any decision in the long term
• The interests of the company’s employees

• The need to foster the company’s business relationships with suppliers, customers and others

• The impact of the company’s operations on the community and the environment

• The desirability of the company maintaining a reputation for high standards of business conduct

• The need to act fairly as between members of the company.

This report was approved by SLC’s Main Board on 7 July 2023 and signed on the Board’s behalf by:

Chris Larmer

Chief Executive and Accounting Officer

18 July 2023

4. Accountability Report

Corporate Governance Report

As an Executive NDPB, SLC’s control framework is set out in the SLC Framework Document, drawn up by the DfE in consultation with SLC and the relevant departments of the Devolved Administrations. The Framework Document refers to the appropriate HMG guidance on corporate governance, including HM Treasury’s Managing Public Money. As defined within Managing Public Money and in the Accounting Officer (AO) Delegation Letter, the AO is charged with ensuring that SLC operates with propriety and regularity; with maintaining a sound system of internal control that supports the achievement of SLC’s policies, aims and objectives; and with regularly reviewing the effectiveness of that system. Throughout 2022-23 SLC operated to the 2022 Framework Document

SLC carries out periodic reviews to assess levels of compliance with the requirements as set out in the Framework Document, where any actions raised are tracked to closure.

SLC is bound by ‘Internal Control: Guidance for Directors on the Combined Code’ (the Turnbull guidance).

4.1 Directors’ Report

The Directors’ Report including Financial Statements for Student Loans Company Limited (SLC) is for the year ended 31 March 2023. The Financial Statements have been prepared in accordance with the Companies Act 2006 and, as appropriate, the FReM, and other guidance issued by HM Treasury and the Secretary of State for Education where the disclosure requirements of these go beyond the Companies Act. The Financial Statements have been prepared and approved by Directors in accordance with the International Financial Reporting Standards (IFRSs) as adopted by the UK (Adopted IFRSs) and International Financial Reporting Interpretations Committee Interpretations.

SLC remains compliant with DfE, HM Treasury and Cabinet Office guidance at all times.

Principal Activities

The principal activities of SLC are noted within the Strategic Report.

Dividends

SLC has no accumulated reserves and accordingly the Directors do not recommend the payment of a dividend (2021-22: £nil).

Directors and their Interests

Non-Executive Board Members	From	To
Peter Lauener, Non-Executive Chair	April 2020	March 2026
Andrew Wathey, Non-Executive Director	January 2018	January 2024
Mary Curnock Cook, Non-Executive Director	December 2017	December 2023
Rona Ruthen, Non-Executive Director	October 2020	October 2023
Gary Page, Non-Executive Director	October 2020	October 2023
Charlotte Moar, Non-Executive Director	May 2019	May 2025
Stephen Tetlow, Non-Executive Director	May 2019	May 2025

Natasha Toothill was appointed as a Non-Executive Director in April 2023

Executive Board Members (Statutory Directors)	From	To
Paula Sussex, CEO	September 2018	27th November 2022
Chris Larmer, CEO	28th November 2022	Ongoing
David Wallace, Deputy CEO and Chief Customer Officer	January 2019	Ongoing
Audrey McColl, Chief Financial Officer	August 2021	Ongoing
Company Secretary	From	To
Gary Womersely, Company Secretary	December 2015	Ongoing

All non-executive Directors are considered to be independent. Details of any related parties are disclosed in note 20 of the Financial Statements.

No Director had any interest in the shares of SLC throughout either the year ended 31 March 2023 or 31 March 2022.

SLC is wholly owned by the Secretary of State for Education, the Welsh Ministers, the Scottish Ministers and the Minister for the Economy in Northern Ireland. All are entered as ‘Registrable Relevant Legal Entities’ in SLC’s Register of Persons with Significant Control.

The Chief Executive Officer is also the Accounting Officer for SLC.

Employees

SLC aims to keep employees informed about its affairs and specifically about those matters that affect them directly. The company has several regular digital communications including weekly all-staff newsletters, a weekly update from the CEO and further ad hoc communications as required. SLC regularly holds sessions where colleagues can put their questions directly to the Executive Leadership Team/ Senior Management Team (SMT) and has processes such as ‘Ask Chris’ where colleagues can directly ask questions of the CEO. SLC frequently issues all-colleague emails and maintains an intranet site available to all colleagues. Details of this year’s Employee Engagement Survey is set out in section 3.2.1 and in the Remuneration and Staff Report.

SLC has a longstanding relationship with its recognised trade union, the Public and Commercial Services Union (PCS). The Colleague Representative Group (CRG) continues to promote enhanced colleague engagement through the collation and discussion of collective colleague views. SLC, PCS and CRG hold regular meetings which provide the opportunity to discuss and resolve employment and business- related matters. SLC is an Equal Opportunities Employer. More information is contained in the Remuneration and Staff Report.

SLC give full and fair consideration for the employment, retention, training and development for those with a disability through the application of the following.

• Recruitment and Selection Policy
• Flexible Working Policy and Procedure
• Equality Diversity and Inclusion Policy
• Employee Wellbeing Policy
• Apprentices Policy, Learning & Development Support Policy, Performance Development and Improvement Policy and Procedure

Whistleblowing

SLC has stringent whistleblowing processes and procedures in place.

SLC’s Whistleblowing Policy is reviewed on an annual basis, reported to ARC and is available to staff internally and is also published on www.gov.uk (at https://www.gov.uk/government/publications/staff- whistleblowing-policy). All staff are reminded of the policy and undertake training on an annual basis. All staff are also able to contact SLC’s Whistleblowing Officer via a variety of channels, either directly or to a dedicated confidential email address and telephone number.

In 2022-23 there were three matters raised with SLC’s Whistleblowing Officer. One matter was not a Public Interest Disclosure Act (PIDA) disclosure and the alleged wrongdoing involved a third party (rather than SLC) and was referred to the relevant operational area within SLC to investigate further. Two of the matters referred to SLC’s Whistleblowing Officer were considered to have some/potential PIDA elements and merited investigation. The first complaint was investigated and the findings were reported to SLC’s Chair and Chief Executive Officer (“CEO”) to consider and take any action considered appropriate. The second complaint was received just before the end of the financial year and is still under investigation.

Ombudsmen Statement

Depending on which student finance funding authority customers have applied to, the Parliamentary and Health Services Ombudsman (PHSO), the Public Services Ombudsman for Wales (PSOW), the Northern Ireland Public Services Ombudsman (NIPSO) or the Scottish Public Services Ombudsman (SPSO) provide an opportunity for customers who are dissatisfied with the outcome of the SLC’s complaints or appeals processes (the final stage of which is an independent and impartial review by an Independent Assessor (IA)) to seek a review through referral by their MP.

Details of engagement are shown in the table below:

Engagements with Ombudsmen in 2022-23

	Open cases  as at 1 April 2022	Cases referred in year	No further investigation	Progressed to further investigation	Still being considered as at 31 March 2023
PHSO	16	18	21	5	8
PSOW	0	7	7	0	0
NIPSO	0	0	0	0	0
SPSO	0	0	0	0	0
TOTAL	16	25	28	5	8

Completed and not upheld	Completed and complaint partially up	Upheld in full	Await outcome
0	0	2	3
0	0	0	0
0	0	0	0
0	0	0	0
0	0	2	3

Where a complaint was upheld in full or in part the PHSO required SLC to take further steps in the form of providing additional explanation, action plan for improvements or offering a higher ex gratia or consolatory award than the IA had recommended.

SLC conducts a full lessons-learned exercise after each Ombudsman engagement in order to mitigate the risk of the reoccurrence of issues raised.

Information, Equipment and Personal Data Losses

In the year 2022-23 SLC reported five incidents to the Information Commissioner’s Office (ICO) (2021- 22: two), although the ICO did not take any further action in relation to any of these breaches.

These incidents related to:

Three instances of customer’s disability information being sent to an unintended recipient. Two instances of sharing employee data when it was not necessary. During 2022-23 two laptops were reported as lost. All devices are encrypted and carry no company data or personal information.

Environment, Sustainability and Corporate Responsibility

SLC will publish their sustainability strategy and targets during 2023-24. This new sustainability strategy will set reduction targets and objectives for the company for the next 3 years and will be supported by SLC’s Sustainability Working Group.

SLC continues to monitor its energy use, energy savings and associated carbon emissions data. Energy use across SLC’s estate has decreased by 18% this year compared to 2021-22. Detail is provided above, in section 3.2.4.

SLC Board

The SLC Board is responsible for ensuring that effective corporate governance arrangements are in place that set out how SLC is directed and controlled and that assurance on risk management and internal control is provided.

The Board is required to demonstrate high standards of corporate governance at all times and to ensure that best practice is followed. The responsibilities of the Board are set out in the Governance Statement.

Remuneration

The remuneration for the Chair and Non-Executive Directors is determined by the Secretary of State for Education, the Welsh Ministers, the Scottish Ministers and the Minister for the Economy in Northern Ireland.

The remuneration of the CEO is determined by the Non-Executive Board members, subject to approval by the Secretary of State for Education, the Welsh Ministers, the Scottish Ministers and the Minister for the Economy in Northern Ireland.

The method of appointment of the Non-Executive Directors is included in the Governance Statement. Details of the standing Committees of the Board can be found in the Governance Statement.

External Auditor

The Comptroller and Auditor General, the head of the NAO, has been reappointed for the financial year ended 31 March 2023.

Details of fees earned by the external auditor are provided in note 4 of the Financial Statements.

Contingent Liabilities

At the year-end there is one personal injury claim that has not been fully litigated. The best estimate for this claim is £5,000. As of 31 March 2023, SLC had a legal case estimated at £0.1m which is included within the legal provision, this case was dismissed by a court order dated 25 April 2023 and is now deemed a contingent liability.

Remote Contingent Liabilities

Under IFRS, contingent liabilities that are considered to be remote are not disclosed, but their narrative disclosure is required by the FReM. Remote contingent liabilities occur where the possibility of future settlement is very small.

At the year-end SLC had no remote contingent liabilities.

Chris Larmer

Chief Executive and Accounting Officer

18 July 2023

4.2 Statement of Directors’ Responsibilities

The Directors who held office at the date of approval of the Directors’ Report confirm that, so far as they are each aware, there is no relevant audit information of which SLC’s external auditor is unaware. Each Director has taken all appropriate steps to make themselves aware of any information relevant to the audit, and to establish that SLC’s external auditor is suitably informed.

Directors are responsible for preparing the Directors’ Report in accordance with applicable law and regulations. Company law requires them to prepare Financial Statements for each financial year. Under the Framework Agreement they are required to follow the principles of the FReM. Consequently, they have elected under the Companies Act to prepare the Financial Statements in accordance with and applicable law and to provide the additional disclosures required by the FReM where these go beyond the requirements of the Companies Act 2006. Under company law Directors must not approve Financial Statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the net income/expenditure of the company for the year. In preparing Financial Statements, Directors are required to:

• Select suitable accounting policies and then apply them consistently.
• Make judgements and estimates that are reasonable and prudent.
• State whether they have been prepared in accordance with IFRS as adopted by the UK.
• Prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

Directors are responsible for keeping adequate accounting records sufficient to show and explain the company’s transactions and disclose, with reasonable accuracy, at any time the financial position of the company, and that will enable them to ensure that the Financial Statements comply with the Companies Act 2006. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the company and to prevent and detect fraud and other irregularities.

The Directors have prepared a Remuneration and Staff Report, in order to comply with the requirements of the FReM and in accordance with Schedule 8 to The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 made under the Companies Act 2006, to the extent that they are relevant. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the company’s website.

Chris Larmer

Chief Executive and Accounting Officer

18 July 2023

4.3   Accounting Officer’s Responsibilities

In preparing the accounts, I am required to comply with the FReM in addition to the Directors’ Responsibilities under the Companies Act 2006 and in particular to:

• Observe the Accounts Direction issued by DfE, including the relevant accounting and disclosure requirements, and apply suitable accounting policies on a consistent basis
• Make judgements and estimates on a reasonable basis; state whether applicable accounting standards as set out in the Companies Act 2006 and FReM have been followed, and disclose and explain any material departures in the Financial Statements
• Prepare the Financial Statements on a going concern basis; and
• Confirm that the Annual Report and Accounts as a whole is fair, balanced and understandable and take personal responsibility for the Annual Report and Accounts and the judgements required for determining that it is fair, balanced and understandable.

As Accounting Officer, I am responsible for ensuring;

• The propriety and regularity of financial transactions under my control;
• For keeping proper records and for safeguarding SLC’s assets;
• The economical, efficient, and effective use of resources placed at the Board’s disposal as set out in Managing Public Money published by HM Treasury; and
• Safeguarding the assets of the Board.

Chris Larmer

Chief Executive and Accounting Officer

18 July 2023

4.4   Governance Statement

As SLC’s Accounting Officer, I have personal responsibility for maintaining a sound system of governance, internal control and risk management that supports the achievement of SLC’s policies, aims and objectives while safeguarding public funds and assets. This is in accordance with the responsibilities assigned to me by the DfE, as described within the Framework Document, and in accordance with relevant HM Treasury guidance, in particular the FReM and Managing Public Money.

I am personally accountable to the UK Parliament, via and alongside the DfE Principal Accounting Officer, and to the Devolved Parliaments and Administrations, via their Accounting Officers.

This Governance Statement provides information about SLC’s corporate governance, risk management and internal control arrangements which have been in place throughout the year. It also outlines issues that have arisen during this and previous years and the mitigations that have been put in place.

The Governance Framework

The Framework Document, which can be found at www.gov.uk/slc, provides comprehensive detail of the roles and responsibilities of Executives, Board members and Shareholders, as well as of the two standing Board Committees – the Audit and Risk Committee (ARC) and the Remuneration Committee (RemCo). The Framework Document was rewritten during 2021-22 to establish more relevant and proportionate governance arrangements. These arrangements allow SLC more autonomy to make decisions, reduce unnecessary bureaucracy and allow change to move at a greater speed while ensuring that SLC remains compliant with Treasury and Cabinet Office guidance.

SLC’s Legal Status

SLC was incorporated in 1989 as a company limited by shares under the Companies Acts and is wholly in public ownership – the UK’s four Government administrations are its shareholders. Since April 1996 SLC has been classified as an executive NDPB.

Accountability to Government Shareholders

The Secretary of State for Education accounts for SLC’s business in the UK Parliament. The DfE Minister with responsibility for Higher Education may also act on his or her behalf as the “Responsible Minister”. SLC is separately accountable to the Responsible Minister and to Devolved Administrations’ Ministers for performance in their respective jurisdictions. However, the Devolved Governments have agreed that DfE will act as the “Sponsor Department”, having the primary relationship with SLC, particularly in relation to corporate governance.

The Responsible Minister appoints the SLC Chair and Non-Executive Directors and determines their terms and conditions. Appointments are made for a period of three years and comply with the Code of Practice for Ministerial Appointments to Public Bodies. The Responsible Minister also approves the Board’s appointment of the Chief Executive.

The Permanent Secretary of DfE, as the Principal Accounting Officer of DfE, and acting on behalf of the Accounting Officers of the Devolved Administrations, has designated SLC’s Chief Executive Officer (CEO) as SLC’s Accounting Officer.

Shareholders and Assessors

The four Government Shareholders each appoint an Assessor who has the right to attend all main Board and Committee meetings on their behalf, and thus have access to SLC’s regular business, financial and internal control and risk reports. Shareholders’ key responsibilities include determining policy and maintaining the legislative framework for student support, providing a resource budget and Grant-in- Aid, and setting SLC’s functions, strategic focus and business objectives.

SLC’s Board

The Board operates in accordance with the Companies Acts, its fiduciary duties to the Company and the Board responsibilities set out at section 8.2 of the Framework Document. In summary, its role is: to establish SLC’s strategic goals and key business objectives and to monitor performance against these; to ensure that there is effective governance concerning the use of public money; to regularly review financial information and provide assurance to Government that appropriate action is taken over any concerns; and to appoint (with the responsible Minister’s approval) the CEO and set their objectives.

