Corporate report

Student Loans Company Ltd Framework Document

Published 26 August 2022

1. Introduction

1.1 This document (“Framework Document”) has been drawn up by DfE in consultation with the Student Loans Company Limited (“SLC”, “Company”) and the relevant departments of the Devolved Administrations (see Definitions at section 2).

1.2 The Framework Document sets out the broad framework within which SLC will operate. The Framework Document does not convey any legal powers or responsibilities. It is signed and dated by SLC, DfE and the relevant departments of the Devolved Administrations, in accordance with HM Treasury’s handbook Managing Public Money (as updated from time to time). Copies of this Framework Document and any subsequent amendments will be placed in the Libraries of both Houses of Parliament and in the equivalent libraries of the Devolved Administrations. SLC will make the Framework Document available to members of the public on the gov.uk website.

2. Definitions

2.1 In this Framework Document:

“Accounting Officer” means the person designated as the Chief Executive of SLC who shall be accountable for the operations of SLC and for SLC’s spending;

“APRA” means the Annual Performance and Resource Agreement Letter;

“Board” means the Board of SLC and includes any sub-committee of that Board;

“DAO letter” means Dear Accounting Officer letter;

“Departments” means DfE in England, the Directorate for Skills, Higher Education and Lifelong Learning in Wales (“SHELL”), the Higher Education and Science Division in Scotland on behalf of Scottish Ministers (“HES”), and the Department for the Economy in Northern Ireland (“DfE (NI)”) or their successors;

“DfE” means the Department for Education;

“Devolved Administrations” means the Scottish Government, the Welsh Government and the Northern Ireland Assembly;

“Devolved Ministers” means the Minister in each Devolved Administration with responsibility for student loans policy;

“Executive NDPB” means Executive Non-Departmental Public Body;

“HMRC” means HM Revenue and Customs;

“PAO” means the Principal Accounting Officer;

“Responsible Minister” means the Secretary of State for Education or their successor; and

“Sponsor Department” means the DfE or its successor.

3. Purpose and Objectives of SLC

3.1 SLC’s role is to administer student loans, grants and repayments in accordance with its statutory functions under relevant primary and secondary legislation, as amended or replaced from time to time.

3.2 SLC is specifically responsible for undertaking certain delegated statutory functions in relation to student loans and grants as specified by the Responsible Minister and Devolved Ministers and to perform related activities to assist in achieving the Departments’ policy objectives from time to time.

3.3 These functions and activities are delegated to SLC in writing by the relevant Responsible Minister and/or Devolved Ministers, as applicable, from time to time. These functions and activities and the relevant authorities for undertaking them shall be listed by title and brief descriptive summary in a Register of approved activities (“Register of Functions”) which shall be displayed by SLC on GOV.UK. The SLC Company Secretary is responsible for maintaining and updating the Register of Functions.

3.4 The Departments are responsible for ensuring that delegated statutory functions and requests for SLC to perform related activities are set out clearly in written instructions and/or notices of appointment. Any material changes to SLC’s delegated statutory functions by the Departments shall be intimated via the Policy Commissioning Process.

3.5 SLC’s primary roles are to:

• pay loans and grants to students;
• pay tuition fees to colleges, training providers and universities;
• collect repayments, through HMRC and direct from borrowers;
• make maintenance payments to school and further education students aged over 16 in Northern Ireland and Wales;
• pay bursaries and scholarships on behalf of universities and colleges; and
• run all the administration and processing associated with these activities.

3.6 SLC’s mission is to enable people to invest in their futures through further and higher education by providing trusted, transparent, flexible and accessible student finance services.

3.7 SLC’s vision is to ensure that SLC is widely recognised as enabling student opportunity and delivering an outstanding customer experience in the efficient delivery of the Departments’ further and higher education finance policies.

4. Governance and Accountability

4.1 SLC’s Legal Origins

• SLC was incorporated in 1989 as a company limited by shares under the Companies Acts.
• SLC was established to administer the student loans scheme introduced by the Education (Student Loans) Act 1990 and the Education (Student Loans) (Northern Ireland) Order 1990.
• SLC began operating in 1990 and since 1 April 1996 it has been classified as an Executive NDPB.
• SLC is a central government company wholly owned by the Secretary of State for Education and the Devolved Administrations.

4.2 Overall Aims

4.2.1 From time to time the Responsible Minister will confirm SLC’s principal delivery priorities for all Departments in writing. SLC will produce a Corporate Plan which will confirm in writing the principal delivery priorities it has agreed with all Departments and will set out how it will deliver its main aims and objectives.

4.2.2 Any policy objectives in relation to student finance policy will be set out in writing by the Departments in accordance with the Policy Commissioning Process (see section 4.3).

4.2.3 All new policies, products and projects should be subject to a proportionate assessment of costs, impact and benefits. SLC may take on new activities provided there is assurance that such new activities are appropriately funded and will not adversely affect its core functions and priorities set by the Responsible Minister and Devolved Ministers.

4.3 Policy Commissioning Process

4.3.1 Each year, the Departments will provide SLC with the annual shareholder policy commission aligned to their ministerial priorities. The agreed annual policy commission will be reflected in the APRA letter issued to SLC. The APRA which includes all signed off and finalised policy commissions and associated funding shall be issued to SLC prior to the first day of the financial year.

4.3.2 The annual policy commission cycle commences through the Joint Quadrilateral Committee (“JQC”). The membership of the JQC will include representatives from the Departments and SLC. The core purpose is to ensure that all policy commissioning is fit for delivery and will receive appropriate funding. The JQC will assess the capacity of SLC to undertake the delivery of new policy and/or products and manage changes to existing policy and/or products in line with the JQC’s Terms of Reference.

4.3.3 The policy commission cycle commences with the Departments providing their policy commission to SLC by the specified deadlines. SLC will estimate the capacity and cost of each policy change alongside changes required in other portfolio areas. These are prioritised and approved by the Executive Leadership Team and the Board to validate that policy changes meet SLC’s strategic aims and objectives.

4.3.4 SLC will provide the JQC with estimates of available resource and budget capacity for policy and/or product development in the following year, to enable Departments to make decisions on policy priorities. Once the APRA is approved, SLC will coordinate and plan projects to deliver the required policy changes. A policy specification will be drafted and the relevant Department(s) will be asked to approve the specification as the project enters the delivery phase. The JQC will provide a formal gateway for approving any policy changes which fall outside of the annual shareholder policy commission to SLC, where there is an impact to capacity or agreed budgets. SLC shall be given appropriate flexibility in terms of quantum and categories of spend in order to deliver required policy changes within HM Treasury guidelines. The JQC will report to the Biannual Shareholders’ Meeting as appropriate.

4.4 Better Regulation, Consultation and Impact Assessments

4.4.1 SLC and the Departments shall follow the Government’s commitment to efficient and effective regulation.  Where possible and certainly whenever necessary SLC and the Departments shall follow the Consultation Principles and comply with the Government’s Better Regulation agenda and the Regulator’s Code.  Where necessary SLC and/or the Departments shall produce Impact Assessments on any proposal that imposes or reduces costs on higher education or further education providers, SLC customers, relevant stakeholders, businesses, community, and voluntary bodies (as applicable).  Impact Assessments and any related material should be produced in accordance with statutory guidance produced by the Better Regulation Executive.

4.5 Ministerial Responsibility

Governance

4.5.1 The Responsible Minister will account for SLC’s business in the Parliament of the United Kingdom. In practice, the DfE Minister with responsibility for Higher Education may act on behalf of the Secretary of State for Education in discharging the duties of the Responsible Minister outlined in this Framework Document. The Sponsorship Team in DfE will ensure that working arrangements are in place to draw relevant matters to the attention of DfE Ministers and officials with responsibility for Further Education.