Non-Executive Directors of the Board are appointed by the Secretary of State for Education, from a variety of backgrounds based on their knowledge and experience gained in both the public and private sectors in industry and academia.

The Board is required to demonstrate high standards of corporate governance at all times and to ensure that best practice is followed.

Board Membership and Attendance Record 2022-23

	From	To	Attendance in 22-23
Peter Lauener, Non-Executive Chair	April 2020	March 2026	8/8
Andrew Wathey, Non-Executive Director	January 2018	December 2023	8/8
Mary Curnock Cook, Non-Executive Director	December 2017	December 2023	8/8
Rona Ruthen, Non-Executive Director	October 2020	October 2023	6/8
Gary Page, Non-Executive Director	October 2020	October 2023	8/8
Charlotte Moar, Non-Executive Director	May 2019	May 2025	8/8
Stephen Tetlow, Non-Executive Director	May 2019	May 2025	8/8
Paula Sussex, CEO	September 2018	November 2022	6/6
Chris Larmer, CEO	November 2022	Ongoing	3/3
David Wallace, Deputy CEO and Chief Customer Officer	January 2019	Ongoing	7/8
Audrey McColl, CFO	August 2021	Ongoing	7/8
Gary Womersley, Company Secretary	December 2015	Ongoing	8/8

*Paula Sussex left SLC in December 2022 and was succeeded as CEO by Chris Larmer who originally joined SLC as Executive Director of Operations in April 2021.

As scheduled, the Board held eight meetings during 2022-23; the table above shows how many of these each member attended (during the period of their membership).

Matters considered by the Board

At each meeting, the Board reviewed and took assurance on SLC’s operational and financial performance via the monthly CEO Report, Corporate Performance Dashboard and the CFO Report.

There was close monitoring of operational services and planning throughout the year, including application numbers, delivery capacity and customer satisfaction, alongside regular consideration of progress against SLC’s Technology Strategy and Evolve transformation programme. Customer Experience, Repayments, SLC Economic Analysis, Application Cycle Annual Review, LLE and HE reforms, the move to 10 Clyde Place, and the Independent Assessors Report were also the subject of key discussions during the year.

The Board took assurance from Committee updates and minutes and reviewed their Terms of Reference.

The Board reviewed and approved arrangements for the coming financial year (2023-24), including the company’s business plan, draft budget and the draft (APRA).

The Board’s formal schedule of meetings was augmented by a series of deep dive sessions which support continuing development and learning for Non-Executive Directors and support colleague engagement. Over the year, additional sessions were held which focussed on LLE, SLC’s strategy, and counter fraud.

Board Effectiveness Review and Inductions

In accordance with the Framework Document, an annual board effectiveness review commenced in March 2022 and the results were discussed with the Chairs of the Board and committees in May 2022. At the Chairs meeting areas for consideration were reviewed with the results informing the work of the Governance team throughout the year.

The 2022 Board Effectiveness Review progress update was sent out to attendees with the 2023 questionnaire and highlighted work including the Strategy Day which was held in Glasgow in November 2022; the 2022 Non-Executive Director recruitment campaign; and the publication of the annual schedules for the Board and its Committees.

The Board regularly provide feedback on the quality of data that is presented in Board papers. In this Financial Year, they have endorsed the usefulness of the Corporate Dashboard and welcomed the improvements in People data presented at the Remuneration Committee.

The Audit and Risk Committee (ARC)

ARC is a standing committee of the Board. The Board established ARC to provide it and the Accounting Officer with assurance on the operation of SLC’s internal risk and control systems, to oversee the provision of internal and external audit services, and to provide assurance on the adequacy of SLC’s corporate governance arrangements.

The Board determines the membership and Terms of Reference of ARC. Assessors, representing the shareholders, have the right to attend all committee meetings.

Members are independent of management and free of any business or other relationships (including cross Directorships or day-to-day involvement in the management of the business) which could interfere with the exercise of their independent judgement.

The Board has appointed a Chartered Accountant as an independent external member of ARC. Any Executive Director, the Company Secretary, the Head of Internal Audit and the representative of External Audit will have free and confidential access to the Chair of the Committee.

The Chair of the committee reports to the Board after each meeting and the minutes of committee meetings are provided to Board members for information.

Committee meetings will normally be attended by the CEO, Deputy CEO, CFO and Company Secretary.

ARC Membership and Attendance Record

	From	To	Attendance
Charlotte Moar, Non-Executive Director, ARC Chair	September 2019	May 2025	5/5
Mary Curnock Cook, Non-Executive Director	September 2018	December 2023	5/5
Gary Page, Non-Executive Director	November 2020	October 2023	5/5
Douglas Griffin, Independent External Member	September 2018	October 2022 *	3/3
Donall Curtin, Independent External Member	January 2023	December 2025	2/2

• Douglas Griffin left in October 2022 and has been succeeded by Donall Curtin.

As scheduled, ARC held five meetings during 2022-23; the table above shows how many of these each member attended (during the period of their membership).

Matters considered by ARC

The committee regularly reviewed key risks and issues, internal audit progress and performance reports throughout the year. The committee took assurance on a range of matters including cyber security, risk, internal and external counter fraud, information security, disaster recovery and business continuity, and commercial.

Additionally, it fulfilled its role in reviewing:

• The Annual Report and Accounts for 2021 -22, which was recommended by ARC for approval by the Board.

• The plan for the Annual Report and Accounts for 2022-23, incorporating SLC’s accounting policies.

• The external audit strategy, and interim reports and fees for 2022-23
• Internal audit work undertaken during 2022-23
• The internal audit plan for 2023-24

The Remuneration Committee (RemCo)

RemCo is a standing committee of the Board. Members of the committee are appointed by the Board.

The Board determines the membership and Terms of Reference of RemCo. Assessors, representing the shareholders, have the right to attend all committee meetings.

Members are independent of management and free of any business or other relationships (including cross directorships or day-to-day involvement in the management of the business) which could interfere with the exercise of their independent judgement.

The Chair of the Committee reports to the Board after each meeting and the minutes of Committee meetings are provided to Board members for information.

Committee meetings are attended by the CEO, the Deputy CEO, and the Executive Director responsible for People, except where the Committee is in closed session and, for example, conducting the annual performance review of the CEO. For further information, refer to the Remuneration and Staff Report.

Key matters considered this year included the SLC People Strategy, Pay Strategy, and ELT succession planning. The Committee also reviewed the annual pay remit, the Remuneration Report, EDI Report, and the Gender Pay Gap Report.

RemCo Membership and Attendance Record

	From	To	Attendance
Andrew Wathey, Non-Executive Director, Chair	September 2020	December 2023	4/4
Stephen Tetlow, Non-Executive Director	May 2019	May 2025	3/4
Gary Page, Non-Executive Director	July 2021	October 2023	4/4
Rona Ruthen, Non-Executive Director	August 2021	October 2023	4/4

As scheduled, RemCo held four meetings during 2022-23; the table above shows how many of these each member attended (during the period of their membership).

Matters considered by RemCo

In accordance with its Terms of Reference, the Committee met in closed sessions to approve the CEO objectives and performance measures as proposed by the SLC Chair, and the ELT objectives and performance measures as proposed by the CEO. The Committee has also reviewed and approved CEO and ELT performance reviews and performance-related pay. In 2022-23, RemCo supported the appointment of three new interim SLC Directors, the Executive Director of Operations, the Executive Director of Change, Data and Repayments, and the Executive Director, People.

RemCo considered the Strategic Workforce Plan at each of its meetings, reviewing updates on key strands of activity including Career Pathways and Employer of Choice.

The Committee reviewed SLC’s Gender Pay Gap and EDI Reports, supporting SLC’s aim to close the gender pay gap and increase diversity.

The Technology and Evolve Oversight Committee (TEOC)

As set out in the Framework Document, the Board may establish committees as required. The Board has established the TEOC as a Committee of the Main Board to support it in its responsibilities for SLC’s Technology Strategy and Evolve Programme.

The Board determines the membership and Terms of Reference of TEOC. Assessors, representing the shareholders, have the right to attend all Committee meetings.

The Chair of the Committee reports to the Board after each meeting and the minutes of committee meetings are provided to Board members for information.

Committee meetings will normally be attended by the CEO and the Evolve programme SRO.

TEOC Membership and Attendance Record

	From	To	Attendance
Stephen Tetlow, Non-Executive Director, Chair	December 2019	May 2025	4/4
Mary Curnock Cook, Non-Executive Director	July 2019	December 2023	3/4

TEOC held four meetings during 2022-23; the table above shows how many of these each member attended (during the period of their membership).

Matters considered by TEOC

The regular agenda covered the following items:

• Key headlines from projects in delivery or with approval to deliver
• Key business outcomes to be achieved
• Upcoming milestones across the programme
• Finance, costs and benefits tracking
• Portfolio level risks and issues
• Deep dive topics to solicit input from the TEOC members

Register of Interests

All Directors and members of the ELT, who are not Directors are required to declare any outside interests. They are required to take due care to avoid conflict between their own and SLC interests. Related Party disclosures, as per IAS 24, are included within note 20 to the Financial Statements. A register of interests is available upon request.

The Executive Leadership Team (ELT)

The ELT is responsible for the day-to-day management of the company. ELT controls and monitors SLC’s operational and financial management, sets SLC’s business priorities and objectives in line with strategies set out by shareholders, and oversees SLC’s capacity and capability to deliver within available resources. Each Executive Director is supported by a team of senior managers, who collectively make up the company’s Senior Management Team (SMT).

ELT Membership 2022-23

Director	Name	Date
Chief Executive Officer	Paula Sussex	Until 28th November 2022
Chief Executive Officer	Chris Larmer	Since 28th November 2022
Deputy CEO and Chief Customer Officer	David Wallace	Throughout Year
Chief Financial Officer	Audrey McColl	Throughout Year
Chief Information Officer	Stephen Campbell	Throughout Year
Executive Director: Business Operations	Chris Larmer	Until 27th November 2022
Interim Executive Director: Business Operations	Jackie Currie	Since 28th November 2022
Executive Director: Repayments and Customer Compliance	Bernice McNaught	Until 9th January 2023
Interim Executive Director: Repayments and Customer Compliance (then changed to Change, Data and Repayments)	David Beattie	Since 19th December 2022
Executive Director: HE/FE Reform	Derek Ross	Throughout Year
Executive Director: People	Morven Spalding	Until December 2022
Interim Executive Director: People	Paula Sussex	Until 22nd December 2022
Interim Executive Director: People	Chris Cooke	Since 12th December 2022

Risk Management Arrangements

SLC continued to mature its approach to risk management and compliance throughout 2022-23. The system of internal control is based on processes that identify, prioritise and manage the principal risks facing the organisation.

A compliance framework pyramid showing layers from Governance to Risk Culture, linked to governance areas and detailed explanations for each element's role in risk management,

Enterprise Risk and Compliance Framework

In 2022-23, SLC’s Risk Framework has continued to mature in line with the Roadmap created by the Enterprise Risk and Compliance (ERC) team. The Roadmap summarises a detailed plan which contains a series of activities that are modernising risk management practices, creating a culture of compliance and strengthening the three lines of defence.

Modernising Risk Management Practices:

• The SLC Executive Risk Forum (ERF) is now live, bringing the ELT together regularly for the first time to oversee the company risk profile. This is an important maturing of Executive oversight and governance.
• Risk Appetite Statements (RASs) have now been incorporated into all SLC policies, aligning each policy to the ERC risk language and specific risk appetite expectations. This supports the embedding of our common risk language across SLC and the practical application of risk appetite into SLC decision making and documented governance. A series of Key Risk Indicators (KRIs) have now been developed, and when finalised will form the basis of risk appetite reporting to support executive risk discussion, challenge and decision making.
• A full suite of Risk and Control Assessments (RCAs) continue to be developed and are now nearing completion ahead of migration to the GRC system. Progress made to date supported the recent launch of our first directorate onto the GRC system, representing a successful test of concept and approach, and a significant milestone ahead of the onboarding of remaining areas. RCA data from the system will subsequently be used to augment ERF and risk appetite reporting.

Creating a Culture of Compliance:

• During the course of the year, SLC’s compliance environment has continued to embed. This includes growing the compliance community via the Compliance and Policy Working Group (CPWG), which brings together the compliance and policy owners to discuss and embed compliance requirements and best practice. We continue to maintain a compliance register and discuss business readiness for changes identified by horizon scanning activity.
• The Key Control Questionnaire (KCQ) was brought in-house to enable significant improvements, including tailored reporting to ELT members, SMT and policy owners to strengthen understanding of policy compliance across SLC.
• The Assurance Framework continues to operate and evolve within SLC, setting out specific requirements for governance, reporting and mapping of assurance activity. We have commissioned an advisory audit engagement this year to gain best practice insight on approach, the output of which will influence further embedding activity and delivery of an Assurance Map across the organisation.
• In addition, an exercise has been carried out to assess compliance with the mandatory elements of the Government Functional Standards. This confirmed that SLC is broadly compliant with the standards but identified actions to strengthen our compliance position, which are being actively tracked and reflected within directorate business plans.

SLC's Assurance Framework includes a risk and compliance pyramid, central and external guidance inputs, assurance map, and flows into governance and external audit processes.

Assurance Framework

Strengthening the three lines of defence:

• A joint exercise with the Institute of Risk Management to create bespoke risk management e-learning modules, aligned to industry best practice and the requirements of SLC’s ERC Framework, has been completed. Launch of the e-learning modules will be positioned alongside the deployment of the GRC system. This will represent the first time SLC has provided risk management training at an ‘all staff’ level and it marks a significant milestone for the company.
• The establishment of the company’s first FCPU is now complete, representing a step change in the SLC approach to managing financial crime risks. A Financial Crime Roadmap is in the process of being created and will focus on the design of a financial crime target operating model to simplify and maximise the SLC approach. In addition, SLC have now joined the National Economic Crime Centre , giving access to valuable insight and data sharing capability moving forward.
• The 1st Line of Defence continues to be strengthened via the implementation of Control Function Teams to support adherence to the Enterprise, Risk and Compliance Policy. Several key positions have been recruited in the year with a fully operational team now supporting the Operations area of the business.
• Standard risk management objectives continue to be developed and now extend to the ELT in addition to ‘all staff’ and ‘SMT only’ levels, demonstrating the increasing risk maturity and commitment to risk management across all levels of the organisation.
• A Risk and Compliance Career Pathway is now established and actively supports strengthening of the 1st Line of Defence via movement to newly established Control Functions.

Developments in risk management arrangements and with the company’s risk profile are presented regularly to the Executive Risk Forum and the Audit and Risk Committee.

Key Risks in 2022-23

The key risks under consideration during the year were:

• The post covid-19 operating model remained a key focus as we moved into FY2022-23, though this has now been largely mitigated by the successful implementation of blended working practices.

• Information and Data Handling due to the nature of SLC’s operations, the scale and complexity of the legacy IT environment and the pervasiveness of personal data within SLC.

• Cyber Security due to a continually evolving threat environment.

• Systems Access Management as we maintain our ability to mitigate and prevent user error, malicious activity or internal fraud across SLC systems.

• Staff attraction and retention pressures remain significant, in particular for technical and specialist roles where the external market continues to offer more attractive benefits’ packages.

• The delivery of (LLE) due to the size and complexity of the programme and interdependencies with the wider change pipeline.

These are referred to in more detail in section 3.1 – About SLC.

Emerging Risks

Emerging risks continue to be anticipated and monitored within SLC, including the consideration of ongoing budgetary pressures on SLC and affecting the public sector more broadly. The scale and complexity of SLC’s change portfolio remains significant against a backdrop of inflationary pressures and ongoing high-profile policy changes required for government (i.e. Higher Education and Further Education Reforms and LLE), and there is a need to consider how change delivery is balanced across service delivery, compliance and transformation initiatives. We also remain focused on building our resilience and capability to respond to financial crime risks.

Internal Audit Opinion

Based on the evidence reviewed, GIAA has concluded that overall, SLC has maintained a sound system of governance, internal control and risk management but there is scope for improvement. This is reflected in the overall level of assurance which is ‘Moderate’ - some improvements are required to enhance the adequacy and effectiveness of the framework of governance, risk management and control.

Management has achieved good progress in addressing audit recommendations raised, including the closure of a small number of longstanding ‘high’ rated recommendations. However, we have also found that controls have not been fully embedded in some of those cases. Nonetheless, we observed improvement to the control environment in the year, stemming notably from the work of the Commercial, Operations, and data privacy teams, and increased maturity of the overall control framework, instigated by the ERC team.

Review of Effectiveness

As Accounting Officer, I have responsibility for reviewing the effectiveness of the system of internal control, and I take personal responsibility in this Governance Statement for the financial year 2022-23.

My review of the effectiveness of the system of governance, internal control and risk management, which has been in place in SLC throughout the year ended 31 March 2023, and up to the date of approval of the Annual Report and Accounts, is informed by:

• The work of the Internal Auditors, who review all material risks and business areas.

• The work of my Enterprise Risk and Compliance team, providing ‘second line assurance’ and supporting the continuous improvement of our risk management, governance and control across the company.

• Control Functions which have been stood up in Operations and strengthened across the company, providing robust first line risk management.

• My ELT, who have each provided additional assurance over the controls they have put in place over the activities where they have delegated responsibility.

• SLC’s SMT, who certify compliance with key controls once a year supporting the production of an annual assurance statement.

• Comments made by the External Auditors in their management letter and other reports.
• The SLC Board, ARC and Company Secretary

None of the assurance mechanisms identified any significant control issues. However, the SLC has identified the importance of introducing a more proactive counter fraud approach and the need to draw more intelligence from its data and respond to potential anomalies and unusual patterns. The establishment of the FCPU in 2022-23 is a key part of this.

As with any complex business, SLC manages a range of risks and SLC’s system of governance, internal control and risk management is designed to manage risk to a reasonable level rather than to eliminate all risk of failure to achieve policies, aims and objectives. It can therefore only provide reasonable and not absolute assurance of effectiveness. It is based on an ongoing process designed to identify and prioritise risks to the achievement of company policies, aims and objectives, to evaluate the likelihood of those risks occurring, their impact and the need to manage them effectively.

Conclusion

I have considered the evidence available to me with regard to the production of the annual Governance Statement and conclude that SLC maintains a sound system of governance, risk management and internal control.

Chris Larmer

Chief Executive and Accounting Officer

18 July 2023

Remuneration and Staff Report

4.5 Remuneration Report

The Remuneration Report sets out the remuneration of all members of the Executive Leadership Team, including Statutory Directors, Executive and Interim Directors and Non-Executives, together with details of the Remuneration policy for the year.

This report is prepared in accordance with the Companies Act 2006, the Large and Medium-sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013 and includes any additional disclosures required by the Financial Reporting Manual.

Remuneration Committee

The Terms of Reference of RemCo and matters considered are set out in the Governance Statement section 4.4.

Committee Membership

	From	To	Attendance
Andrew Wathey, Non-Executive Director, Chair	September 2020	December 2023	4/4
Stephen Tetlow, Non-Executive Director	May 2019	May 2025	3/4
Gary Page, Non-Executive Director	July 2021	October 2023	4/4
Rona Ruthen, Non-Executive Director	August 2021	October 2023	4/4

Peter Lauener, the Chair, has a standing invite to attend this Committee, although he is not a member.

Remuneration Policy

SLC aims that the remuneration packages offered to the ELT:

• Enables SLC to attract, retain and motivate high calibre executives.
• Remunerates individuals fairly for individual responsibility and contribution, while providing an element of performance related pay reflecting the individual performance of each ELT member, having regard to public sector pay guidance/restrictions.
• Take account of salary policy within the rest of SLC and the relationship that should exist between the remuneration of the ELT and that of other employees.

As a Non-Departmental Public Body, SLC’s Senior Civil Service (SCS) equivalent graded staff are not Civil Servants and therefore not in scope of the Senior Salaries Review Body’s remit. Nevertheless, SLC recognises the importance of public sector pay policy. Therefore, any annual pay increase or decision to award performance-related pay to SLC’s SCS equivalent staff is considered alongside and according to the same general principles that apply to SCS.

SLC aims to review ELT pay annually, in line with the SCS pay guidance. However, this has not been the case for several years due to circumstances such as the public sector pay pause in 2021-22 and SLC’s decision to direct its pay remit to its lowest paid colleagues in 2022-23.

The notice period for ELT members who are permanent employees is six months, and they are on standard SLC contracts of employment. In 2022-23, three of SLC’s ELT positions became vacant which were filled by interim Executive Directors while formal recruitment processes were undertaken.

Non-Executive Remuneration

Remuneration of the Non-Executive Directors (including the Chair) is set for their three-year term of appointment by the Secretary of State for Education, the Welsh Ministers, the Scottish Ministers and the Minister for the Economy in Northern Ireland or their delegated representative(s). Additional responsibilities may attract further remuneration.

Pensions

Prior to 1 March 2020, SLC operated the Student Loans Company Limited Retirement and Death Benefits Scheme (SLC Pension Scheme) which was a defined benefit scheme and NOW: Pensions, a defined contribution scheme, which met SLC’s statutory obligations to enrol all employees in a pension scheme.

SLC, since March 2020 is an affiliated employer of the Civil Service Pension Arrangements (CSPA) and made the alpha and partnership schemes available to all its employees. SLC auto-enrols all new employees into the CSPA and provides new staff with the options of joining the alpha or partnership schemes of the CSPA, or remaining a non-pension member until the next re-enrolment date when they would be auto-enrolled into alpha.

No ELT members retain any pension benefits in the previous SLC Pension Scheme.

Details of the Civil Service scheme can be found at: www.civilservicepensionscheme.org.uk

Performance Related Payments

Each member of the ELT has personal performance objectives, including specific targets which have a significant impact on the performance of the organisation. These targets and the CEO’s appraisal of their performance against them are subject to review by RemCo. Subject to RemCo approval, members of the ELT who are permanent staff are eligible to participate in SLC’s performance related payment scheme.

Other Benefits and Expenses

SLC meets normal allowable costs for Board Directors and members of ELT in accordance with SLC’s standard travel and expenses policy.

The Chair reviews the performance of the CEO and based on delivery against agreed objectives, may propose an award for consideration by the RemCo. The terms of the CEO’s appointment provide for a performance related payment to a maximum value of £20,000 per annum.

Performance-related payments are not awarded to Non-Executive Directors.

Non-Executive Directors and Executive Leadership Team Salary and Pension Information (subject to audit)

Remuneration of Board Members

There were no redundancy payments to members of the Board for loss of office made during the year (2021-22: £nil).

Fees Paid to Chair and Non-Executive Directors

	2022-23 Remuneration £’000	2022-23 Other expenses (to the nearest £100) £’000	2022-23 Total £’000
Peter Lauener	50-55	0.7	50-55
Mary Curnock Cook	15-20	0.7	15-20
Charlotte Moar	15-20	1.5	15-20
Stephen Tetlow	10-15	1.4	15-20
Andrew Wathey	15-20	0.7	15-20
Gary Page	15-20	3.0	15-20
Rona Ruthen	15-20	0.6	15-20

The level of expenses will vary dependent on where Non-Executives live and the frequency of face to face meetings that occur for Board and committee business.

	2021-22 Remuneration £’000	2021-22 Other expenses (to the nearest £100) £’000	2021-22 Total Remuneration £’000
Peter Lauener	50-55	0.5	50-55
Mary Curnock Cook	15-20	-	15-20
Simon Devonshire	15-20	-	15-20
Charlotte Moar	15-20	0.4	15-20
Stephen Tetlow	10-15	0.1	15-20
Andrew Wathey	15-20	-	15-20
Gary Page	15-20	0.7	15-20
Rona Ruthen	10-15	0.3	10-15

Remuneration of ELT

The ELT is responsible for the day-to-day management and leadership of SLC’s activities and operations. The Governance Statement notes the areas of responsibility for each member of ELT.

There were no redundancy payments to members of the ELT for loss of office made during the year (2021-22: £nil).

Remuneration of ELT 2022-23

Permanent Members of ELT

Name	Position	2022-23 Remuneration £’000	2022-23 Other Taxable Benefits and Expenses (to the nearest £100)	2022-23 Accrued Performance Related Pay £’000 ¤	2022-23 Employer Pension Contribution (nearest £1,000) £’000	2022-23 Total Remuneration* *** £’000
Paula Sussex* (to 22 December 2022, CEO until 27 November 2022)	Chief Executive	150-155 (190-195) **	-	10-15	42	205-210
Chris Larmer* (from 28 November 2022)	Chief Executive	65-70 (190-195) **	-	5-10	20	90-95
David Wallace*	Deputy Chief Executive	140-145	-	5-10	43	190-195
Audrey McColl*	Chief Financial Officer	130-135	-	5-10	39	175-180
Stephen Campbell	Chief Information Officer	135-140	1.4	5-10	26	170-175
Derek Ross	Executive Director	130-135	1.0	n/a	39	170-175
Bernice McNaught (to 9 January 2023)	Executive Director	105-110 (140-145) **	-	n/a	32	140-145
Chris Larmer (to 27 November 2022) **	Executive Director	85-90 (130-135) **	-	5-10	26	115-120
Morven Spalding (to 15 December 2022) ***	Executive Director	80-85 (120-125) **	-	n/a	26	110-115

Interim Members of ELT

Name	Position	2022-23 Remuneration £’000	2022-23 Other Taxable Benefits and Expenses (to the nearest £100)	2022-23 Accrued Performance Related Pay £’000 ¤	2022-23 Employer Pension Contribution (nearest £1,000) £’000	2022-23 Total Remuneration* *** £’000
Jacqueline Currie (from 28 November 2022)	Interim Executive Director	40-45 (115-120) **		n/a	9	45-50
David Beattie (from 19 December 2022)	Interim Executive Director	40-45 (145-150) **	-	n/a	13	50-55
Chris Cooke (from 12 December 2022) ***	Interim Executive Director	35-40 (130-135) **	1.7	n/a	12	50-55

• *Denotes that the individual is a statutory SLC Board Member under the Companies Act 2006
• **Denotes the Full Year Equivalent salaries for those members of ELT who were not in post/position was not held for the full financial year
• ***Following the resignation of the permanent Executive People Director in December 2022, interim support was secured by SLC to facilitate the transitional position until the recruitment/appointment of a new permanent Executive People Director. Some of this cover was provided by Paula Sussex on leaving the CEO role.
• **Chris Larmer was a permanent member of the ELT for the full 2022-23 financial year. He held two roles over this period as highlighted in the table above. The total remuneration for the year was Remuneration £150k-£155k, Accrued Performance Related Pay, £10k-£15k, Employer Pension Contribution (to nearest £1,000), £46k, Total Remuneration, £205k-£210k.
• ¤Accrued performance pay is shown in bands of £5,000.

Remuneration of ELT 2021-22

Name	Position(s)	2021-22 Remuneration £’000	2021-22 Other Taxable Benefits and expenses (to the nearest £100) £’000	2021-22 Accrued Performance Related Pay £’000¤	2021-22 Employer Pension Contribution (nearest £1,000) £’000	2021-22 Total Remuneration £’000
Paula Sussex*	Chief Executive	190-195	-	15-20	58	265-270
David Wallace*	Deputy Chief Executive	140-145	-	5-10	43	190-195
Jacqui Smillie* (to 31 May 2021)	Chief Financial Officer	20-25 (130-135) φ	-	-	7	25-30
Audrey McColl* (from 02 August 2021)	Chief Financial Officer	85-90 (130-135)φ	-	0-5	26	115-120
Stephen Campbell	Chief Information Officer	135-140	0.2	5-10	26	170-175
Derek Ross	Executive Director	130-135	0.5	-	39	165-170
Bernice McNaught	Executive Director	135-140	-	5-10	42	185-190
Chris Larmer (from 24 May 2021) **	Executive Director	110-115 (130-135)φ	-	5-10	34	155-160
Morven Spalding	Executive Director	120-125	-	0-5	36	160-165

• *Denotes that the individual is a statutory SLC Board Member under Companies Act 2006
• **The £7k expenses for Chris Larmer previously in 2021/22 have been removed as these related to relocation expenses within HMRC guidance as non-taxable and had been included erroneously.
• φDenotes the Full Year Equivalent salaries for those members of ELT who were not in post for the full financial year

Retirement Benefits for the ELT

Accrued pension and related lump sum at pension age as at 31 March 2023 £’000*	Real increase in accrued pension and related lump sum at pension age during the year to 31 March 2023 £’000**	CETV as at 31 March 2023φ (to nearest £1,000) *** £’000	CETV as at 31 March 2022φ (to nearest £1,000) *** £’000	Real increase in CETV (to nearest £1,000) *** £’000	Employer Contribution to partnership pension scheme 31 March 2023(to nearest £1,000) *** £’000	Employer Contribution to partnership pension scheme 31 March 2022 (to nearest £1,000) *** £’000
Paula Sussex (to 22 December 22)	30-35	2.5-5	458	389	35	-	-
Chris Larmer	5-10	2.5-5	79	32	33	-	-
David Wallace	30-35	2.5-5	594	506	20	-	-
Derek Ross	55-60	0	1,098	1,020	-29	-	-
Bernice McNaught (to 9 January 2023)	15-20	0-2.5	225	189	12	-	-
Audrey McColl	5-10	2.5-5	68	26	31	-	-
Morven Spalding	5-10	2.5-5	142	96	31	-	-
Jacqueline Currie (from 28 November 2022)	5-10	0-2.5	68	58	5	-	-
David Beattie (from 19 December 2022)	0-5	0-2.5	12	-	9	-	-
Chris Cooke (from 12 December 2022)	0-5	0-2.5	12	-	12	-	-
Stephen Campbell	-	-	-	-	-	26	26

• *These columns are stated in bands of £5,000
• **These columns are stated in bands of £2,500
• ***Cash Equivalent Transfer Values (CETV) have been calculated in accordance with the Occupational Pension Schemes (Transfer Values) Regulations 1996, depending upon length of membership of the SLC Pension Scheme, and figures have been rounded. Taking account of inflation, the CETV funded by the employer has decreased in real terms.
• Any Additional Voluntary Contributions paid by members of the ELT and the resulting benefits are not shown.
• Φ CETV figures are calculated using the guidance on discount rates for calculating unfunded public service pension contribution rates that was extant at 31 March 2023. HM Treasury published updated guidance on 27 April 2023; this guidance will be used in the calculation of 2023-24 CETV figures.

4.6 Staff Report

Median and Fair Pay (audited)

Reporting bodies are required to disclose the relationship between the remuneration, including bonus paid during the year, of the highest-paid Director in their organisation and the lower quartile, median and upper quartile remuneration of the organisation’s workforce.

SLC’s highest-paid director in the financial year 2022-23 was the CEO.

The value was £203.8k which was 8.2 times (2021-22: 8.7 times) the median remuneration of the workforce, which was £24,726 (2021-22: £23,928).

Pay Ratios of Highest Paid Director (audited)

Year	25th percentile pay ratio	Median pay ratio	75th percentile pay ratio
2022-23	9.6:1	8.2:1	5.8:1
2021-22	10.2:1	8.7:1	6.2:1

The remuneration and salary cost information used to calculate the above ratios are shown below.