4.5.2 SLC is separately accountable to the Responsible Minister and Devolved Ministers for performance of the functions specifically delegated in relation to performance in their respective jurisdictions. However, the Devolved Ministers have agreed that DfE will be the designated Sponsor Department having the primary relationship with SLC in relation to matters of corporate governance, acting in defined circumstances on behalf of the Departments. The Responsible Minister will specifically consult and seek the agreement of the Devolved Ministers in relation to agreed matters of shared strategic interest.

4.5.3 Each Devolved Administration will liaise directly with SLC on certain bilateral issues. The division of governance responsibilities is set out more fully in a Memorandum of Understanding (“MoU”) between the Departments attached at Annex A.

Board Appointments

4.5.4 The Responsible Minister shall, in accordance with the MoU at Annex A, appoint, remove and determine the remuneration and terms of appointment of the SLC Chair and Non-Executive Directors. All such appointments should have regard to the principle that appointments should reflect the diversity of the society in which we live, and appointments should be made taking account of the need to appoint Boards which include a balance of skills and backgrounds. Appointments will be made for a period of three years and will comply with the provisions and principles of the Governance Code on Public Appointments. Only one further period of reappointment is normally permissible, subject to a satisfactory appraisal.

4.5.5 The Responsible Minister will also approve the appointment by the Board of the Chief Executive.

5. Specific Accountabilities and Responsibilities of the Accountable Officer in each Department

5.1 The Permanent Secretary of DfE, acting in their capacity as PAO, has designated SLC’s Chief Executive as Accounting Officer. The Accounting Officer’s role and responsibilities are set out in Chapter 3 of HM Treasury’s Managing Public Money guidance. This guidance and other related documents are listed in the SLC’s Accounting Officer Appointment Letter. The respective responsibilities of the PAO and the Accounting Officer for SLC are set out in Chapter 3 of Managing Public Money.

5.2 The Accounting Officer is accountable to the devolved parliaments and Devolved Administrations, via the Accountable Officers of those administrations, in matters relating to those administrations, as set out in paragraph 6.6 of this Framework Document.

5.3 The Accountable Officers of the Devolved Administrations, having been appointed by the relevant Devolved Minister, are as follows:

• the Deputy Director of HES in Scotland;
• the Director of SHELL in the Welsh Government; and
• the Director of Higher Education at the DfE (NI).

5.4 Each department’s Accountable Officer is also responsible for ensuring arrangements are in place, in accordance with the split of responsibilities as set out in Annex A of this Framework Document, in order to:

• monitor SLC’s activities;
• in collaboration with the Sponsor Department, and the other administrations, address significant problems in SLC, making such interventions as are judged necessary;
• periodically carry out an assessment of the risks both to the relevant department and SLC’s objectives and activities;
• inform SLC of relevant departmental policy in a timely manner and in accordance with the Policy Commissioning Process;
• bring concerns about the activities of SLC to the SLC Board, requiring explanations and assurances that appropriate action has been taken; and
• be assured that Grant (as referred to in paragraph 12.1.3 and defined in Annex 5.1 of Managing Public Money) disbursed by SLC on behalf of the Departments is properly managed and accounted for.

5.5 The Sponsorship Team in DfE will act as the primary contact for SLC in relation to all bilateral matters between DfE and SLC and in relation to those administrative matters defined in the MoU which DfE has agreed to co-ordinate on behalf of all Departments. This nominated team is the main source of advice to the Responsible Minister on the discharge of his or her responsibilities in respect of SLC. It also supports the Sponsor Department’s PAO in respect of his or her responsibilities toward SLC. Officials in the Devolved Administrations will be responsible for support and advice to their respective Ministers and PAOs.

5.6 In addition to the responsibilities outlined at paragraph 5.4, the Sponsor Department’s PAO is specifically responsible for advising the Responsible Minister:

• on an appropriate framework of objectives and targets for SLC, taking into consideration the wider strategic aims and priorities of the Departments and Annex A of this Framework Document;
• on an appropriate budget for SLC;
• how well SLC is achieving its strategic objectives and whether it is delivering value for money; and
• via the Sponsorship Team at DfE, on the exercise of the Responsible Minister’s statutory responsibilities concerning SLC.

5.7 The DfE and SLC will have an open and honest, trust-based relationship supported by the principles set out in the Partnerships between Departments and Arm’s Length Bodies: Code of Good Practice. As such, both parties will work in partnership and will ensure they clearly understand the strategic aims and objectives of the other party. Both parties will also commit to keeping each other informed of any significant issues and concerns. Subject to any significant changes to approved budgets or objectives, SLC shall have autonomy to deliver and manage all day to day operational and commercial matters without the requirement to obtain further approvals from the Departments. SLC shall ensure it complies with the requirements of Managing Public Money.

6. Responsibilities of the Chief Executive and SLC Accounting Officer

6.1 The Chief Executive Officer is appointed by the Board in accordance with paragraph 8.2.3. The Chief Executive as Accounting Officer for SLC is personally responsible for safeguarding the public funds for which he or she has charge (including the stewardship of funds administered by SLC on behalf of the Departments as set out as section 12); for ensuring propriety, regularity, value for money and feasibility in the handling of those public funds; and for the day to day operations and management of SLC.

6.2 In addition, the Accounting Officer should ensure that SLC as a whole is run on the basis of the standards, in terms of governance, decision-making and financial management that are set out in Box 3.1 of Managing Public Money.

6.3 As Accounting Officer, the Chief Executive has specific responsibilities to account to Parliament, via and alongside the PAO of the Sponsor Department, as covered by the Accounting Officer’s letter of appointment and as described in Managing Public Money.

6.4 The Chief Executive, as Accounting Officer, must take care that his or her personal legal responsibilities do not conflict with his or her duties as a board member. In particular, the Accounting Officer should vote against any proposal which appears to cause such a conflict; it is not sufficient to abstain.

6.5 The Accounting Officer’s responsibilities include:

• signing the accounts, ensuring that proper records are kept relating to the accounts and that the accounts are properly prepared and presented in accordance with any directions issued by the Treasury and the Secretary of State for Education and in accordance with the Companies Acts and company law more generally;
• preparing and signing a Governance Statement covering corporate governance, risk management and oversight of any local responsibilities, for inclusion in the annual report and accounts;
• ensuring that effective procedures for handling complaints about SLC are established and made widely known within SLC;
• acting in accordance with their fiduciary duties under the Companies Acts, the terms of this Framework Document, Managing Public Money and other instructions, delegation letters, settlement letters and guidance issued from time to time by the Departments, the Treasury and the Cabinet Office; and
• giving evidence, normally with the PAO, when summoned before the Public Accounts Committee or appropriate committee of the Devolved Administrations, on SLC’s stewardship of public funds.

6.6 The Accounting Officer’s responsibilities to the Departments include:

• establishing, in agreement with the Departments, SLC’s Corporate and Business Plans in light of the Departments’ wider strategic aims and agreed priorities;
• informing the Departments of progress in helping to achieve their policy and delivery objectives and in demonstrating how resources are being used to achieve those objectives;
• ensuring that timely and regular forecasts and monitoring information on performance and finance are provided to the Departments; ensuring that the Departments are notified promptly if over or under spends are likely and that corrective action is taken; and that any significant problems whether financial or otherwise are notified to the Departments in a timely fashion.
• managing the day-to-day operation of SLC;
• managing resources, including Grant (see paragraph 12.1.3), in an efficient and effective way to achieve good value for money for the taxpayer;
• ensuring compliance with standards for governance, financial management, decision-making and risk management; escalating strategic, financial, operational and reputational risks to the Departments when appropriate and in a timely manner;
• demonstrating a thorough understanding of the policy context for student support and of the public perception of the student finance delivery service, escalating any emerging risks or issues to senior staff in the Departments with an assessment of the impact and possible solutions; and
• ensuring that SLC discharges its responsibilities in cases where irregular activity with the potential to cause financial loss is suspected, as outlined in the incident response protocols agreed with DfE.

6.7 The Chief Executive’s responsibilities to the SLC Board include:

• advising the Board on the discharge of SLC’s responsibilities as set out in this Framework Document and its annexes and in any other relevant instructions and guidance that may be issued from time to time;
• advising the Board on SLC’s performance against its aims, objectives, performance targets and plans;
• ensuring that financial considerations are taken fully into account by the Board at all stages in reaching and executing its decisions, and that appropriate financial, investment and project appraisal techniques are followed;
• taking action as set out at paragraphs 6.10 – 6.11 of this Framework Document if the Board, or its Chair, is contemplating a course of action involving a transaction which the Chief Executive considers would infringe the requirements of propriety or regularity, or does not represent prudent, economical, efficiency or effectiveness, or is of questionable feasibility, or is unethical;
• making recommendations to the Remuneration Committee on the appointment of an Executive Leadership Team to conduct the day to day business of SLC, ensuring an appropriate balance of skills and experience; and
• providing clear and timely strategic and operational information to the Board on the emergence of risks and proposed mitigations.

6.8 The Accounting Officer shall carry out their responsibilities to the Departments, Parliament, the Board and otherwise in accordance with this Framework Document.

6.9 Where applicable, the Chief Executive should follow the advice and direction of the Board, except in very exceptional circumstances with a clear cut and transparent rationale for not doing so. For example, where the precedence of Companies Acts legislation is deemed to supersede any matters delegated to the Accounting Officer or for which they are personally accountable.

6.10 If the Chair or Board of SLC is minded to instruct its Accounting Officer to carry out a course of action inconsistent with their duties as Accounting Officer, then the Accounting Officer should make their reservations clear, preferably in writing. If the Board is still minded to proceed, SLC’s Accounting Officer should then:

• ask the PAO to consider intervening to resolve the difference of view, preferably in writing;
• if the Board’s decision stands, seek its written direction to carry it out, asking the Sponsor Department to inform HM Treasury;
• proceed to implement without delay; and
• follow the routine in paragraph 3.6.6 of Managing Public Money.

6.11 Where a difference of view exists between the Accounting Officer and the Board, the Board must take the view of the Government via consultation with the Sponsor Department and give full consideration to this view before reaching a final decision and instructing the Accounting Officer.

6.12 Nothing in this section shall prevent SLC’s Accounting Officer from accepting instructions from the Departments in relation to the interpretation and application of student support regulations and student finance policy.

6.13 The Chief Executive will be authorised to act as the “qualified person” under section 36(5)(o) (iii) of the Freedom of Information Act 2000.

6.14 SLC’s Accounting Officer will provide regular reports on SLC’s performance to DfE’s PAO and may consult with the PAO on major projects or expenditure. The PAO will be responsible for advising the Secretary of State for Education on how the SLC is performing.

7. Shareholder Relationship

7.1 SLC will operate a corporate governance structure that provides a relationship between its Board and the Departments which, so far as practicable and in the light of the other provisions of this Framework Document or as otherwise may be agreed between SLC and the Departments, accords with best corporate governance practice.

7.2 Interactions between the Departments and SLC must be conducted in a professional, efficient, and trust-based dialogue.

7.3 The Departments in consultation with SLC will be entitled to reports or other information, on reasonable notice, to enable the performance of the Company to be assessed or audited and as part of their broader oversight of SLC. SLC shall report financial and non-financial performance, including performance in helping to deliver ministers’ policies, and the achievement of key objectives regularly.

7.4 The Sponsor Department will act as the principal shareholder and carry out the functions more fully specified in the MoU between the Departments at Annex A to this Framework Document. The Sponsor Department is answerable to Parliament for all matters concerning SLC.

7.5 As the principal shareholder, the Sponsor Department, via its Sponsorship Team, will ensure that there are clear structures in place to review this Framework Document periodically and to make any necessary amendments as and when required. The Framework Document will be reviewed by the Sponsor Department, in consultation with the Devolved Administrations and SLC, at least once every three years. The Sponsor Department shall also carry out annual light touch reviews of this Framework Document to ensure it remains fit for purpose.

7.6 If a machinery of Government change results in SLC being sponsored by a new department before the Framework Document is due for review, the Sponsor Department will notify SLC of the relevant relationship changes. The provisions of the Framework Document will continue to have effect until the Framework Document is replaced, unless otherwise stated by the new sponsor department.

7.7 The Sponsor Department, acting on behalf of the Departments, will have the following responsibilities: (the “Shareholder Reserved Matters”):

• appointment of the Chair and Non- Executive Directors;
• approve the Board’s proposed appointment of the Chief Executive;
• approving SLC’s forward strategy or high-level priorities;
• approval of the terms (including remuneration and policy regarding payment of expenses) of all appointments to the Board;
• approval of the remuneration framework for all staff including executive directors and individual pay awards outside the delegated framework;
• matters regarding spending approvals, acquisitions, disposals, and joint ventures in line with delegations as set out in the delegation letter; and
• approval of the SLC budget and funding.

7.8 The Departments will set objectives, priorities and budget for SLC and shall deliver the APRA to SLC prior to the first day of the financial year. The Departments shall give the Board, SLC’s Accounting Officer and Executive Leadership Team appropriate autonomy to deliver. Once projects and spend have been approved by the Sponsor Department for the financial year, SLC shall not be required to seek further approvals from the Sponsor Department unless such projects or projected spend are subject to significant change or fall outside SLC’s delegated authority. Subject to any significant changes to approved budgets or objectives, SLC shall have autonomy to deliver and manage all day to day operational and commercial matters without the requirement to obtain further approvals from the Departments. This paragraph does not remove SLC’s obligations to comply with HM Treasury approvals required by Managing Public Money.

7.9 Reporting on Legal Risk and Litigation

7.9.1 SLC shall provide a quarterly update to the Departments, via the Sponsor Department, on the existence of any active litigation and any reasonably anticipated litigation. The parties acknowledge the importance of ensuring that legal risks are communicated appropriately in a timely manner. The Departments shall inform SLC of relevant active or reasonably anticipated litigation against the relevant department involving a challenge to the student support regulations or student finance policy.

7.9.2 In respect of each substantial active piece of litigation involving SLC, the parties will agree a litigation protocol which will include specific provisions to ensure appropriate and timely reporting on the status of the litigation and the protection of legally privileged information transmitted to the shareholder to facilitate this. Until such time as a protocol is agreed, the parties will ensure that:

• material developments in the litigation are communicated in an appropriate and timely manner;
• legally privileged documents and information are clearly marked as such;
• individual employees handling the legally privileged documents are familiar with principles to which they must adhere to protect legal privilege; and
• circulation of privileged information within government occurs only as necessary.

8. The SLC Board

8.1 Board Composition

8.1.1 The Board shall operate in accordance with the Companies Acts, its fiduciary duties to the Company and the Board responsibilities set out at section 8.2 of this Framework Document. The role of the Board shall be to provide an assurance and supervisory function to ensure that SLC delivers its objectives and complies with relevant corporate governance guidance set out in Annex B. The Board shall carry out its role in accordance with its statutory, regulatory, common law duties and its responsibilities and SLC’s purposes set out under this Framework Document. Detailed responsibilities of the Board shall be set out in the Board terms of reference. Remuneration of the Board will be disclosed in line with the guidance in Government Financial reporting manual.

8.1.2 The Board will consist of the following Board Members:

• a non-executive Chair;
• the Chief Executive (who may not also hold the position of Chair);
• the Deputy Chief Executive;
• the Chief Finance Officer;
• up to eight Non-Executive Directors; and
• the Company Secretary

that together have a balance of skills and experience appropriate to directing SLC’s business and which enable it to provide appropriate support and constructive challenge to the Executive Leadership Team. This will include an appropriately qualified finance professional as described in Annex 4.1 of Managing Public Money.