Remuneration and Salary Information used to calculate pay ratios (audited)

	2022-23 Total Pay and Benefits	2022-23 Salary component	2021-22 Total Pay and Benefits	2021-22 Salary component
25th percentile	21,282	20,299	20,338	19,418
Median	24,726	22,523	23,928	22,264
75th percentile	35,350	33,500	33,684	32,720

The percentage change in the remuneration of the highest-paid Director and of the employees of SLC taken as a whole are shown in the tables below.

Percentage change of salaries and allowances and performance related pay and bonuses of the highest paid Director and all employees (excluding the highest paid Director) (audited)

	Highest Paid Director 2022-23	Highest Paid Director 2021-22	All employees (excluding highest paid Director 2022-23	All employees (excluding highest paid Director 2021-22
Salary and allowances	0.0%	0.0%	8.8%	1.3%
Performance pay and bonuses	-21.1%	9.4%	85.6%*	7.2%

The change in Performance Pay and Bonus is due the 2022-23 bonus being earned for 9 months compared to a full year in 2021-22.

• *The increase in Performance pay & bonuses for all employees (excluding the highest paid director) reflects an additional non-consolidated payment of £450 per person in October to support significant cost-of-living pressures.

During the year, remuneration for permanent members of staff ranged from £19,250 up to £203,800 (2021-22: £18,750 to £207,500). No employees were paid more than the highest paid director. The remuneration for the entire ELT, excluding PRP was £1.2m (2021-22: £1.1m).

Total remuneration includes salary, non-consolidated performance related pay and benefits-in kind. It does not include severance payments, employer pension contributions and the cash equivalent transfer value of pensions.

Staff Numbers and Remuneration (audited)

The below table represents the average full-time equivalent employees. SLC’s Senior Management Team and Executive Leadership Team are Senior Civil Service (SCS) equivalent roles.

Staff Numbers by grade and gender for the year to 31 March 2023

	Male	Female	Total
Executive Leadership Team	5	4	9*
Senior Management Team	22	12	34
All other employees	1,485	1,632	3,117
Total	1,512	1,648	3,160

• *There are only 8 Permanent members of the ELT. This short-term increase reflects the cross-over period for the Executive Director, People post.

Staff Numbers by grade and gender for the year to 31 March 2022

	Male	Female	Total
Executive Leadership Team	4	4	8
Senior Management Team	20	11	31
All other employees	1,460	1,644	3,104
Total	1,484	1,659	3,143

There has been a small (0.5%) increase in average staff numbers since last year – from 3,143 to 3,160. The impact on the level of salaries and other staff costs is detailed in the financial review within the Strategic Report.

Wages and salaries (audited)

‘Permanent staff’ in the tables below includes all staff with an employment contract with SLC and those employees on fixed term contracts. ‘Agency costs’ incorporates agency staff who are fulfilling a permanent role within the structure; these short term roles support requirements such as unexpected absences, short term peaks in workload, short term projects or gaps between filling permanent vacancies.

	2022-23 Permanent Staff £’000	2022-23 Agency Costs £’000	2022-23 Total Remuneration £’000
Wages and salaries	98,090	1,247	99,337
National Insurance costs	9,874	-	9,874
Employer Pension costs	19,453	-	19,453
Non-cash IAS 19 adjustment	0	-	0
Gain on settlement	0	-	0
Direct staff costs	127,417	1,247	128,664
Indirect staff costs*	709	-	709
Total staff costs	128,126	1,247	129,373

	2021-22 Permanent Staff £’000	2021-22 Agency Costs £’000	2021-22 Total Remuneration £’000
Wages and salaries	91,972	2,065	94,037
National Insurance costs	8,780	-	8,781
Employer Pension costs	16,633	-	16,632
Gain on settlement	0	-	0
Direct staff costs	117,385	2,065	119,450
Indirect staff costs*	731	-	731
Total staff costs	118,116	2,065	120,181

• *Indirect staff costs relate to the apprenticeship levy and health insurance premiums.

Total Permanent Staff costs have increased by £9.7m (8.3%) of which £4.2m relates to the pay awards for October 2021 and October 2022 and a slight increase in average headcount. £3.9m of the increase, relates to changes (+2.3%) in Employers and National Insurance contributions and a further £1.4m relates to an additional non-consolidated payment made to staff in October 2022 to help alleviate cost- of-living pressures. More successful recruitment has seen a reduction in Agency costs, £1.0m (2021-22 £1.9m)

Severance Payments (audited)

SLC agreed and paid two (2021-22: 2) severance payments during the year. Both were Voluntary redundancies and were approved by DfE/Cabinet Office as required.

Consultancy costs are included within other administrative expenses within the Statement of comprehensive net expenditure which are detailed in Note 4 to the financial statements. Other consultancy costs amounted to £1.7m (2021-22: £1.6m) during the year.

Number of Severance Payments

Payment Band	2022-23	2021-22	2020-21
£< £10,000	-	-	1
£10,000 - £25,000	1	2	-
£25,000 - £50,000	1	-	-
£50,000 - £75,000	-	-	-
Total	2	2	1

The total cost of severance payments on a cash basis for the year was £54,000 (2021 - 22: £34,000).

Off-payroll Arrangements (unaudited)

Off-Payroll Arrangements exceeding £245 per day

	31 March 2023 No.	31 March 2022 No.
No. of existing engagements as of 31 March 2023	20	10
Of which.
No. that have existed for less than one year at time of reporting.	15	3
No. that have existed for between one and two years at time of reporting.	1	1
No. that have existed for between two and three years at time of reporting.	2	4
No. that have existed for between three and four years at time of reporting.	1	2
No. that have existed for four or more years at time of reporting.	1	-

	31 March 2023 No.
No. of temporary off-payroll workers engaged during the year ended 31 March 2023
Of which…
Not subject to off-payroll legislation	-
Subject to off-payroll legislation and determined as in-scope of IR35	13
Subject to off-payroll legislation and determined as out-of-scope of IR35	7
No. of engagements reassessed for compliance or assurance purposes during the year	-
Of which: no. of engagements that saw a change to IR35 status following review.	-

People Strategy (unaudited)

The company has a robust People Strategy which covers all aspects of the employee lifecycle including attraction, retention, development and reward.

Our Reward: SLC wants to properly recognise and reward its people for their contribution and achievements and be recognised as a company that promotes fair pay. However, the recent economic climate and public sector pay constraints has placed pressure on our pay arrangements.

Recognising the extraordinary rise in the cost of living that all colleagues are experiencing, and in recognition of everyone’s collective effort towards the organisation’s strong performance, this year we gave all eligible colleagues a one-off before tax payment of £450 from our non-consolidated pay budget.

Our 2022 Gender Pay Gap Report noted a slight increase in both the mean and median gender pay gaps from 2021, 0.62% and 2.92% respectively. We explain the detail behind these results and our action plan to reduce our gender pay gap in this report published in April 2023 at https://www.gov.uk/government/publications/slc-gender-pay-gap-report-2022.

Our Brand: In a buoyant employment market, employer brand is key. This year SLC focused on building its internal talent acquisition capability with the creation of an internal team of recruitment specialists enhancing SLC’s recruitment capability, focussing on the candidate journey and enhancing our employer brand.

Our Skills: This year marked the first full year of Career Pathways – a competency-based career progression tool to enable our colleagues to develop their careers up and across SLC. Taking on board colleague feedback from the first year, we are now focused on increasing confidence to use the tool to develop skills at all levels.

Our Workforce: Our Colleague Representative Group is now embedded as a key vehicle for structured colleague engagement and input into decision-making processes.

2022-23 marked the final year of our three-year EDI strategy, published in 2020. The objectives of this strategy were to:

• To build and maintain a diverse and inclusive workforce.

• To cultivate and promote a workforce culture where everyone is included and is encouraged to be their true selves and feel accepted for who they are.

• To work together towards an empowered and engaged workforce.

Progress against this strategy is available in our latest EDI annual report, published here: https://www.gov.uk/government/publications/slc-equality-diversity-and-inclusion-annual-report-2022

SLC is committed to the development and progression of colleagues with disabilities and to the provision of an inclusive and accessible working environment for all. In 2022-23, SLC received the highest level of recognition under the Government’s Disability Confident scheme – Disability Confident Leader. Through the external accreditation process we were commended for improving support for colleagues through the launch of our remote mental health first aid service; and for continually reviewing our policies to ensure they are inclusive, accessible, and allow for discretion to help break down potential barriers and facilitate the development of colleagues with disabilities.

SLC’s Recruitment and Selection Policy outlines and confirms our commitment as a Disability Confident Leader by ensuring candidates identifying as having a disability, and able to meet the minimum criteria for a role, are guaranteed an interview. Practical guidance for recruiting, managing and developing colleagues with a disability or health condition is available for managers. Support for colleagues with disabilities is incorporated into SLC policies, procedures and processes and SLC offers support for colleagues to manage their disabilities or health conditions.

We are now at an advanced stage in the development of our next three-year EDI Strategy, which we will publish in early 2023-24. This strategy will seek to mature our EDI approach ensuring that SLC is an organisation that has an inclusive culture and is reflective of our local communities and the customers we serve.

The following information sets out a summary of the equality profile of the Student Loans Company as of 31 December 2022. This data has been used in the development of the SLC EDI action plan which will support the new three-year strategy. It is also used to provide company employee information as part of the equality impact assessment process.

• Age: The mean age of SLC colleagues in 2022 was 39; this shows that we continue to have a young workforce when compared to other public sector employers, where the median age was 45 years old in 2020.

• Gender: The company gender profile is consistent when compared with other public sector organisations. The percentage of men working at SLC is 46.75% and the percentage of women is 53.25%. The proportion of women employed by SLC is slightly lower than in the wider Civil Service, in which women represent 54.2% of employees.

• Race/Ethnicity: Employees sharing their ethnicity as white has increased from 60.78% in 2020 to 65.83% and those from each of the ethnic minority groups increased from 3.08% in 2020 to 3.98%. There has been a decrease in nil responses from 36.15% to 29.98% since 2020. This continued downwards trend reflects our progress in making employees feel comfortable in sharing their ethnic origin, but we are taking further steps to ensure we have high quality data, so we gain a better picture of our ethnicity profile at SLC.

• Religion and belief: This year we hold data for 73.59% of our employees, which is a slight decrease from 74.38% in 2020. The percentage of employees who prefer not to share their religion or belief has slightly increased from 2.77% in 2020 to 3.01% this year.

• Disability: 3.58% of employees have indicated that they have a disability. This is a decrease from 2020 where 4.58% of colleagues shared having a disability. The percentage of employees sharing that they do not have a disability has decreased 89.24% in 2020 to 72.30% in 2022.

• Sexual Orientation: In 2020, we had 71.66% of our employees sharing their sexual orientation, this year we can see a slight decrease to 69.38%. This year 4.65% of employees shared they are gay, lesbian, or bisexual (LGB), which is a slight increase from 4.24% last year.

Our Employee Engagement: SLC conducts an annual Employee Engagement Survey to gain insight into colleagues’ experiences and views of working at SLC. Results are used to help inform and enable our strategic goal of making SLC a great place to work.

Our 2022 Employee Engagement Survey attracted 2,497 responses, representing a completion response rate of 78% of SLC employees (while this is a high response rate it does reflect a 2% decrease on the rate for the survey issued in February 2021).

The Employee Net Promoter Score (ENPS) as established by the question ‘How likely is it you would recommend SLC as a great place to work’ has fallen to 6.1. This is lower than our target of 6.6, and a reduction from the 2021 score of 7.0.

Analysis of qualitative responses highlighted those factors such as the impact of the increased cost of living/travel, sentiment around pay and reward and the shift in post pandemic working patterns have heavily influenced colleague responses. This sentiment is not unique to SLC but is also evidenced in the Civil Service People Survey, which saw a reduction in sentiment across Government Departments.

Positive areas evidenced in the survey results included colleagues’ connections within their teams, how they feel about the future of SLC and their understanding of their contribution to this.

Staff Health, Safety and Wellbeing

SLC understands and discharges its duties under the Management of Health and Safety at Work Regulations 1999 and the Health and Safety Act 1974. SLC does this using a broad strategy incorporating regularly reviewed and updated policies, mandatory annual Health and Safety training for all employees including a workstation assessment, a regular review of Health and Safety risks, regular audits of the working environment, independent third-party assurance reviews such as ISO 45001, regular communications to staff and an annual Health and Safety report to the SLC main Board.

Sickness Absence Report

	2022-23 %	2021-22 %	2020-21 %
Sickness Absence	3.75	3.83	3.93

Staff turnover

Staff turnover percentage includes all staff employed at SLC. For a given period, the turnover figure is calculated as the number of leavers within that period divided by the average of staff in post over the period.

Staff Turnover Report

	2022-23 %	2021-22 %	2020-21 %
Staff turnover percentage	15.17	18.41	8.06

2022-23 staff turnover has reduced from 2021-22 and is broadly in line with pre-covid levels 2019-20 levels (2019-20: 16.88%).

Trade Union Facility Time Reporting

SLC has a longstanding relationship with its recognised trade union, Public and Commercial Services Union (PCS). SLC and PCS hold monthly meetings which provide an opportunity to discuss and resolve employment and business-related matters. PCS provided support across all SLC sites: Glasgow, Darlington and Llandudno Junction.

The Facility Time Agreement implemented in November 2018 permits SLC employees who act as PCS representatives to spend up to a maximum of 50% of their working week on union responsibilities.

Overall, 18.45% of time was spent on trade union activities.

Trade Union facility time reporting

	31 March 2023	31 March 2022
Relevant Union Officials
Employees identified as union officials	13	10
Full time equivalent employees identified as union officials	13	10
Percentage of time spent on facility time
0% of working time
1-50% of working time	13	10
51-99% of working time
100% of working time		-
Amount of pay bill spent on facility time	£33,041	£37,571
Total Pay bill	£128m	£118m
Percentage of pay bill spent on facility time	0.03%	0.03%
Time spent on paid trade union activities as a percentage of total paid facility time	100%	100%

4.5 Parliamentary Accountability Report

Losses, Special Payments and Write-offs (audited)

There were two redundancy payments in total during the year which are detailed in the Remuneration and Staff Report. These were voluntary redundancy payments and subject to the appropriate approval from DfE.

There were no donations made during either the year ended 31 March 2023 or 31 March 2022.

Other than the above, losses for payroll debt write-off were limited to £10,000 during the year for an individual claim with a total ceiling of £40,000. No payroll debt write-offs exceeded the individual limit in the year, neither was the ceiling breached.

Special payments of £241,080 were made during the year. These include not only ex-gratia payments, but all types of special payments as set out in Managing Public Money (MPM).

Of the total £241,080 paid, £107,248 were approved within SLC’s delegated authority of £500 per case up to the delegated authority in 2022-23 of £150,000. The remaining £133,832 of the special payments related to cases above £500 and for which relevant additional approvals were obtained.

We are custodian of taxpayers’ funds and have a duty to parliament to ensure the regularity and propriety of our activities and expenditure. We manage public funds in line with Managing Public Money. The importance of operating with regularity and the need for efficiency, economy, effectiveness and prudence in the administration of public resources to secure value for public money, is the responsibility of our Accounting Officer whose responsibilities are also set out in Managing Public Money.

They include responsibility for the propriety and regularity of the public finances for which the Accounting Officer is answerable. To discharge this responsibility and ensure our control totals are not breached, the following activities are in place:

• formal delegation of budgets

• detailed monitoring of expenditure

• monthly management reporting against control totals

Fees and Charges (audited)

There are no material fees and charges to disclose.

5. Independent Auditor’s Report

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF STUDENT LOANS COMPANY LIMITED

Opinion on financial statements

I have audited the financial statements of Student Loans Company Limited for the year ended 31 March 2023.

The financial statements comprise the Student Loans Company Limited’s:

• Statements of Financial Position as at 31 March 2023;
• Statement of Comprehensive Net Expenditure, Statement of Cash Flows and Statement of Changes in Taxpayers’ Equity for the year then ended; and
• the related notes including the significant accounting policies.

The financial reporting framework that has been applied in the preparation of the financial statements is applicable law and the UK adopted International Accounting Standards and as applied in accordance with the provisions of the Companies Act 2006.

In my opinion the financial statements:

• give a true and fair view of the state of the Student Loans Company Limited’s affairs as at 31 March 2023 and its loss on ordinary activities for the year then ended; and
• have been properly prepared in accordance with the UK adopted International Accounting Standards and
• have been prepared in accordance with the requirements of the Companies Act 2006.

Opinion on regularity

In my opinion, in all material respects, the income and expenditure recorded in the financial statements have been applied to the purposes intended by Parliament and the financial transactions recorded in the financial statements conform to the authorities which govern them.

Basis for opinions

I conducted my audit in accordance with International Standards on Auditing (UK) (ISAs (UK)), applicable law and Practice Note 10 Audit of Financial Statements and Regularity of Public Sector Bodies in the United Kingdom (2022)2. My responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of my report.

Those standards require me and my staff to comply with the Financial Reporting Council’s Revised Ethical Standard 2019. I am independent of the Student Loans Company Limited in accordance with the ethical requirements that are relevant to my audit of the financial statements in the UK. My staff and I have fulfilled our other ethical responsibilities in accordance with these requirements.

I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.

Conclusions relating to going concern

In auditing the financial statements, I have concluded that the Student Loans Company Limited’s use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

My evaluation of the director’s assessment of the entity’s ability to continue to adopt the going concern basis of accounting included obtaining details of Grant in aid agreed with the Department for Education for the financial year ended 31 March 2023 and reviewing evidence of the commitment by the Department for Education to the longer-term business of the Student Loans Company Limited referenced in management’s going concern assessment.

Based on the work I have performed, I have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Student Loans Company Limited’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

My responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other Information

The other information comprises the information included in the Annual Report but does not include the financial statements and my auditor’s report thereon. The directors are responsible for the other information.

My opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in my report, I do not express any form of assurance conclusion thereon.

My responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or my knowledge obtained in the audit, or otherwise appears to be materially misstated.

If I identify such material inconsistencies or apparent material misstatements, I am required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work I have performed, I conclude that there is a material misstatement of this other information, I am required to report that fact.

I have nothing to report in this regard.

Opinion on other matters prescribed by the Companies Act 2006

In my opinion the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006.

In my opinion, based on the work undertaken in the course of the audit:

• the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

• the Strategic Report and the Directors’ Report have been prepared in accordance with applicable legal requirements.

Matters on which I report by exception

In the light of the knowledge and understanding of the Student Loans Company Limited and its environment obtained in the course of the audit, I have not identified material misstatements in the Strategic Report or the Directors’ Report.

I have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires me to report to you if, in my opinion:

• adequate accounting records have not been kept or returns adequate for my audit have not been received from branches not visited by my staff; or
• the financial statements and the parts of the Directors’ Remuneration Report to be audited are not in agreement with the accounting records and returns; or
• certain disclosures of director’s remuneration specified by law are not made; or
• I have not received all of the information and explanations I require for my audit; or
• the Governance Statement does not reflect compliance with HM Treasury’s guidance.

Responsibilities of the directors for the financial statements

As explained more fully in the Statement of Directors’ Responsibilities, the directors are responsible for: - maintaining proper accounting records; - providing the C&AG with access to all information of which management is aware that is relevant to the preparation of the financial statements such as records, documentation and other matters; - providing the C&AG with additional information and explanations needed for his audit;

• providing the C&AG with unrestricted access to persons within the [audited entity] from whom the auditor determines it necessary to obtain audit evidence.
• preparing financial statements, which give a true and fair view, in accordance with the Companies Act 2006;
• ensuring such internal controls are in place as directors determine are necessary to enable the preparation of financial statement to be free from material misstatement, whether due to fraud or error;
• preparing the Annual Report, which includes the Directors’ Remuneration Report, in accordance with the Companies Act 2006; and
• assessing the Student Loans Company Limited’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intends to liquidate the entity or to cease operations, or has no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements

My responsibility is to audit and report on the financial statements in accordance with the applicable law and International Standards on Auditing (UK) (ISAs (UK)

My objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a report that includes my opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Extent to which the audit was considered capable of detecting non-compliance with laws and regulations including fraud3

I design procedures in line with my responsibilities, outlined above, to detect material misstatements in respect of non-compliance with laws and regulations, including fraud. The extent to which my procedures are capable of detecting non-compliance with laws and regulations, including fraud is detailed below.

Identifying and assessing potential risks related to non-compliance with laws and regulations, including fraud

In identifying and assessing risks of material misstatement in respect of non-compliance with laws and regulations, including fraud, I:

• considered the nature of the sector, control environment and operational performance including the design of the Student Loans Company Limited’s accounting policies and key performance indicators.
• inquired of management, Student Loans Company Limited’s head of internal audit and those charged with governance, including obtaining and reviewing supporting documentation relating to the Student Loans Company Limited’s policies and procedures on:
• identifying, evaluating and complying with laws and regulations;
• detecting and responding to the risks of fraud; and
• the internal controls established to mitigate risks related to fraud or non-compliance with laws and regulations including the Student Loans Company Limited’s controls relating to the Student Loans Company Limited’s compliance with the Companies Act 2006 and Managing Public Money;
• inquired of management, Student Loans Company Limited’s and those charged with governance whether:
• they were aware of any instances of non-compliance with laws and regulations; and
• they had knowledge of any actual, suspected, or alleged fraud;
• discussed with the engagement team and the relevant internal and external specialists, including pension specialists, Property specialists and IT specialists and regarding how and where fraud might occur in the financial statements and any potential indicators of fraud.

As a result of these procedures, I considered the opportunities and incentives that may exist within the Student Loans Company Limited for fraud and identified the greatest potential for fraud in the following areas: posting of unusual journals, complex transactions, and bias in management estimates. In common with all audits under ISAs (UK), I am also required to perform specific procedures to respond to the risk of management override .

I obtained an understanding of the Student Loans Company Limited’s framework of authority and other legal and regulatory frameworks in which the Student Loans Company Limited operates. I focused on those laws and regulations that had a direct effect on material amounts and disclosures in the financial statements or that had a fundamental effect on the operations of the Student Loans Company Limited.

The key laws and regulations I considered in this context included Companies Act 2006, Managing Public Money

Audit response to identified risk

To respond to the identified risks resulting from the above procedures:

• I reviewed the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described above as having direct effect on the financial statements;
• I enquired of management, the Audit Committee and in-house legal counsel concerning actual and potential litigation and claims;
• I reviewed minutes of meetings of those charged with governance and the Board and internal audit reports;
• in addressing the risk of fraud through management override of controls, I tested the appropriateness of journal entries and other adjustments; assessed whether the judgements on estimates are indicative of a potential bias; and evaluated the business rationale of any significant transactions that are unusual or outside the normal course of business; and

I communicated relevant identified laws and regulations and potential risks of fraud to all engagement team members including internal specialists and remained alert to any indications of fraud or non- compliance with laws and regulations throughout the audit.

A further description of my responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of my report.

Other auditor’s responsibilities

I am required to obtain evidence sufficient to give reasonable assurance that the expenditure and income recorded in the financial statements have been applied to the purposes intended by Parliament and the financial transactions recorded in the financial statements conform to the authorities which govern them.

I communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control I identify during my audit.

Peter Morland (Senior Statutory Auditor)

19 July 2023

For and on behalf of the

Comptroller and Auditor General (Statutory Auditor)
National Audit Office
157-197 Buckingham Palace Road Victoria
London SW1W 9SP

6. Financial Statements

6.1 Statement of Comprehensive Net Expenditure For the year ended 31 March 2023

	Note	2023	2022
		£’000	£’000
Revenue	3	1,519	1,117
Staff costs	5	(129,373)	(120,181)
Restructuring costs	5	(54)	(34)
Depreciation, amortisation and impairments	8,9	(36,599)	(38,569)
Other administrative expenditure	4	(126,363)	(112,082)
		(292,389)	(270,866)
Net operating expenditure		(290,870)	(269,749)
Finance income	6	30	14
Finance costs	7	(470)	(823)
Net financing expense		(440)	(809)
(Loss) on ordinary activities before taxation		(291,310)	(270,558)
Tax on result of ordinary activities		-	-
(Loss) on ordinary activities after taxation		(291,310)	(270,558)
Other comprehensive (expenditure)/income:
Actuarial gain/(loss) on defined benefit pension scheme	15	(18,507)	4,987
Total comprehensive net (expenditure) for the period		(309,817)	(265,571)

All income and expenditure reported is derived from continuing operations.

The notes on pages 73 to 98 form part of these Accounts.

6.2 Statement of Financial Position as at 31 March 2023

	Note	2023 £’000	2023 £’000	2022 £’000	2022 £’000
Non-current assets
Property, plant and equipment	8	24,815		19,453
Intangible assets	9	60,169		70,393
Retirement benefit obligation surplus	15	-		1,995
Total non-current assets			84,984		91,841
Current assets
Trade and other receivables	11	15,702		15,310
Cash and cash equivalents	12	10,103		4,963
Corporation tax		3		3
Total current assets			25,808		20,276
Total assets			110,792		112,117
Current liabilities
Trade and other payables	13	(31,706)		(32,615)
Provisions	14	(2,785)		(185)
Total current liabilities			(34,491)		(32,800)
Total assets less current liabilities			76,301		79,317
Non-current liabilities
Trade and other payables	13	(9,376)		(1,527)
Provisions	14	(1,360)		(2,862)
Retirement benefit obligation deficit	15	(16,893)		-
Total non-current liabilities			(27,629)		(4,389)
Net Assets			48,672		74,928
Capital and reserves
Called up share capital	17	-		-
General reserve		48,672		74,928
Total equity			48,672		74,928

These Financial Statements were approved by the Board of Directors on 7 July 2023 and were signed on its behalf by the Accounting Officer, who authorised these accounts for issue on the date of the Statutory Auditor’s certificate.

The notes in the following pages form part of these Accounts.

Chris Larmer

Chief Executive and Accounting Officer

18 July 2023

6.3 Statement of Changes in Taxpayers’ Equity

For the year ended 31 March 2023

General Reserves 2023	Note	General Fund	Pension Reserve	Total
		£’000	£’000	£’000
Balance at 1 April		72,933	1,995	74,928
Net (loss)		(290,929)	(381)	(291,310)
Actuarial loss in retirement benefit obligations	15	-	(18,507)	(18,507)
Grant from sponsoring department		283,561	-	283,561
Balance at 31 March		65,565	(16,893)	48,672

General Reserves 2022	Note	General Fund	Pension Reserve	Total
		£’000	£’000	£’000
Balance at 1 April		84,423	(2,306)	82,117
Net (loss)		(269,872)	(686)	(270,558)
Actuarial gain in retirement benefit obligations	15	-	4,987	4,987
Grant from sponsoring department		258,382	-	258,382
Balance at 31 March		72,933	1,995	74,928

The General Fund represents total assets less liabilities, to the extent that the total is not represented by other reserves and financing items for the Company.

The Pension Reserve represents the net surplus from/(obligation to) the defined benefit pension scheme.

The notes in the following pages form part of these Accounts.

6.4 Statement of Cash Flows For the year ended 31 March 2023

	Note	2023 £’000	2023 £’000	2022 £’000	2022 £’000
Cashflow from operating activities
(Loss) on ordinary activities after taxation		(291,310)		(270,558)
Adjustments to (loss) on ordinary activities:
Depreciation	8	9,017		8,113
Impairments - Property, plant and equipment	8	-		9
Amortisation	9	27,582		30,447
Impairments - Intangible assets	9	-		-
Loss on disposal of fixed assets	4	(18)		(5)
Taxation				-
Finance costs	7	89		137
Finance income	6	(30)		(14)
Pension valuation movements		381		686
		(254,290)		(231,185)
(Increase)/decrease in trade and other receivables	11	(392)		(2,952)
Increase/(Decrease) in trade and other payables*	13	206		3,719
Increase/(Decrease) in provisions	14	1,098		426
Net cash (outflow) from operating activities			(253,379)		(229,992)
Cashflow from investing activities
Finance income	6	30		14
Acquisition of property, plant and equipment	8	(14,293)		(4,609)
Acquisition of intangible assets	9	(17,364)		(19,605)
Proceeds from sales of property, plant and equipment		47		98
Net cash (outflow) from investing activities			(31,580)		(24,102)
Cashflow from financing activities
Grant in Aid funding received from sponsoring department		283,561		258,382
Cash payments for the principal portion of the lease liability		6,538		(3,422)
Net cash inflow from financing activities			290,099		254,960
Net increase/(decrease) in cash and cash equivalents	12		5,140		866
Cash and cash equivalents at 1 April	12		4,963		4,097
Cash and cash equivalents at 31 March	12		10,103		4,963

*The movement in payables noted above excludes movements on amounts due under leases which are non-cash movements.

The acquisition of property, plant and equipment excludes non-cash acquisitions.

The notes on the following pages form part of these Accounts.

6.5 Notes to the Financial Statements

1.1 Accounting Policies

SLC is a company incorporated in England and Wales and domiciled in the UK. SLC is owned by the Secretary of State for Education, the Welsh Ministers, the Scottish Ministers and the Minister for the Economy in Northern Ireland.

The Financial Statements have been prepared on an accruals basis in accordance with the Companies Act 2006. The Government Financial Reporting Manual (FReM) and other guidance issued by HM Treasury and the Secretary of State for Education where the disclosure requirements of these go beyond the Companies Act 2006 and do not conflict have been applied in relation to the financial statements. We have also elected to comply with FReM disclosures in the Annual Report where it is deemed more transparent to do so and where there is no conflict with the Companies Act 2006. The Financial Statements have been prepared and approved by the Directors in accordance with International Financial Reporting Standards as adopted by the UK (Adopted IFRSs) and International Financial Reporting Interpretations Committee interpretations. There have been no significant changes to the FReM during the year.#

Disclosure of Assessment of the Impact of Accounting Standards not yet Adopted

1.2 Impact of New Accounting Standards

IFRS 17 Insurance Contracts was effective for accounting periods on or after 1st January 2023. The exact date for adoption in the Public Sector is subject to confirmation. This will have no impact on the company’s Financial Statements as the company does not issue insurance finance or insurance contracts.

1.3 Impact of New Accounting Standards

The Financial Statements are prepared on the historical cost basis, with the following exceptions which are stated at fair value:

• Financial instruments, namely payables and receivables, are measured at amortised cost - see note 1.11 for further detail.
• Cash is stated at fair value.
• Tangible and intangible assets, other than assets under development, are stated at depreciated historic cost, as this accurately represents their value in use – see note 1.9 for further detail.
• Assets under development are valued at historic cost, calculated using expenditure incurred to date, and are subject to impairment review - see note 1.10 for further detail.

1.4 Going Concern

The terms of the Framework Document between SLC and the Secretary of State for Education, the Advanced Learning and Science Directorate of the Scottish Government, acting on behalf of Scottish Ministers, the Department for the Economy in Northern Ireland and the Directorate for Skills, Higher Education and Lifelong learning of the Welsh Government requires SLC to conduct its affairs so as to remain solvent within the total resources made available to it by the funding bodies. These Financial Statements have been prepared on this basis.

Grant-in-Aid for SLC’s business as usual operating expenditure for 2023-24 has already been included in the sponsoring departments’ estimates for that year, which have been approved by Parliament. The

total budget has been confirmed by the Department for Education as set out in the Annual Performance and Resource Agreement (APRA) Letter 2023-24. The APRA letter also confirms initial funding for the delivery of HE Reform, reflecting a commitment to SLC continuing to operate longer term as the delivery vehicle for student finance and the development of future HE Reform. 2023-24 is the second year of the current 3-year Comprehensive Spending Review (CSR) meaning funding is confirmed up to March 2025. It has therefore been considered appropriate to adopt a going concern basis for the preparation of the 2022-23 financial statements.