8.1.3 SLC’s Company Secretary is a member of the Board but is not a Director of the Company. He or she is answerable to the Board, via the Chair, on matters related to Companies Acts governance and related activities. If the holder of the Company Secretary post has any additional operational responsibilities he or she should report separately to a nominated member of SLC’s Executive Leadership Team on those matters.

8.1.4 Observers may attend Board meetings with the permission of the Chair.

8.1.5 From time to time, and with the Sponsor Department’s approval, the Board may co-opt additional members onto its Board sub-committees on a fixed-term basis to provide specific experience or expertise.

8.2 Board Responsibilities

8.2.1 The Board must provide strategic direction to SLC, and ensure it is equipped to perform its functions, including having sufficient resourcing and a suitable organisational structure.

8.2.2 The Board should enable effective arrangements to be put in place to provide assurance on risk management, governance and internal control.

8.2.3 The Board is specifically responsible for:

• establishing and taking forward the strategic vision, mission and objectives of SLC consistent with its overall strategic direction and within the policy and resources framework determined by the Secretary of State for Education;
• ensuring that the Departments are kept informed of any changes which are likely to affect the strategic direction of SLC or on the attainability of its targets, and determining the steps needed to deal with such changes;
• ensuring that it receives and evaluates regular and timely information about SLC’s performance against its aims, objectives, performance targets and plans, including standards of delivery to SLC’s customers, and ensuring appropriate action is in hand to address any areas of underperformance;
• ensuring that effective arrangements are in place to ensure that any statutory or administrative requirements for the use of public funds are complied with;
• ensuring that the Board operates in accordance with the relevant provisions of the Companies Acts and company law more generally, within the limits of any delegated statutory authority as set out in the Register of Functions as amended from time to time, and in accordance with any other conditions relating to the use of public funds;
• ensuring that, in reaching decisions, the Board takes into account guidance issued by the Departments and ensures it receives adequate information regarding the stewardship of funds disbursed by SLC on behalf of the Departments;
• providing an assessment of SLC’s compliance with the Financial Reporting Council’s UK Corporate Governance Code (to the extent applicable to SLC) for the annual governance statement, in line with paragraph 12.1.1 of this Framework Document and Annex 3.1 of Managing Public Money;
• ensuring that the Board receives and reviews regular financial information concerning the management of SLC; is informed in a timely manner about any concerns about the activities of SLC; and provides positive assurance to the Departments that appropriate action has been taken on such concerns;
• demonstrating high standards of corporate governance at all times, including by using the Audit and Risk Committee to help the Board to address key financial and other risks;
• ensuring that, as part of its compliance functions, the Board is familiar with the Framework Document and any delegation or settlement letters issued by the Sponsor Department, and that the Board has appropriate mechanisms in place for monitoring and reporting on SLC’s compliance with such documents;
• reviewing management performance;
• ensuring that SLC’s responsibilities towards its employees, as set out in section 14, are satisfactorily discharged;
• appointing, with the Responsible Minister’s approval, a Chief Executive and, in consultation with the Departments, setting his or her performance objectives and performance measures which are aligned with the SLC Corporate Plan, performance targets and Annual Business Plans and the specific responsibilities of the Chief Executive as set out in this Framework Document, ensuring that remuneration terms are linked to these objectives and give due weight to the proper management and use of public resources;
• assisting SLC’s Accounting Officer with in-depth consideration of Company matters that SLC’s Accounting Officer deems significant including new projects, existing projects, approvals and endorsement of advice;
• collectively supporting the Accounting Officer to account to Parliament for SLC’s performance and stewardship of public funds;
• setting up a Remuneration Committee, an Audit and Risk Committee and such other committees as the Board deems appropriate from time to time;
• appointing an Executive Leadership Team to conduct the day to day business of SLC, ensuring an appropriate balance of skills and experience; and
• approving detailed financial plans in the context of the Corporate Plan which sets out the Annual Business Plan, the Annual Report and Accounts and the Risk Management Strategy.

8.2.4 The Board shall act in the capacity of an expert assurance and supervisory function and should not be unduly influenced by shareholders. The Board may offer independent advice to ministers should it wish to, via the Chair, without the involvement of shareholders if necessary.

8.3 Board Indemnity

8.3.1 An individual Board Member who has acted honestly and in good faith will not have to meet out of his or her personal resources any personal civil liability which is incurred in the execution or the purported execution of his or her Board functions, save where the Board Member has acted recklessly.

8.4 Responsibilities of the Chair

8.4.1 The chair of the Board (the “Chair”) is accountable to the Responsible Minister.

8.4.2 Communications between the Board and the Departments should normally be through the Chair. He or she is responsible for ensuring that SLC’s policies and actions support the Departments’ wider strategic policies and that its affairs are conducted with probity. Where appropriate, the Chair will support the Chief Executive in ensuring that the Departments’ policies, and how SLC will support them, are clearly communicated and disseminated throughout SLC. The Board is bound by the Code of Conduct for Board Members of Public Bodies and the Code of Conduct for SLC Board Members and Chair, which cover conduct in the role and includes the Nolan Principles of Public Life.

8.4.3 In addition, the Chair has the following leadership responsibilities:

• overseeing the formulation of SLC’s Corporate Plan, setting out how SLC will deliver the Departments’ policy and delivery objectives and the services they have agreed that SLC may provide for other stakeholders, and submitting this for approval by the Sponsor Department;
• ensuring that the Board, in reaching decisions, takes proper account of guidance provided by the Responsible Minister or the Departments;
• promoting the efficient and effective use of resources;
• delivering high standards of regularity and propriety; and
• representing the views of the Board to the general public via SLC Communications and/or published Board minutes.

8.4.4 The Chair also has an obligation to ensure that:

• the work of the Board and its members are reviewed and are working effectively including ongoing assessment of the performance of individual Board members with a formal annual evaluation and more in-depth assessments of the performance of individual Board members when being considered for re-appointment;
• information from committees is sufficient, appropriate and timely and ensures effective Board oversight of the issues within committee remits;
• he or she monitors the balance of skills of SLC’s Board membership to ensure it is appropriate to directing SLC’s business, and makes timely representations to the Responsible Minister as necessary;
• Board vacancies are anticipated and he or she advises the Responsible Minister of SLC’s needs in good time and that he or she takes an active part in appointing suitable Non-Executive Directors in conjunction with the Responsible Minister;
• the Board Members are fully briefed on terms of appointment, duties, rights and responsibilities;
• he or she, together with the other Board Members, receives appropriate training on corporate governance from the Sponsor Department and/or other sources, including governance structure, appraisal arrangements, delegations and retained permissions, government finance, fiduciary responsibilities and on any differences that may exist between private and public sector practice;
• he or she assesses the performance of individual SLC Non-Executive Directors when they are being considered for re-appointment and submits a report to the Responsible Minister;
• he or she assesses the performance of the Chief Executive annually and makes recommendations to the Responsible Minister on remuneration increases;
• he or she also assists the Chief Executive in assessing the performance of the other members of the Executive Leadership Team;
• the Board Terms of Reference sets out the role and responsibilities of the Board consistent with the Government Code of Good Practice for Corporate Governance; and
• Board Members act in a way that is consistent with the Cabinet Office Code of Conduct for Board Members of Public Bodies.

8.5 Responsibilities of Individual Board Members

8.5.1 Individual Board members should:

• comply with the requirements of the Companies Acts and company law more generally which set out the responsibilities of directors of companies;
• comply with SLC’s obligations as an Executive NDPB, recognising that the requirements of company law shall take precedence;
• comply at all times with the Code of Conduct for Board Members of Public Bodies, the Code of Conduct for SLC Board Members and Chair which both cover conduct in the role and includes the Nolan Principles of Public Life, and with the rules relating to the use of public funds and to conflicts of interest;
• demonstrate adherence to the 12 Principles of Governance for all Public Body Non-Executive Directors as appropriate and not misuse information gained in the course of their public service for personal gain or for political profit, nor seek to use the opportunity of public service to promote their private interests or those of connected persons or organisations;
• comply with the Board’s rules on the acceptance of gifts and hospitality, and on business appointments;
• provide advice, guidance, support and effective challenge to the Executive Leadership Team with regard to compliance with controls and Managing Public Money;
• ensure that that SLC adheres to all relevant legislation and strategic boundaries as set by the Departments; and
• act in good faith and in the best interests of SLC.