The remaining deferred members and pensioners of SLC’s defined benefit pension scheme have been transferred to the Civil Service Pension. Derecognition of the scheme and final signature will be later in 2023.

1.5 Unsold Loans

SLC, in conjunction with HMRC through whom most repayments are collected, services the entire loan book. The loan book is partly owned by HMG and partly owned by private investors. The value of loans owned by HMG is recorded in the accounts of DfE.

1.6 Use of Estimates and Judgement

The preparation of the Financial Statements in compliance with IFRS requires Directors to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, revenue and expenditure. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on a continuing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial year are included in the following notes:

Lease term: SLC has determined the lease term to be to the lease end date, as the expectation is SLC are unlikely to terminate any existing leases early.

Dilapidations provisions: The dilapidations provision is based on external valuations provided by SLC’s property consultants. The latest formal desk top valuations were provided in March 2023. Key assumptions are based, in addition to management judgement, on the likely obligation at the lease expiry date and lease stipulations on the property condition on that expiry date.

Legal provisions: Legal provisions as at 31 March 2023 have been assessed up until the signing date of the Annual Report and Accounts. This assessment has taken into consideration the estimated cost of settlement, including fees, and the probability that a settlement will be required.

Accruals and Prepayments: SLC recognises accruals based on receipted purchase orders, other accruals and/or prepayments where the invoice value is over £10,000 de minimis. The exceptions to this de minimis rule include accruals in respect of internal rechargeable resource costs and project milestone- based contracts. Accruals and prepayments are estimated using the best available sources of information at the date of calculation.

Retirement Benefit Obligations: SLC’s retirement benefit obligations are based on external valuations provided annually by qualified actuaries.

The following key assumptions are used to determine estimated future cash outflows anticipated to settle SLC’s pension obligations:

• Discount rate
• The rate of salary increases
• RPI and CPI Inflation
• Life expectancy
• Deferred pension revaluation
• Pensions-in-payment increase rate
• Duration of the defined benefit obligation

The pension scheme’s actuary carries out triennial valuations on behalf of the pension scheme trustee. The final results of the section 179 valuation undertaken in November 2020 projected forward are reflected in the actuarial valuation as at 31 March 2023. This valuation predicts a deficit, and the pension liability is reflected in these financial statements.

Intangible Assets: Development costs that meet IFRSs intangible asset recognition criteria where the assets are intended to be used internally or otherwise, are capitalised as an intangible asset.

Capitalisation will only occur when management identify the technological and economic feasibility of the project as detailed in 1.10 below. Assets under development and other intangible assets are tested annually for impairment with an assessment undertaken as to whether the asset will be, or continues to be, technologically and economically viable. Impairments are based on key assumptions made by management on the value in use of the intangible asset.

Judgement has been applied in determining whether the changes to the owned software meets the definition of and recognition criteria for an intangible asset in accordance with IAS 38 Intangible Assets.

1.7 Revenue

Revenue Recognition: Revenue is recognised when the amount of revenue can be reliably measured and where probable future economic benefit will flow to the entity.

Grant-in-Aid: Grant-in-Aid is drawn down from the DfE and recorded on a cash basis in line with DfE’s own reporting requirements and in line with the FReM. Grant-in-Aid will be credited to SLC’s reserves.

1.8 Taxation

Corporation Tax: Tax on the profit or loss for the year comprises current tax. Tax is recognised in the SOCNE. Current tax is the expected tax due on the taxable profit or loss for the year and any adjustment to tax due in respect of previous years.

VAT: Income and expenditure are shown net of VAT with irrecoverable VAT charged to the SOCNE under the relevant expenditure heading.

The net amount due to HM Revenue and Customs in respect of VAT is included within trade and other payables within the Statement of Financial Position (SOFP).

1.9 Property, Plant and Equipment

Recognition

Property, plant and equipment is capitalised where: its value is greater than £5,000 (grouped) at the date of purchase; it is held for use in delivering services or for administrative purposes; it is probable that future benefits will flow to, or service potential be provided to, SLC; it is expected to be used for more than one financial year; and the cost of the item can be measured reliably.

Measurement

Items of property, plant and equipment are initially measured at cost, representing the costs directly attributable to the acquisition or construction of the asset.

Revaluation and Impairment

The assets’ net book values are reviewed for impairment, and adjusted if appropriate, at the date of each SOFP. Apart from right-of-use assets, assets are valued at depreciated historical cost less impairment. PPE assets held are of short life and or low value and depreciated historical cost has been used as a proxy for fair value.

There is no revaluation reserve balance within the SOFP, as SLC does not have a policy of revaluing its assets.

Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and are recognised within other administrative expenses in the SOCNE.

Right of use Assets

Where leases were recognised as operating leases, SLC has measured the right of use assets at an amount equal to the lease liability adjusted for any prepaid or accrued lease payments recognised in the SOFP immediately before the date of initial application and including the carrying amount of the dilapidations provision.

For new leases with a remaining lease term of less than 12 months and for leases of low-value assets the Company has applied the optional exemptions to not recognise right-of-use assets but to account for the lease expense on a straight-line-basis over the remaining lease term.

Depreciation

Depreciation is charged on all property, plant and equipment when substantially all the risks and rewards of the asset have been transferred to SLC. It is calculated to write off the cost of each asset less estimated residual value, evenly over its expected useful life as follows:

Right-of-use assets	Over the term of the lease
Short leasehold improvements	Over the unexpired period of the lease
Computer and other electronic equipment	3 to 5 years
Furniture, fixtures and fittings	8 years
Motor vehicles	3 to 5 years

1.10 Intangible Assets Recognition

Intangible assets valued greater than £5,000 (grouped) are recognised where the costs can be measured reliably and there is a clear future benefit or service potential attributable from the asset that will flow to SLC.

SLC determines phases during each project’s life cycle.

1. Discovery
2. Inception 3. Delivery and Implementation
3. Run and Warranty

As costs accumulate during the discovery phase, expenditure is not capitalised, as feasibility is only determined at the end of the discovery phase. A stage gate report or alternative equivalent assessment is used to determine each project as ready for delivery.

Expenditure on delivery and implementation is then capitalised where all the following can be demonstrated in accordance with IAS 38:

• The project is technically feasible to the point of completion and will result in an intangible asset for use in the provision of services to SLC or to SLC customers
• SLC intends to complete the asset and use it
• SLC could use the asset
• the intangible asset will generate probable future economic or service delivery benefits
• adequate financial, technical and other resources are available to SLC to complete the development and use the asset
• SLC can reliably measure the expense attributable to the asset during development

Only expenditure directly attributable to the cost of developing software in-house is capitalised. Costs directly attributable are capitalised by way of an estimated standard cost for each development team. Any other expenditure is taken to the SOCNE as an expense.

Websites represent website developments for delivering specific services to customers in the payment and repayment of products within the portfolio.

Measurement

All intangible assets recognised, with the exception of perpetual licences, have finite useful lives and are measured at cost less accumulated amortisation and impairment losses. In accordance with the assessment of capitalisation methods for software development conducted, the cost for internally generated intangible assets has been assessed as the direct labour and management costs directly attributable to the development of the intangible asset. Perpetual licenses are held at their carrying value, with an indefinite useful life. When using an indefinite useful life, SLC consider the nature of the license and whether the use of the license is for a set period or indefinitely.

Revaluation and Impairment

The assets’ net book values are reviewed for impairment, and adjusted if appropriate, at the date of each SOFP. The assets are valued at depreciated historical cost.

Intangible assets are carried at fair value that is determined by reference to an active market where possible. As there is no active market, we use depreciated historical cost as a proxy fair value.

Assets under construction are not amortised but are assessed for impairment annually.

Amortisation

Amortisation is recognised in the SOCNE on a straight-line basis over the useful life of intangible assets from the date that they are available for use, since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset. The expected useful lives for the current and comparative year are as follows:

Internally generated software	2 to 10 years
Websites	5 years
Software licences	Over the period of the licence

Amortisation methods, useful lives and residual values are reviewed at the end of each financial year and adjusted if appropriate.

Software-as-a-Service (SaaS) arrangements

SaaS arrangements are service contracts providing SLC with the right to access the cloud provider’s application software over the contract period. As such SLC does not recognise a software intangible asset at the contract commencement date.

A right to receive future access to the supplier’s software does not, at the contract commencement date, give the customer the power to obtain the future economic benefits flowing from the software itself and to restrict others’ access to those benefits.

The following outlines the accounting treatment of costs incurred in relation to SaaS arrangements:

Recognise as an operating expense over the term of the service contract	Fee for use of application software
		Customisation by third party not separately identifiable from right to receive access to the application software.
Recognise as an operating expense as the service is received	Configuration costs
	In-house customisation costs
	Distinct customisation costs by a third party
	Data conversion and migration costs
	Testing costs
	Training costs
Recognise as an intangible asset	Costs incurred for the development of software code that enhances or modifies, or creates additional capability to, existing on-premise systems and meets the definition of and recognition criteria for an intangible asset.

1.11 Financial Instruments

(a) Financial Assets

Classification

IFRS 9 requires financial assets to be measured at either amortised cost or fair value. Changes in fair value should either be reflected in profit or loss in the SOCNE or taken to ‘other comprehensive income and expenditure’ (OCI) with no recycling. As at the date of the SOFP, SLC has financial assets included in current assets; these comprise of, ‘trade and other receivables’ and ‘cash and cash equivalents’.

Recognition and Measurement

Financial assets are recognised when SLC becomes party to the contractual provisions of the financial instrument. These assets are recognised at amortised cost. Financial assets are de-recognised when the rights to receive the cash flows from the assets have expired or have been transferred and SLC has transferred substantially all risks and rewards of ownership.

Cash and cash equivalents represent cash in hand, and deposits held with banks, excluding deposits held in trust for the payments and repayments of student funding.

(b) Financial Liabilities

Classification

Any changes in fair value is reflected through the SOCNE. The classification depends on the purpose for which the financial liabilities were issued. Management determines the classification of its financial liabilities at initial recognition.

As at the date of the SOFP, SLC has financial liabilities included as current liabilities comprising of ‘trade payables’, ‘accruals and deferred income, ‘VAT, other taxation and social security’ and’ lease liability’ in the SOFP.

Recognition and Measurement

Financial liabilities are recognised when SLC becomes party to the contractual provisions of the financial instrument. These liabilities are recognised at amortised cost.

A financial liability is removed from the SOFP when it is extinguished, that is when the obligation is discharged, cancelled or expired.

1.12 Provisions

Provisions are recognised when:

• There is a present legal or constructive obligation as a result of past events
• It is more likely than not that an outflow of resources will be required to settle the obligation
• The amount can be reliably estimated

The provision’s value is discounted when the time value of money is considered material. Changes in the discount rate applied will be recognised in the year in which the change occurred. The discount rate applied is in line with HM Treasury’s Public Expenditure System Announcement of Rates which was published on 2 December 2022.

1.13 Employee Benefits

Short term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised, for the amount expected to be paid under a short-term cash performance related award, if SLC has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably. The cost of annual leave earned but not taken by employees at the reporting date of the SOFP is recognised to the extent that employees are permitted to carry forward leave to the following year.

SLC contributed to the Civil Service alpha and partnership schemes and NOW: Pensions scheme during the year.

Civil Service Pension Scheme (the CSPA)

The alpha scheme provides benefits on a career-average basis, with a normal pension age equal to the member’s state pension age. Pensions payable under the alpha scheme are increased annually in line with the relevant legislation relating to defined benefit pensions increases. The alpha scheme is a defined benefit pension scheme in accordance with IAS 19.

Employee contributions are salary-related for alpha. Benefits in alpha build up with an accrual rate of 2.32%. In all cases, members may opt to give up (commute) their pension for a lump sum up to the limits set by the Finance Act 2004.

The partnership pension account is a stakeholder pension arrangement and classified as a defined contribution pension scheme in accordance with IAS 19. The employer makes a basic contribution of between 8% and 14.75% (depending on the age of the member) into a personal pension product. The employee does not have to contribute, but where they do make contributions, the employer will match these up to a limit of 3% of pensionable salary (in addition to the employer’s basic contribution).

Employers also contribute a further 0.5% of pensionable salary to cover the cost of centrally provided risk benefit cover (death in service and ill-health retirement).

These statutory arrangements are unfunded, as the cost of the benefits is met by monies allocated by Parliament each year. Further details about the civil service pension arrangements can be found at the website: www.civilservicepensionscheme.org.uk. It is not possible to separately identify SLC’s share of the underlying assets and liabilities.

The alpha scheme is a multi-employer defined benefit scheme. For accounting purposes this is recognised as a defined contribution scheme in accordance with IAS19. SLC recognises contributions payable to the alpha scheme and the partnership scheme in the Statement of Comprehensive Net Expenditure.

NOW: Pensions

NOW: Pensions is a defined contribution scheme which was in place in prior years to meet SLC’s statutory obligations to enrol all employees in a pension scheme. This still maintains some active membership. Contributions are recognised in the SOCNE as they are incurred. SLC has no further liability once contributions are paid to the pension scheme.

Student Loans Company Limited Retirement and Death Benefits Scheme (the SLC Pension Scheme)

The SLC Pension Scheme is defined under the Pensions Act 1993 (part 1) and operates in accordance with the Pension Act 1995 as a trust, established by its Definitive Trust Deed and Rules (June 2004).

The scheme is legally separated from SLC and governed by the Board of Trustees which has control over its operation, funding and investment strategy. The Board is chaired by an independent trustee, The scheme is regulated by the Pensions Regulator, and its Annual Report and Accounts are subject to audit by an independent auditor. SLC is the ‘principal employer’ and as such, retains responsibilities within the Definitive Trust Deed and Rules.

SLC has the ability to receive a surplus following a gradual settlement of the Scheme and therefore recognises scheme assets within the financial statements

The scheme closed to future accrual of benefits and all active members were moved to the CSPA during the year ended 31 March 2020. This included the bulk transfer of the benefits for those with more than two years’ pensionable service into the nuvos final salary section. Members with less than 2 years’ service (around 400 members) were given the option of either a refund of contributions or an enhanced cash transfer sum payable during the year ended 31 March 2021. The final transfers have been recognised in the pension asset and liability movements for the year, and a gain on settlement has arisen as a result.

The Trustee reviews the scheme’s investment strategy at least every three years following the actuarial valuation of the scheme. The last full triennial valuation was carried out as at 5 November 2019, with the most recent investment strategy dated September 2020. The accounting actuarial valuation as at 31 March 2023 is based on the section 179 valuation from November 2020.

In order to manage the investment risks within the scheme, all the scheme’s growth mandates were fully disinvested in February 2020. As such, the Trustee adopted an interim investment strategy which consists of the remaining holdings in the corporate bond funds and the liability-driven investment (LDI) mandate. The Trustee adopted a strategy which balances the need to meet the investment objectives of the scheme and the risks taken by the scheme. They have reduced this risk by allocating assets which aim to match the interest rate and inflation sensitivities of the scheme’s liabilities. The Trustee operates a bank account and invests Additional Voluntary Contributions (AVCs) on behalf of the members in insurance policies. The AVC policies are reviewed on a regular basis to ensure they remain appropriate.

The Trustee has delegated the responsibility for the day-to-day management of the scheme’s assets to Legal & General Investment Management (LGIM). Subject to respective benchmarks and guidelines, the manager is given full discretion over the choice of investments and is expected to maintain a diversified portfolio.

The defined benefit scheme provides a pension and lump sum based on pensionable service and final pensionable salary. The final pensionable salary is the average of the best three continuous pensionable salaries in the ten years before retirement. Benefits are also accessible to a spouse on the death of a scheme member.