8.6 Board Committees

Committee Governance

8.6.1 The Chair should ensure Board committees are properly structured with appropriate terms of reference. The terms of each committee should set out its responsibilities and the authority delegated to it by the Board. The Chair should ensure that committee membership is periodically refreshed and that individual independent non-executive directors are not over-burdened when deciding the chairs and membership of committees.

8.6.2 The Chair should ensure that sufficient time is allowed at the Board for committees to report on the nature and content of discussion, on recommendations, and on actions to be taken. The Board may take assurance in respect of any decisions or recommendations made by the committees or take a decision or recommendation as a Board in its own right.

Audit and Risk Committee

8.6.3 The Board is required to set up an Audit and Risk Committee which shall be chaired by an independent non-executive member to provide independent advice. The Board is expected to assure itself of the effectiveness of the internal control and risk management systems.

8.6.4 The Audit and Risk Committee will review and report to the Board and SLC’s Accounting Officer on monitoring, oversight and advice for financial reporting, external and internal audit, internal control and risk, whistleblowing procedures and compliance. The Audit and Risk Committee will operate in accordance with its terms of reference, which may be updated from time to time.

Remuneration Committee

8.6.5 The Board is responsible for setting up a Remuneration Committee.

8.6.6 The Remuneration Committee will support the Board in its responsibilities for the remuneration and appointment of Executives, people matters and organisational design.

8.6.7 The Remuneration Committee will approve the objectives, performance measures and remuneration terms for the Executive Leadership Team, ensuring these are aligned with the agreed Corporate Plan, performance targets and Annual Business Plans and to also consider recommendations from the Chief Executive on the appointment of Executive Team members and make recommendations to the Board for approval. The Remuneration Committee will operate in accordance with its terms of reference, which may be updated from time to time.

Other Committees

8.6.8 The Board may establish such other committees from time to time as it considers are required.

8.7 Board Assessors

8.7.1 The Departments may send Assessor(s) to the Board meetings.

8.7.2 Assessors are not members of the Board and have no decision making rights at Board meetings.

8.7.3 The role of the Assessors is to:

• assist the Board in understanding their respective Minister’s aims and objectives, where required;
• advise where their respective Ministers will need to be consulted or to agree a specific course of action;
• bring any of the Departments’ concerns to the Board’s attention; and
• ensure the Board is aware of guidance issued by the Departments.

8.7.4 In addition, Assessors:

• provide an assessment to their respective Ministers and respective principal accounting officers and/or accountable officers about the Board’s oversight of SLC, including the effectiveness of corporate governance arrangements in place and the Board’s oversight of SLC’s operation of the service, its performance against objectives and value for money;
• support their respective principal accounting officers and/or accountable officers in relation to responsibilities in paragraphs 5.4 and 5.5;
• advise the Responsible Minister on the appointment of the Chair, Non-Executive Directors and the Chief Executive;
• assess the performance of the Chair annually, and for the purpose of reappointment; and
• may also attend meetings of sub-committees of the Board.

8.7.5 SLC will send copies of all Board papers and sub-committee papers to Departments for information.

8.8 The Board’s Freedom to Act

8.8.1 The Departments are committed to giving the Board the freedom to adhere to the SLC budget and fulfil and deliver the activities and objectives set out in this Framework Document, SLC’s Corporate and Annual Business Plans and the APRA. Subject to any significant changes to approved budgets or objectives, SLC shall have autonomy to deliver and manage all day to day operational and commercial matters without the requirement to obtain further approvals from the Departments. This paragraph does not remove SLC’s obligations to comply with HM Treasury approvals required by Managing Public Money.

9. Annual Report and Accounts

9.1 SLC must publish an annual report of its activities together with its audited accounts after the end of each financial year.

9.2 As SLC falls within DfE’s accounting boundary, SLC shall provide its draft accounts, other financial data, and any account adjustments, to DfE for consolidation within its accounts. DfE will communicate the timetable for the production of accounts to SLC in good time each year.

9.3 The notes to the accounts shall include a statement on loans administered by SLC and a breakdown by Department of grant-in-aid receivable.

9.4 The annual report must:

• be properly prepared and presented in accordance with any direction issued by the Secretary of State, the relevant provisions of the Companies Acts and company law more generally;
• cover any corporate, subsidiary or joint ventures under its control;
• comply with the Treasury’s Financial Reporting Manual (FReM); and
• outline main activities and performance during the previous financial year and set out in summary form its forward plans.

9.5 Information on performance against key financial targets is included within the annual report and subject to the auditor’s consistency opinion.

9.6 A draft of the annual report shall be shared with DfE prior to the final draft being submitted to the Audit and Risk Committee and SLC Board for approval.

9.7 Once approved by the Audit and Risk Committee and the Board, the annual report and accounts should be submitted to DfE for formal ministerial approval (a two week window is required for this to be issued).

9.8 Once formal ministerial approval is obtained, the annual report and accounts are signed at the same time as a Letter of Representation addressed to the National Audit Office. The National Audit Office shall then issue a signed audit certificate following confirmation of ministerial approval and receipt of the signed Letter of Representation and signed annual report and accounts.

9.9 SLC shall engage with the Sponsor Department to arrange for placing the annual report and accounts in the Libraries of both Houses of Parliament. SLC shall then make the annual report and accounts accessible to the public on gov.uk.

9.10 SLC shall file its approved annual report and accounts with Companies House in compliance with its statutory obligations.

9.11 Where SLC wishes to publish a document additional to its annual report and accounts that contains supplementary material including summary financial statements it should comply with the requirements of sections 426 and 426A of the Companies Act 2006.

9.12 The summary data must not be published in advance of the full annual report and accounts being laid before Parliament as to do so would be a breach of Parliamentary privilege.

9.13 If, due to exceptional circumstances, there is a conflict between the requirements of the Companies Acts and the Government Financial Reporting Manual (FReM), the Companies Acts take precedence. SLC should discuss the situation in the first instance with the Sponsor Department and HM Treasury, as appropriate.

10. Risk Management, Counter Fraud and Audit

10.1 Risk Management and Counter Fraud

10.1.1 SLC shall ensure that the risks to which it is exposed, and those to which the Departments are exposed both by virtue of the funds they lend and also by virtue of SLC’s administration, are managed in an appropriate manner and in accordance with relevant aspects of best practice in corporate governance. SLC shall develop a risk management strategy to be approved by the Board and the Departments. The risk management strategy should be drawn up in accordance with the Treasury guidance Management of Risk: Principles and Concepts and regularly be reviewed by the Board and the Audit and Risk Committee. The Board should enable effective arrangements to be put in place to provide assurance on risk management in line with its responsibilities outlined at sections 8.2.2 and 8.2.3.

10.1.2 SLC should adopt and implement policies and practices to safeguard itself against fraud and theft. SLC should act in line with the Treasury’s guidance on tackling fraud (including procedures and considerations as set out in Managing Public Money Annex 4.9); guidance as issued by the Counter Fraud Function; the Counter Fraud Functional Standard; SLC’s Tackling Fraud Strategy; SLC’s Customer Compliance Statement of Intent and other published fraud management policies. It should also take all reasonable steps to appraise the financial standing of any firm or other body with which it intends to enter into a contract or give grant or grant-in-aid.

10.1.3 SLC shall keep records of, and prepare and forward to the Sponsor Department, an annual report on fraud and theft suffered by SLC and notify of any unusual or major incidents as soon as possible. SLC should also report detected loss from fraud, bribery, corruption and error, alongside associated recoveries and prevented losses, to the counter fraud centre of expertise in line with the agreed government definitions as set out in Counter Fraud Functional Standard.

10.2 Internal Audit

10.2.1 SLC will establish and maintain arrangements for internal audit. The internal auditors shall provide an objective assurance to the SLC Accounting Officer and the Board on the adequacy and effectiveness of the SLC system of governance, risk management and control as required.

10.2.2 SLC shall:

• ensure that any arrangements for internal audit are in accordance with the Public Sector Internal Audit Standards (PSIAS) as adopted by HM Treasury;
• ensure the Sponsor Department is satisfied with the competence and qualification of the Head of Internal Audit, in line with requirements for approving appointments in accordance with PSIAS;
• share with the Sponsor Department relevant information, reports and outputs identified during the audit process following consultation with the Audit and Risk Committee;
• set up an Audit and Risk Committee in accordance with the ‘Code of Good Practice for Corporate Governance’ and the ‘Audit Committee Handbook’; and
• forward the audit strategy, periodic audit plans and annual audit report, including opinion on risk management, control and governance as soon as possible, following consultation with the Audit and Risk Committee, to the Sponsor Department.

10.2.3 Internal auditors shall have a right of access to all documents, systems and SLC personnel to provide information on relevant matters.

10.2.4 Further detail on audit services will be contained within the Audit Charter, to be agreed annually by the Audit and Risk Committee.

10.3 External Audit

Appointment of external auditor

10.3.1 SLC is a company limited by shares and is therefore responsible for appointing its own external auditor. The Companies Act 2006 allows the Comptroller & Auditor General (“C&AG”) to carry out statutory company audits of Executive NDPBs. As an Executive NDPB and government company, SLC may be subject to audits by the C&AG. SLC may also appoint other suitably qualified external auditors as agreed with the Sponsor Department.

10.3.2 SLC shall appoint auditors in compliance with the Companies Acts and in cognisance of relevant government guidance, in particular this DAO letter dated 17 January 2008. The DAO letter sets out that the expectation in central government is that the C&AG is appointed auditor for companies limited by shares. As set out in the DAO letter, should SLC appoint an auditor who is not the C&AG, it shall account for its reasons for preferring another auditor and seek the approval of shareholders and otherwise inform the Sponsor Department and the National Audit Office. SLC shall ensure that its auditor shall furnish the Departments, and other relevant bodies, with regulatory compliance reports and any other reports deemed appropriate at the commencement of the audit and as compatible with the independent auditor’s role. SLC’s Audit and Risk Committee should periodically review the company’s external auditors in line with best practice.

10.3.3 The external auditor:

• has a right of access to relevant documents, including those held by another party in receipt of payments or grants from SLC;
• will, on request, share with the Departments information identified during the audit process and the audit report (together with any other outputs) at the end of the audit, in particular on issues impacting on the Departments’ responsibilities in relation to financial systems within SLC; and
• will, where asked, provide the Departments with Regulatory Compliance Reports and other similar reports which Departments may request at the commencement of the audit and which are compatible with the independent auditor’s role.

C&AG

10.3.4 The C&AG may carry out examinations into the economy, efficiency and effectiveness with which SLC has used its resources in discharging its functions. For the purpose of these examinations the C&AG has statutory access to documents as provided for under section 8 of the National Audit Act 1983. In addition, SLC shall provide, in conditions to grants and contracts, for the C&AG to exercise such access to documents held by grant recipients and contractors and sub-contractors as may be required for these examinations; and shall use its best endeavours to secure access for the C&AG to any other documents required by the C&AG which are held by other bodies.

Right of access

10.3.5 The Departments have the right of access to all SLC’s records and personnel for any purpose including, for example, sponsorship audits and operational investigations.

11. Complaints and Appeals

11.1 SLC shall ensure it has in place appropriate processes to manage complaints about its services. SLC shall also ensure it has an appeal process to review decisions of SLC in relation to entitlement and/or eligibility to student finance based on its interpretation of relevant law, regulations and policy. This includes the process for referral to an external independent assessor whose task is to review complaints and appeals. External independent assessors shall be appointed by, and will report annually to, the Responsible Minister and the Welsh Ministers on behalf of all the Departments.

11.2 The resulting processes for handling complaints and appeals and the detailed Terms of Reference for external independent assessors should be made publicly available on gov.uk. SLC is responsible for ensuring effective liaison with independent assessors, and that recommendations made by them are followed unless otherwise directed by the Departments.

12. Management and Financial Responsibilities

12.1 Managing Public Money and Other Government-wide Corporate Guidance and Instructions

12.1.1 SLC shall:

• follow the principles, rules, guidance and advice in Managing Public Money referring any difficulties or potential bids for exceptions to the Sponsor Department in the first instance;
• comply with guidance at Annex B and applicable government functional standards (including those concerning finance, commercial and counter fraud);
• comply with the principles and provisions of the Corporate Governance in Central Government Departments Code of Good Practice and the Financial Reporting Council’s UK Corporate Governance Code, to the extent appropriate and applicable to SLC;
• provide an account of corporate governance in its annual governance statement, in accordance with Managing Public Money Annex 3.1, including the Board’s assessment of its compliance with the Financial Reporting Council’s UK Corporate Governance Code with explanations of any material departures. To the extent that SLC intends to materially depart from this Code the Sponsor Department should be notified in advance.

Management of grant-in-aid funding for SLC’s administration costs

12.1.2 Once the administrative budget has been approved by the Departments and subject to any restrictions imposed by Departments or this Framework Document, SLC shall have authority to incur expenditure approved in the budget without further reference to the Departments, on the following conditions:

• SLC shall comply with its financial delegations set out by the Sponsor Department . These delegations shall not be altered without the prior agreement of the Sponsor Department;
• SLC shall comply with guidance regarding novel, contentious or repercussive proposals;
• inclusion of any planned and approved expenditure in the budget shall not remove the need to seek formal approval from the relevant Department(s) where any proposed expenditure is outside the delegated limits; or is for new schemes not previously agreed by the Departments; and
• SLC shall provide the Departments with such information about its expenditure on operations, performance, individual projects or other expenditure or activities as the Departments may reasonably require.

Management of Departmental funds: payments to and collections from customers

12.1.3 SLC shall have authority to make payments to, and collect repayments from, third parties in respect of approved activities set out in the Register of Functions (for example, as loans or grants, referred to collectively in this Framework Document as “Grant”) without further reference to the Departments. SLC shall comply with all applicable statutes and regulations governing such payments and repayments in relation to the approved activities set out in the Register of Functions published on gov.uk.

Income from other sources

12.1.4 SLC may receive income from sources other than the Departments. SLC shall only receive income in respect of functions or activities approved by the Departments and included in the Register of Functions. Any fees or charges for any services supplied by the Company shall be determined in accordance with the Treasury’s Fees and Charges Guide at Chapter 6 of Managing Public Money.

12.1.5 SLC shall adhere to relevant state aid regulations and shall provide the Departments with such information on other income as the Departments may reasonably require. SLC shall provide the Departments with forecasts of expected income from other sources for approval in line with the Corporate Planning process outlined in section 12.2.

12.1.6 SLC should not assume that Departments will increase grant-in-aid in response to shortfalls against approved income; or that it may retain any income in excess of the approved level without a corresponding reduction in grant-in-aid from Departments. HMT approval to net off would also need to be received.

Management and ownership of assets

12.1.7 Outstanding student loan balances are not assets of the Company, but remain under the ownership of the relevant Department or private owner.

12.1.8 Any intellectual property generated by SLC utilising funding provided pursuant to or in connection with this Framework Document (“Grant-Funded Intellectual Property”), including computer software developed specifically to support the functions delegated by the Departments, shall vest in the Crown and SLC will enter into or execute such documentation as may be requested by the Sponsor Department to properly vest all Grant-Funded Intellectual Property in the Crown. The Departments have equal access to any such intellectual property.