SLC’s net obligation in respect of the defined benefit pension plan is calculated by estimating the amount of future benefit that employees have earned in return for their service in the prior years. That benefit is discounted to determine its present value, and the fair value of any plan assets (at bid price) is deducted to determine the net obligation. The liability discount rate is the yield at the reporting date on ‘AA’ credit rated bonds denominated in the currency relating to the terms of the bonds and having maturity dates approximating to the terms of SLC’s obligations.

The calculation is performed by a qualified actuary using the projected unit credit method. When the calculation results in a benefit to SLC, the recognised asset is limited to the present value of benefits available in the form of any future refunds from the plan, reductions in future contributions to the plan or on settlement of the plan and takes into account the adverse effect of any minimum funding requirements. Actuarial gains and losses that arise are recognised by SLC in the year they occur through the SOCNE.

1.14 Leases

Leases are capitalised at the present value of the minimum lease payments at the inception of the lease and a liability recognised for the same amount. Leased assets are depreciated over the shorter of the asset’s useful life and the lease term. Each lease payment is allocated between the principal capital component and finance charges. The finance charges are allocated to each period during the lease term in order to produce a constant periodic rate of interest on the remaining balance of the liability.

Interest on leases is charged to the SOCNE in the year to which the lease payment relates.

Leases which are low in value or represent a short-term lease of up to 12 months are recognised as expenses on a straight-line basis and charged to the SOCNE in the year to which they relate.

Peppercorn leases meet the definition of a lease in all aspects apart from containing consideration. Peppercorn leases are accounted for as follows:

• Recognise a right-of-use (ROU) asset and initially measure it at current value in existing use or fair value, depending on whether the right-of-use asset will be held for its service potential.
• Recognise a lease liability measured in accordance with IFRS 16.
• Recognise any difference between the carrying amount of the right-of-use asset and the lease liability as income.

1.15 Segmental Reporting

Operating segments are reported in a manner consistent with the internal reporting as provided to the ELT, Board and to DfE. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Chief Executive Officer (CEO).

The CEO reviews performance based on four segments: Operating Budget, Change Programme, Evolve and LLE and Higher Education (HE) Reforms. This is the basis for SLC’s reporting to DfE.

• The Operating Budget represents day to day operating activities undertaken by SLC.

• The Change Programme represents additional activities undertaken by SLC in the financial year to create new activities. Once complete they will become part of normal operating activities.

• The Evolve Programme is the SLC transformation programme.
• LLE and HE Reform are Government initiatives.

2 Segmental Reporting

2023

	Operating Activities £’000	Change Programme £’000	Evolve Programme £’000	HE FE Reform £’000	Total £’000
Segmental Revenue:
Grant Income	1	-	-	-	1
Administration fees receivable from third parties	1,217	-	-	-	1,217
Other income	301	-	-	-	301
Total revenue	1,519	-	-	-	1,519
Segmental Expenditure:
Total expenditure	(229,199)	(34,008)	(23,787)	(5,395)	(292,389)
Net operating expenditure	(227,680)	(34,008)	(23,787)	(5,395)	(290,870)
Capital expenditure	(15,428)	(13,110)	(330)	(2,860)	(31,727)
Total Segmental Expenditure	(243,108)	(47,118)	(24,117)	(8,254)	(322,597)

2022

	Operating Activities £’000	Change Programme £’000	Evolve Programme £’000	HE FE Reform £’000	Total £’000
Segmental Revenue:
Grant Income	-	-	-	-	-
Administration fees receivable from third parties	1,095	-	-	-	1,095
Other income	22	-	-	-	22
Total revenue	1,117	-	-	-	1,117
Segmental Expenditure:
Total expenditure	(211,208)	(26,237)	(33,601)	-	(270,866)
Net operating expenditure	(209,911)	(26,237)	(33,601)	-	(269,749)
Capital expenditure	(8,985)	(13,765)	(938)	-	(23,688)
Total Segmental Expenditure	(218,896)	(40,002)	(34,539)	-	(293,437)

Segmental information after operating profit before interest and tax has not been provided on the basis that these costs are determined at corporate level and are not separately reportable to management.

3. Revenue

	2023	2022
	£’000	£’000
Grant income	1	-
Administration fees receivable from third parties	1,217	1,095
Other income	301	22
	1,519	1,117

The Administration fees receivable from third parties in the table above includes £1.1m of Bursary fee income (2022-23: £0.99m). These are fees raised for the administration services provided by SLC to support Higher Education Providers (HEPs) in England, Northern Ireland, Scotland and Wales, in providing mandatory and discretionary bursaries, scholarships and fee waivers to students. HEPs may subscribe to the full service or the core service. The full service includes payment of the bursary, scholarship or fee waiver entitlement to the student. The core service is an information-only service. The level of subscription is intended to both pay for the planned operational costs incurred by SLC and to fund a programme of ongoing enhancements. The increase in Other Income relates to new income for sub-letting space in Bothwell Street and events income for Student Support seminars for our service partners.

4. Items included in Net Expenditure before Interest and Tax

Other Administrative Expenditure

	2023	2022
	£’000	£’000
Technical Service Delivery	52,829	48,154
Technology, Licenses, Voice & Data	29,066	23,657
Outsourced Services	21,183	19,086
Professional Services	6,891	6,484
Premises Costs	6,590	4,926
Postage & Courier	4,805	4,700
Office Services	1,494	1,445
Bank Charges	1,229	890
General Expenditure	1,099	1,038
Recruitment	661	851
Other	516	851
TOTAL	126,363	112,082

The table above provides the breakdown of other operating expenditure. An explanation of the increase in expenditure in 2022-23 can be found in section 3.2.2. of the annual report and accounts.

To meet reporting requirements, the following analysis is provided to show key items included in net expenditure before interest and tax.

	2023	2022
	£’000	£’000
Dilapidations provision	1,211	424
Depreciation, amortisation and impairments	36,599	38,569
Net (gain)/loss on disposal of fixed assets	(18)	(5)
Directors’ remuneration	787	755
Auditors remuneration:
- Audit of these financial statements	200	190
Operating lease rentals:
- Land and buildings	-	7

Of the £1.2m for dilapidations provision includes £1.151m for Bothwell Street.

Directors’ remuneration:

	2023	2022
	£’000	£’000
Non-Executive Directors’ Fees	153	162
Executive emoluments (including benefits in kind)	490	466
Pension contributions	144	127
Taxable expenses	-	-
	787	755

There are three statutory Executive Directors at SLC, the Chief Executive Officer, the Deputy Chief Executive Officer and Customer Officer, and the Chief Financial Officer. The remuneration of each individual Director is analysed in the Remuneration and Staff Report. The highest paid Director during the year was the previous CEO, Paula Sussex , with a salary of £203,800 (2021-22: £207,500).

5. Staff Costs

The aggregate payroll costs were as follows:

	2023	2022
	£’000	£’000
Wages and salaries	98,090	91,972
Social security costs	9,874	8,780
Pension service costs/(income)	19,453	16,633
Gain on settlement at transfer of pension fund (see note 15)		-
	127,417	117,385
Other staff costs	1,956	2,796
	129,373	120,181
Restructuring costs	54	34

Average staff numbers for the year were 3,160 compared to 3,143 in 2021-22 as noted in the Remuneration and Staff Report.

The increase in Wages and Salaries primarily reflects the impact of the new Pay and grading framework during 2022-23 and a slight increase in average headcount. Other staff costs represent the additional cost to SLC for agency workers, contractors, the apprenticeship levy and other indirect staff costs at times of peak demand or to cover vacant posts whilst recruitment is underway.

Restructuring costs of £54,000 (2022-23: £34,000) represents the severance payments made in year. Full details of the number of payments and corresponding costs on a cash basis are included in the Remuneration and Staff Report.

6. Finance Income

	2023	2022
	£’000	£’000
Bank interest	30	1
Stamp duty Tax rebate		13
	30	14

7. Finance Costs

	2023	2022
	£’000	£’000
Pension interest charge/(income)	(50)	58
Pension administration expenses	431	628
Lease finance charge	89	137
	470	823

The decrease in lease finance charge in the year is in line with expected reductions in the lease liability.

Pension interest income was charged in 2021-22 as the scheme was in a small deficit at the beginning of the financial year. The scheme moved into a surplus at the end of 2022-23 resulting in interest income being received.

8. Property, Plant and Equipment

	Short leasehold improvements £’000	Computer and other electronic equipment £’000	Furniture, fixtures and fittings £’000	Motor vehicles £’000	Assets under construction £’000	Right of Use £’000	Total £’000
Cost:
At 1 April 2021	14,743	19,315	3,726	97	160	15,836	53,877
Adjustments							-
Additions	186	2,148	702	29	1,120	470	4,655
Disposals	(262)	(1,190)	(199)	(25)			(1,676)
Transfers	253	77			(330)		-
Impairment		(9)					(9)
At 1 April 2022	14,920	20,341	4,229	101	950	16,306	56,847
Adjustments						110	110
Additions	125	2,608	20	29	1,094	10,427	14,303
Disposals	(319)	(3,342)	(155)	(18)	-	-	(3,833)
Transfers	1,261	-	-	-	(1,261)	-	-
Impairment							-
At 31 March 2023	15,987	19,606	4,095	112	783	26,843	67,426
Depreciation
At 1 April 2021	8,728	13,010	1,926	39	-	7,225	30,928
Charge for the year	2,104	2,315	356	24	-	3,314	8,113
On disposals	(263)	(1,186)	(174)	(25)	-	-	(1,648)
Impairments	-		-	-	-	-	-
At 1 April 2022	10,569	14,139	2,108	38	-	10,539	37,393
Adjustments							-
Charge for the year	1,771	3,074	398	32	-	3,741	9,017
On disposals	(319)	(3,341)	(120)	(18)			(3,798)
Impairments
At 31 March 2023	12,021	13,872	2,386	52	-	14,280	42,612
Net book value
At 1 April 2022	4,351	6,202	2,121	63	950	5,767	19,454
At 31 March 2023	3,966	5,735	1,708	60	783	12,563	24,815

The main additions in year relate to the extension of the existing Memphis lease from April 2023 to 2033, £8.6m. And a new lease addition in relation to the Co-location Data Centre required as a result of our exit from Bothwell Street, £1.6m.

9. Intangible Assets

	Intangible assets under development £’000	Internally generated software £’000	Websites £’000	Software licences £’000	Total £’000
Cost:
At 1 April 2021	9,999	180,481	2,576	7,836	200,892
Additions	18,467			1,138	19,605
Disposals	-	(5,594)		(2,413)	(8,007)
Transfer	(17,086)	17,079	7		-
Impairment					-
Impairment	-	-	-	-	-
At 1 April 2022	11,380	191,966	2,583	6,561	212,490
Additions	17,329	-	-	34	17,364
Disposals	-	-	-	(2,377)	(2,377)
Transfer	(13,833)	13,833	-	-	-
Impairment	-	-	-	-	-
At 31 March 2023	14,876	205,799	2,583	4,218	227,476
Amortisation
At 1 April 2021	-	112,182	1,985	5,425	119,592
Charge for the year	-	29,170	139	1,138	30,447
Disposals	-	(5,529)		(2,413)	(7,942)
At 1 April 2022	-	135,823	2,124	4,150	142,097
Adjustment					-
Charge for the year	-	26,201	139	1,242	27,582
Disposals	-	-	-	(2,372)	(2,372)
At 31 March 2023	-	162,024	2,263	3,020	167,307
Net book value
At 1 April 2022	11,380	56,143	459	2,411	70,393
At 31 March 2023	14,876	43,775	320	1,198	60,169

Assets under Development represent the ongoing internal development of SLC’s systems to allow the delivery of services to customers and the policy change requested by the shareholders. The completed developments to date are included within Internally Generated Software.

The most significant additions to Assets under Development and Internally Generated Software relate to work on updating systems for the new academic year and to bring systems in line with Shareholder policy initiatives.

Of the £1,198,000 of Software Licenses £735,000 relates to perpetual licenses (2021-22: £735,000). There were no new perpetual licenses in year.

10. Financial Instruments

As the cash requirements of SLC are met through Grant-in-Aid, financial instruments play a more limited role in creating and managing risk than would apply to a non-public sector body. Most financial instruments relate to contracts to buy non-financial items in line with SLC’s expected purchase and usage requirements and SLC is therefore exposed to little liquidity or market risk. Credit risk exists for trade and other receivables, which are detailed in note 12.

Credit Risk

Credit risk arises from cash and cash equivalents, deposits with banks and other institutions, as well as credit exposure to customers. For banks and other institutions, only independently rated parties with a minimum rating of ‘A’ are accepted.

Credit risk is the risk of financial loss to SLC if a customer fails to meet their contractual obligations.

Other trade receivables comprise sums due from third party portfolio administration and HEPs for the bursary administration service. 99% of other trade receivables are not older than 3 months and do not represent any credit risk, therefore no allowance for credit loss is required.

Liquidity Risk

SLC’s net revenue resource requirements and capital expenditure requirements are financed by fees charged to universities and colleges and Grant-in-Aid funded by Parliament. The Annual Performance and Resource Agreement letter, which confirms the top-level budget delegated to SLC, for the financial year 2022-23 has been presented to SLC and provides assurance that funding of its activities will continue. Cash requirements are presented to the Department for Education on a monthly basis, and any cash flow requirements are forthcoming as required. SLC is therefore not exposed to any material liquidity risks.

Market and Currency Risk

SLC does not borrow or invest funds. Financial assets and liabilities are generated by day-to-day activities and are not held to manage the risks facing SLC in undertaking its activities.

The Financial Statements are presented in ‘Pound Sterling’ (£), which is SLC’s functional and presentation currency. SLC does not ordinarily enter foreign currency transactions.

The carrying value approximates to the fair value due to the short maturity of the instruments.

	2023 Book value	2023 Fair value	2022  Restated Book value	2022 Restated Fair value
	£’000	£’000	£’000	£’000
Trade receivables due within 1 year	5,509	5,509	5,320	5,320
Cash and cash equivalents	10,103	10,103	4,963	4,963
Trade and other payables due within 1 year	24,763	24,763	27,044	27,044
Trade and other payables due after 1 year	9,376	9,376	1,527	1,527

The maturity analysis of lease liabilities that shows the remaining contractual maturities are shown below. Trade and other payables due within 1 year for 2022 have been restated to exclude Vat and Other taxation and social security.

Property	End Date of lease	2023 Lease liability	2022 Lease liability
		£’000	£’000
Darlington Building 13	13/08/2024	74	45
Darlington Memphis Building	28/04/2033	8,365	938
Data Centre Co-Location	14/12/2027	1,572	-
Bothwell Street	24/12/2023	1,062	3,154
Darlington Studios	13/08/2024	183	295
Hillington	15/08/2025	339	429
Total liability		11,595	4,861

Liquidity risk arising from maturity dates is managed in line with the SLC’s approach to liquidity risk above.

11. Trade and Other Receivables

Amounts falling due within one year:	2023	2022
—	£’000	£’000
Other trade receivables	5,509	5,320
Prepayments and accrued income	9,622	9,839
	15,131	15,159
Amounts falling due after more than one year:
Prepayments and accrued income	571	151
Total trade and other receivables	15,702	15,310

12. Cash and Equivalents

	2023	2022
—	£’000	£’000
Balance at 1 April	4,963	4,097
Net increase/(decrease) in cash and cash equivalents	5,140	866
Balance at 31 March	10,103	4,963
The balances at 31 March were held at:
Government banking scheme accounts	10,103	4,963

At 31 March 2023 £132.2m (2021-22: £98.1m) was held in trust on behalf of third parties. These are not SLC funds but are accessed by SLC as part of its function to service the loan book which is partly owned by HMG and partly owned by private investors. This cash balance, and any movements in year, are recorded, along with the value of the loans outstanding, in the accounts of the owners of the loan book.

13. Trade and Other Payables

	2023	2022
—	£’000	£’000
Amounts falling due within one year:
Trade payables	3,575	2,257
VAT	4,543	3,316
Other taxation and social security	2,400	2,255
Accruals and deferred income	18,969	21,453
Lease liability	2,219	3,334
	31,706	32,615
Amounts falling due after more than one year:
Lease liability	9,376	1,527
Total trade and other payables	41,082	34,142

There has been a £2.5m decrease in accruals. This relates primarily to the timing of payment for services received in 2022-23 where costs are recognised against milestone statement of works on the projects. Larger payments are made to suppliers less often than would have been the case when work was invoiced based on time expended.

14. Provisions

	Legal costs	Dilapidations	Deferred lease improvement	Total
	£’000	£’000	£’000	£’000
At 1 April 2021	173	2,370	78	2,621
Arising in year	110	424	(10)	524
Amounts utilised	(73)			(73)
Amounts reversed unutilised to the Statement of Comprehensive Income	(25)			(25)
At 31 March 2022	185	2,794	68	3,047
Amounts falling due within one year	185			185
Amounts falling due after more than one year		2,794	68	2,862
	185	2,794	68	3,047

	Legal costs	Dilapidations	Deferred lease improvement	Total
	£’000	£’000	£’000	£’000
At 1 April 2022	185	2,794	68	3,047
Arising in year	15	1,211	-	1,226
Amounts utilised	(18)	-	(5)	(22)
Amounts reversed unutilised to the Statement of Comprehensive Income	(52)		(54)	(106)
At 31 March 2023	130	4,005	10	4,145
Amounts falling due within one year	130	2,645	10	2,785
Amounts falling due after more than one year		1,360		1,360
	130	4,005	10	4,145

The provision for legal claims represents the estimated cost to SLC for ongoing legal work. The provision is the best estimate, based on the value of the claims made and the circumstances surrounding the claims. In 2022-23 £52k was unutilised from previous provision.

The provision for dilapidations represents the estimated settlement cost to SLC of the dilapidation’s clauses included in its property leases. These costs are expected to be incurred on the termination of the property leases as follows: £298,000 in August 2025, £115,000 in August 2024, £2,645,000 in December 2023 and £947,000 in April 2023. The provision has been made based on the best estimate using independent professional assessments.

Deferred lease improvement represents future improvements to the leased property on Bothwell Street which are part of the specific works required under the terms of the lease agreement until its expiration.

15. Retirement Benefit Obligation

Until 1 March 2020, SLC operated the SLC Pension Scheme for all permanent staff. This scheme was a defined benefit scheme that provides benefits based on final pensionable salary. The assets of the scheme have been held separately from those of SLC, being invested by the Trustees of the scheme.

At 29 February 2020, the SLC Pension Scheme closed to future accrual of benefits and most active members were transferred (‘bulk transfer’) to the Principal Civil Service Pension Scheme (‘nuvos’ section) on 1 March 2020 where they retained their salary link.

On 1 March 2020 SLC became a member of the Civil Service Pension Arrangements and made the alpha and partnership schemes available to all its employees and provided non-scheme members with the options of joining alpha, partnership, or remaining a non-pension member until next re-enrolment date when they would be auto enrolled into alpha.

Under the SLC Pension Scheme rules, if the actuary certified that there is sufficient surplus in the scheme, the trustees may be liable to pay all or part of the surplus to the employer, however this is subject to specific funding rules. In the event of a deficit position, the position will be as provided for in the formal Transfer Agreement among DfE, SLC and the SLC Pension Trustee. The Scheme actuary would have to certify that the scheme liabilities are fully funded under an actuarial valuation conducted under the Pensions Act 1995 (as amended) and SLC does not propose to request a refund given the volatility within the scheme.

A reconciliation of the scheme movements to the Statement of Financial Position is given below:

Reconciliation to Statement of Financial Position	2023	2023	2022	2022
	£’000	£’000	£’000	£’000
Opening pension net liability / (asset)		(1,995)		2,306
Administrative expenses		431		628
Interest costs/(income)		(50)		58
Employer contributions		0		0
Other staff costs		0		0
Actuarial loss in fair value of plan assets	44,120		4,363
Actuarial (gain)/loss in defined benefit obligation:
- effect of changes in demographic assumptions	(995)		(180)
- effect of changes in financial assumptions	(29,002)		(9,721)
- effect of experience adjustments	4,384		551
Total actuarial (gain)/loss		18,507		(4,987)
Gain on settlement at transfer of pension fund		0		0
Net (assets)/liability as at 31 March		16,893		(1,995)

The SLC Pension Scheme closed to future accrual on 29 February 2020. Following this the 2019 triennial actuarial valuation was concluded and resulted in a new Schedule of Contributions, postponing all payments into the SLC Pension Scheme from SLC. The basis of this was the additional agreement with the Cabinet Office and HM Treasury that the residual parts of the SLC Pension Scheme (being deferred members and pensioners) would transfer to the CSPA during 2023-24.

Net defined (asset)/liability reconciliation	2023	2022
	£’000	£’000
Opening net defined benefit liability/(asset)	(1,995)	2,306
Defined benefit cost included in Statement of Comprehensive Net Expenditure	381	686
Total re-measurements included in Statement of Comprehensive Net Expenditure	18,507	(4,987)
Employer contributions	-	0
Net (asset)/liability	16,893	(1,995)
Amounts recognised in the Statement of Financial Position
Present value of funded obligations	53,706	78,141
Fair value of plan assets	36,813	80,136
Net (asset)/liability	16,893	(1,995)

The defined benefit obligations are estimated based on the projected unit cost method. They have been rolled forward from a projection from the results of the scheme’s statutory funding valuation as at 5 November 2019 to 31 March 2023.

Change in defined benefit obligation	2023	2022
	£’000	£’000
Benefit obligation as at 1 April	78,141	87,492
Current service cost	0	0
Past service costs	0	0
(Gain) on settlements	0	0
Settlement payments from plan assets	0	0
Interest cost	2,174	1,904
Benefits paid	(996)	(1,905)
Actuarial loss/(gain):
- effect of changes in demographic assumptions	(995)	(180)
- effect of changes in financial assumptions	(29,002)	(9,721)
- effect of experience adjustments	4,384	551
Total actuarial loss	(25,613)	(9,350)
Benefit obligation as at 31 March	53,706	78,141

Change in fair value of plan assets	2023	2022
	£’000	£’000
Fair value of plan assets as at 1 April	80,136	85,186
Interest income	2,224	1,846
Employer contributions		0
Settlement payments from plan assets		0
Plan participants’ contributions		0
Benefits paid	(996)	(1,905)
Administrative expenses	(431)	(628)
Insurance premiums for risk benefits
Actuarial (loss)/gain	(44,120)	(4,363)
Fair value of plan assets as at 31 March	36,813	80,136

Components of defined benefit cost	2023 £’000	2023 £’000	2022 £’000	2022 £’000
	£’000	£’000	£’000	£’000
Current service cost	-		-
GMP Equalisation / past service costs	0		0
Total service cost		0		0
Gain on settlements		0		0
Interest cost	2,174		1,904
Interest (income) on plan assets	(2,224)		(1,846)
Total net interest cost/(income)		(50)		58
Administrative expenses		431		628
Defined benefit cost included in Statement of Comprehensive Net Expenditure		381		686
Re-measurements (recognised in other comprehensive income):
Effect of changes in demographic assumptions	(995)		(180)
Effect of changes in financial assumptions	(29,002)		(9,721)
Effect of experience assumptions	4,384		551
Return on plan assets (excluding interest income)	44,120		4,363
Total re-measurements		18,507		(4,987)
Total recognised in the Statement of Comprehensive Net Expenditure		18,888		(4,301)

There are no active members in the SLC Pension Scheme, and so the below table shows the new analysis of the defined benefit obligation by remaining member type:

Defined benefit obligation by participation status	2023	2022
	£’000	£’000
Vested deferrals	40,431	61, 394
Retirees	13,274	16,747
Total	53,706	78,141

Prior to the transfer of assets and liabilities to the Civil Service Pension Scheme, previously held equity instruments, real estate and funds were realised. Assets held on behalf of the remaining scheme are now limited to cash and debt instruments:

Fair value of plan assets	2023	2022
	£’000	£’000
Cash and cash equivalents	4,932	890
I-L Gilts	25,296	35,126
Corporate bonds	6,585	44,120
Total	36,813	80,136
Actual return on plan assets	(41,896)	(2,517)

The assumptions used to determine the actuarial calculations are shown below. There have been no changes in methodology since the prior valuation.

Weighted average assumptions used to determine benefit obligations	2023 %	2022 %
Discount rate	4.80	2.80
Rate of price inflation (RPI)	3.10	3.50
Rate of price inflation (CPI)	2.80	3.30
Deferred pension increase rate (pre/post - 2009)	2.80/2/50	3.30/2.50
Rate of increase of pension in payment	2.90	2.90

Weighted average life expectancy for mortality tables used to determine benefit obligation	2023 (years)	2022 (years)
Male member age 65 (current life expectancy)	20.4	20.8
Male member age 45 (life expectancy at aged 65)	21.3	21.8
Female member age 65 (current life expectancy)	22.4	22.8
Female member age 45 (life expectancy at aged 65)	23.9	24.3

Weighted average assumptions used to determine benefit cost	2023 %	2022 %
Discount rate	2.80	2.20
Rate of price inflation (RPI)	3.50	3.10
Rate of price inflation (CPI)	3.30	2.70
Deferred pension increase rate (pre/post - 2009)	3.30/2/50	2.70/2.50
Rate of increase of pension in payment	2.90	2.90

Weighted average life expectancy for mortality tables used to determine benefit obligation (Mortality)	2023	2022
Post-retirement male mortality assumption	S3PMA CMI 2021 1.25% with Sk = 7.5, weightings of 135% for non-pensioners and 128% for pensioners	S3PMA CMI 2021 1.25% with Sk = 7.5, weightings of 125% for non-pensioners and 121% for pensioners
Post-retirement female mortality assumption	S3PFA “Middle” CMI 2021 1.25% with Sk = 7.5, weightings of 125% for non-pensioners and 124% for pensioners	S3PFA “Middle” CMI 2021 1.25% with Sk = 7.5, weightings of 116% for non-pensioners and 117% for pensioners

The weighted average duration of the defined benefit pension obligation is 21 years.

The funded status of the scheme and the amounts recognised as a liability as at 31 March 2023 are compared to the corresponding amounts given a range of sensitivities below.

Sensitivities from Base - Analysis of amounts recognised in the SOFP

	2022 £’000	2023 £’000	Minus 0.25% discount rate £’000	Plus 0.25% discount rate £’000	Minus 0.25% inflation rate £’000	Plus 0.25% inflation rate £’000	Mortality: Minus one- year age rating £’000
Fair value of plan asset	80,136	36,813	36,813	36,813	36,813	36,813	36,813
Defined benefit obligation	78,141	53,706	56,291	51,285	52,315	55,162	55,380
Funded status	(1,995)	16,893	19,478	14,472	15,502	18,349	18,567
Net defined benefit liability /(asset) excluding any effect of asset ceiling	(1,995)	16,893	19,478	14,472	15,502	18,349	18,567

Sensitivities on actuarial assumptions

	2022	2023	Minus 0.25% discount rate	Plus 0.25% discount rate	Minus 0.25%
inflation rate	Plus 0.25% inflation rate	Mortality: Minus one year age rating
	%	%	%	%	%	%	%
Discount rate	2.80	4.80	4.55	5.05	4.80	4.80	4.80
Rate of RPI assumption	3.50	3.10	3.10	3.10	2.85	3.35	3.10
Rate of CPI assumption	3.30	2.80	2.80	2.80	2.55	3.05	2.80

Contributions in 2023-24

SLC is obliged to contribute between 26.6% and 30.3 % to the alpha scheme and 8.0% to 14.75% to the partnership scheme in 2023-24.

16. Capital and other financial Commitments

At 31 March SLC had placed contracts for the purchase of the following:

	2023 £’000	2022 £’000
	£’000	£’000
Tangible assets	1,096	837
Intangible assets	2,953	636
Software licences	8,456	4,486

17. Called up Share Capital

	2023 £	2022 £
Authorised
200 ordinary shares of 50p each	100	100

Allotted, called up and fully paid
20 ordinary shares of 50p each	10	10

18. Prior Year Comparatives Restatement

There have been no prior year comparatives requiring restatement this year.

19. Controlling Parties

SLC is owned by the Secretary of State for Education, the Welsh Ministers, the Scottish Ministers and the Minister for the Economy in Northern Ireland.

20. Related Party Transactions

SLC is a NDPB that is funded by the bodies detailed in note 1 to the financial statements. Those funding bodies are regarded as related parties.

During the year, SLC had various material transactions with the above departments. Grant-In-Aid funding received is detailed in 7.3 and 7.4 the Statement of Changes in Taxpayers’ Equity, and Statement of Cashflows respectively.

Dependants of Directors, executive management and staff who are students, are eligible to participate in the student loans scheme on the same terms and conditions as are available to other students.

During the period, certain Non-Executive and Executive Directors held the following positions with higher education providers with which SLC transacts for student funding or bodies which are closely associated with higher education.

• The Chair, Mr Peter Lauener, was Chair of the Newcastle College Group until January 2023 and is Chair of Orchard Hill College & Academy Trust.

• Ms Mary Curnock Cook CBE will step down as a Non-Executive Director in December 2023. She is Chair of Council at the Dyson Institute of Engineering and Technology; Non-Executive Director of the London Interdisciplinary School; Non-Executive Director of The Student Room; Non- Executive Director of Education Cubed Limited; Trustee of the Higher Education Policy Institute and Chair of Pearson Education Limited.

• Ms Charlotte Moar is a Council Member at the University of Bath and an independent member of the Audit and Risk Committee at DfE.

• Prof. Andrew Wathey CBE was Vice Chancellor and Chief Executive Officer of Northumbria University until May 2022 and was a Council Member of the All-Party University Group to August 2022. From March 2023 he is an external member of Council at the University of Cambridge.

SLC is exempt from the disclosure requirements in relation to transactions and outstanding balances, where not individually or collectively significant, with any of the above related parties where the UK Government has significant influence over UK universities and colleges.

In addition to the above related party disclosure, a register of interests for Non-Executive and Executive Directors is held by SLC and is available upon request.

Transactions with bodies in which the Non-Executive Directors held interests during the year have been examined. One related party transaction was identified:

During the year SLC contracted with the Student Room £72,000 (at market rate) in respect of digital marketing services. There was no outstanding balance as at 31 March 2023.

Compensation for key management personnel is disclosed in the Remuneration and Staff Report.

21. Statement of Loans Administered by SLC

Funding for the purpose of making loans to students is received by SLC from the Department for Education, the Welsh Government, the Scottish Government and the Department for the Economy in Northern Ireland.

As at 31 March 2023 the total face value of the loan portfolio administered by SLC on behalf of the funding bodies was £203.3bn, (31 March 2022: £178.5bn), which excludes all non-repayable student support.

22. Events after the Reporting Period

The Accounting Officer authorised these accounts for issue on the date the independent auditor’s report was signed by the Comptroller and Auditor General.

Property Leases

Since the 31st March 2023 SLC’s (peppercorn) lease for our Llandudno property lapsed at the end of June, the property is rented from the Welsh Government who are currently redefining the space and layout available for SLC. Until a new lease arrangement is in place, we have an agreed licence to occupy in place.

Legal Provisions

As of 31 March 2023, SLC had a legal case estimated at £0.1m which is included within the legal provision, this case was dismissed by a court order dated 25 April 2023 and can no longer be classed as a legal provision.

100 Bothwell Street
Glasgow
G2 7JD

Tel 0141 306 2000

Fax 0141 306 2005

VAT Reg No. 556 4352 32

Registered in England and Wales No. 2401034

Registered Office:
Memphis Building
Lingfield Point
McMullen Road
Darlington
D1 1RW

1. As at March 2023 ↩