12.2 Corporate and Business Planning and the APRA

Corporate Plan

12.2.1 SLC shall submit annually to the Sponsor Department a draft of the Corporate Plan covering three years ahead, unless explicitly agreed otherwise by the Sponsor Department. The draft should be submitted in time for the Corporate Plan to be published at the start of each financial year. SLC shall agree with the Sponsor Department the issues to be addressed in the Corporate Plan and the timetable for its preparation. The Corporate Plan shall reflect SLC’s statutory and/or other duties and, within those duties, the priorities set from time to time by the Responsible Minister (including decisions taken on policy and resources in the light of wider public expenditure decisions). The Corporate Plan shall demonstrate how SLC contributes to the achievements of the Departments’ priorities. The Chair shall have responsibility for overseeing the formulation of SLC’s Corporate Plan in accordance with paragraph 8.4.3 of this Framework Document.

12.2.2 SLC shall agree with the Sponsor Department a timetable and process for completion and agreement of the Corporate Plan, which should include the following matters:

• an analysis of SLC’s current and future operating context, and a demonstration of how SLC contributes to the Departments’ objectives;
• SLC’s aims and objectives;
• an outline of the underpinning strategies;
• proposed success measures; and
• principal delivery milestones across the period.

Annual Business Plan

12.2.3 The first year of the Corporate Plan shall form the basis of SLC’s Annual Business Plan. The Annual Business Plan, or a summary or digest thereof, should be published online and provided to SLC staff.

12.2.4 SLC will draft an Annual Business Plan, which will be incorporated into the Corporate Plan, and will set out:

• how SLC will deliver its objectives, targets and the Departments’ priorities, along with principal delivery milestones for the year ahead;
• the agreed change projects and programmes;
• principal risks that may significantly affect the execution of the Annual Business Plan;
• how SLC’s performance will be measured; and
• how resources will be aligned with priorities, including detailed financial annexes which confirm for each Department:
  • an estimate of the resources required to deliver the objectives in the Annual Business Plan, plus any developmental work, feasibility studies or other relevant matters agreed with Departments;
  • approved funding provision and any forecast receipts, as set out in the APRA; and
  • details of any specific efficiency savings targets that Departments may set.

The APRA

12.2.5 Prior to the first day of the financial year, the Responsible Minister will send to the Chair of the Board, a letter that sets out the responsibilities of SLC’s Chair and Non-Executive Directors in the context of the Departments’ high level priorities for SLC (the “Chair’s Letter”).

12.2.6 The Chair’s Letter will set out SLC’s strategic direction, objectives and high-level change policies.

12.2.7 At the same time, an APRA will be sent by the DfE Director General to SLC’s Chief Executive as Accounting Officer, detailing the responsibilities of SLC’s Chief Executive and wider Executive Leadership Team. The APRA letter will include confirmation of SLC’s delegated budgets and the agreed performance measures and associated targets for the financial year.

12.2.8 The APRA will confirm on behalf of the Departments:

• performance targets which the Departments require SLC to meet in that year;
• a formal statement of the annual budgetary provision allocated by the Departments determined in the light of competing priorities across the Departments and of any forecast income approved by the Departments;
• a statement confirming the Accounting Officer’s financial delegation and delegated statutory functions; and
• if available, indicative funding for the remaining years of the current Spending Review allocation.

12.2.9 Any changes to priorities, funding or performance measures which are required during the year will be communicated to SLC through the issue of a supplementary APRA letter. This may be issued by senior officials or Ministers within each department, as deemed appropriate.

12.2.10 Subject to any commercial considerations the Corporate Plan and Annual Business Plan should be published by SLC on its website and separately be made available to staff.

12.3 Grant in Aid

Grant-in-aid funding for SLC’s administration costs

12.3.1 Payment of grant-in-aid will be conditional on SLC abiding by the terms of this Framework Document and any conditions set out in the APRA.

12.3.2 Any grant-in-aid provided by the Departments for the year in question will be voted in the Departments’ Supply Estimate and be subject to the control of the relevant Parliament or Assembly.

12.3.3 The grant-in-aid will normally be paid in monthly instalments on the basis of written applications. SLC will comply with the general principle, that there is no payment in advance of need. Cash balances accumulated during the course of the year from grant-in-aid or other Exchequer funds shall be kept to a minimum level consistent with the efficient operation of SLC. Grant-in-Aid not drawn down by the end of the year shall lapse. Subject to approval by Parliament of the relevant estimates provision, where grant-in-aid is delayed to avoid excess cash balances at the year-end, SLC should contact each Department to confirm their ability to make available in the next financial year any such grant-in-aid that is required to meet any liabilities at the year end, such as creditors.

Banking arrangements

12.3.4 SLC operates its banking arrangements in accordance with the government banking service. SLC shall keep separate bank accounts for grant-in-aid, Grant funding for onward payment and repayments of loans or grants. The bank accounts for Grant funding and repayments of loans shall be held on trust for the Departments. SLC shall not vire money between the account for grant-in-aid and either of the other accounts which are held on trust. The Accounting Officer is responsible for ensuring SLC operates a banking policy as set out in Managing Public Money and ensuring that this policy is complied with.

12.3.5 Separate arrangements may apply in the event of SLC administering sold loans on behalf of one or more of the Departments for the benefit of the purchaser(s) of sold loans, in accordance with the terms of any agreement between the Department(s) and any purchaser(s). The terms of the agreement will be agreed between the Department(s) and SLC in advance of any sale.

12.3.6 SLC should only hold money outside Government Banking Service accounts where a good business case can made for doing so and HM Treasury consent is required for each account to be established. Only commercial banks which are members of relevant UK clearing bodies may be considered for this purpose.

12.4 SLC Customer Payments

Grant funding for onward disbursement

12.4.1 Separate Grant for specific purposes will be made available by the Departments for disbursement (e.g. in the form of loan or grant payments) either to customers or to organisations on the customers’ behalf.

12.4.2 Grant funding will normally be paid to SLC in monthly instalments on the basis of written applications. SLC will provide evidence that the Grant was used for the purposes authorised by the Departments or stakeholders. SLC shall not have uncommitted Grant funds in hand and shall minimise cash balances between financial years.

Repayments of loans

12.4.3 SLC shall return to the Departments, net of cash refunds, all cash repayments received directly by SLC in respect of loans; recoveries against any penalties, costs or expenses which have been charged or added to a borrower’s loan account; and any cash amounts recovered from grant overpayments. SLC shall be liable to return to Departments only repayments which it actually recovers.

12.4.4 In the event of any future loan sale by one or more Departments pursuant to the Sale of Student Loans Act 2008, separate arrangements may apply in accordance with the terms of the agreement between the Department(s) and any loan purchaser(s) and the requirements of any regulations made pursuant to section 22 of the Teaching and Higher Education Act 1998.

12.5 Reporting Performance to Departments

Performance monitoring and review arrangements

12.5.1 SLC shall operate management, information and accounting systems that enable it to review in a timely and effective manner its financial and non-financial performance against the budgets and targets set out in the Corporate Plan and Annual Business Plans.

12.5.2 SLC shall inform the Sponsor Department promptly of any changes that make achievement of objectives more or less difficult. It shall report its financial and non-financial performance, including performance in helping to deliver the Departments’ policies, and the achievement of its principal objectives to its Board on a monthly basis. The Departments may also set out other management information requirements in the APRA.

12.5.3 A meeting with the Chair and Chief Executive will be held at least twice a year to review SLC’s performance. The Responsible Minister will conduct at least one of these performance reviews on behalf of all Departments; other reviews may be held by the Biannual Shareholders’ meeting where all shareholders are present and represented. SLC shall provide the Sponsor Department with a report of its financial and non-financial performance in advance of these performance reviews.

Financial monitoring information required by the Departments

12.5.4 SLC shall provide such financial information as the Departments may reasonably require, which shall include as a minimum (monthly unless otherwise stipulated by any Department), the following:

• information relating to SLC Customer Payments:
  • its drawdown and forecast outturn of Grant for loans and grants;
  • repayments received on behalf of the Departments; and
  • quarterly details on loans outstanding administered by SLC on behalf of the Departments;
• SLC’s cash requirements;
• its draw-down of grant-in-aid; and
• forecast outturn by resource headings.

12.5.5 The format of the information to be provided will be agreed with the Departments from time to time.

Data Protection

12.5.6 Any data held by SLC about its customers, sponsors and/or other organisations will be processed in accordance with SLC’s Privacy Policy, as amended from time to time. All data will be controlled and processed in accordance with relevant data protection legislation, including provisions for controlling data jointly with the relevant Department(s).

Executive NDPB/Department working level liaison arrangements

12.5.7 Officials of the Sponsor Department and relevant personnel in the Devolved Administrations will liaise regularly with SLC’s officials to review performance against plans, achievement against targets and expenditure against its Departmental Expenditure Limit and Annual Managed Expenditure allocations (as defined in Manging Public Money). Departmental officials will also take the opportunity to explain wider policy developments that might have an impact on SLC.

12.5.8 The Department and SLC will seek to resolve any disputes through an informal process in the first instance. If this is not possible, then a formal process, overseen by the Senior Sponsor, will be used to resolve the issue. Failing this, the Senior Sponsor will ask the relevant policy Director General to oversee the dispute. He or she may then choose to ask the Permanent Secretary to nominate a non-executive member of the Department’s Board to review the dispute, mediate with both sides and reach an outcome, in consultation with the Secretary of State for Education.

12.5.9 Where a request for information is received by a party under the Freedom of Information Act 2000, the party receiving the request will consult with the other party or parties prior to any disclosure of information that may affect their respective responsibilities.

12.6 Delegated Financial Authorities

12.6.1 SLC’s delegated financial authorities are set out by the Sponsor Department. SLC’s delegated financial authorities may be updated and superseded by later versions which may be issued by the Sponsor Department in agreement with HM Treasury. In line with Managing Public Money Annex 2.2, these delegations will be reviewed on an annual basis.

12.6.2 SLC shall obtain the Sponsor Department’s, and where appropriate HM Treasury’s, prior written approval before:

• entering into any undertaking to incur any expenditure that falls outside its delegated financial authorities or which is not provided for in SLC’s annual budget as approved by the Departments;
• incurring expenditure for any purpose that is or might be considered novel or contentious, or which has or could have significant future cost implications;
• making any significant change in the scale of operation or funding of any initiative or particular scheme previously approved by the Departments;
• making any change of policy or practice which has wider financial implications, either for SLC or the Departments, that might prove repercussive or which might significantly affect the future level of Grant or grant-in-aid required; and
• carrying out policies that go against the principles, rules, guidance and advice set out in Managing Public Money.

12.6.3 Where the Sponsor Department makes any changes to delegated financial authorities or departmental approvals for spend, it shall inform SLC promptly in writing.

Novel, contentious and repercussive expenditure

12.6.4 There is no formal definition of “novel contentious, and repercussive”, although Managing Public Money provides guidance with respect to interpretation. In practice whether something is considered novel, contentious or repercussive will vary from case to case and should involve early and close engagement with the Sponsorship Team. Being novel, contentious or repercussive in itself does not mean a proposal should not be undertaken, but it will require careful consideration and escalation to the Sponsor Department and HM Treasury, to ensure there is a mutual understanding of risk. Novel, contentious and repercussive expenditure will always require approval of the Sponsor Department and HM Treasury.

12.6.5 Novel transactions are those of which SLC has no experience, or are outside its range of normal business.

12.6.6 Contentious transactions are those that might cause criticism of SLC by Parliament, the public or the media.

12.6.7 Repercussive transactions are those likely to cause pressure on SLC to take a similar approach and hence have wider financial implications.

12.6.8 The above definitions are intended as guidance. If there is any doubt as to whether transactions are novel, contentious or repercussive, SLC shall consult the Sponsor Department, who shall engage with HM Treasury as required.

13. Procurement

13.1 SLC shall ensure that its procurement policies are aligned with and comply with any relevant UK or other international procurement rules and in particular the Public Contracts Regulations 2015 and/or the Public Contracts (Scotland) Regulations 2015 as applicable (as amended or replaced from time to time).

13.2 SLC shall establish its procurement policies and document these in a Commercial Manual.

13.3 In procurement cases where SLC is likely to exceed its delegated authority limit, approval for the specific planned purchase must be sought from the Sponsor Department.

13.4 Goods, services, and works should be acquired by competition. Proposals to let single-tender or restricted contracts shall be limited and exceptional, and a quarterly report explaining those exceptions should be sent to the Sponsor Department.

13.5 Procurement by SLC of works, equipment, goods, and services shall be based on, a full option appraisal and value for money i.e. the optimum combination and whole life costs and quality (fitness for purpose).

13.6 SLC shall a) engage fully with the Sponsor Department and Government wide procurement initiatives that seek to achieve value for money from collaborative projects, b) comply with all relevant Procurement Policy Notes issued by Cabinet Office and c) co-operate fully with initiatives to improve the availability of procurement data to facilitate the achievement of value for money.

13.7 SLC shall comply with the Commercial and Grants Standards as applicable. These standards apply to the planning, delivery, and management of government commercial activity, including management of grants in all departments and arm’s length bodies, regardless of commercial approach used and form part of a suite of functional standards that set expectations for management within government.

14. Staff

14.1 Responsibilities towards Staff

14.1.1 SLC shall, within approved arrangements from the Responsible Minister and HM Treasury as applicable, have responsibility for the recruitment and retention of its staff.

14.1.2 The broad responsibilities toward its staff are to ensure that:

• the rules for recruitment and management of staff create an inclusive culture in which diversity is fully valued;
• appointment and advancement is based on merit: there is no discrimination on grounds of gender, gender reassignment, marital status, pregnancy, maternity, sexual orientation, race, colour, ethnic or national origin, religion, disability, community background, or age;
• the level and structure of its staffing, including grading and staff numbers, are appropriate to its functions and the requirements of economy, efficiency and effectiveness;
• individual performance objectives and pay and incentives are aligned with the Corporate Plan and Annual Business Plans;
• the performance of its staff at all levels is appraised and SLC’s performance measurement systems are reviewed from time to time;
• its staff are encouraged to acquire the appropriate professional, management and other expertise necessary to achieve SLC’s objectives;
• proper consultation with staff takes place on issues affecting them;
• adequate grievance and disciplinary procedures are in place;
• whistle-blowing procedures consistent with the Public Interest Disclosure Act are in place; and
• a code of conduct for staff is in place based on the Cabinet Office’s Model Code for Staff of Executive Non-departmental Public Bodies (set out in Annex A of chapter 5 of Public Bodies: A Guide for Departments).

14.2 Pay and Conditions of Service

14.2.1 SLC’s staff are subject to levels of remuneration within the general pay structure approved by the Sponsor Department and based on Treasury Civil Service Pay Guidance. SLC shall abide by public sector pay controls, including the relevant approvals process dependent on the organisation’s classification as detailed in the Senior Pay Guidance and the public sector pay and terms guidance.

14.2.2 Staff terms and conditions, including SLC’s policies on travel and expenses, should be set out in an Employee Handbook, which should be provided to the Sponsor Department together with subsequent amendments.

14.2.3 The travel expenses of Board Members shall be tied to the rates allowed to senior staff of SLC. Reasonable actual costs shall be reimbursed.

14.2.4 SLC shall operate a performance-related pay scheme that shall form part of the annual aggregate pay budget approved by the Sponsor Department and Treasury, where relevant with due regard to the senior pay guidance.

14.3 Pensions, Redundancy and Compensation

14.3.1 SLC’s staff shall normally be eligible for a pension provided by Civil Service Pensions (MyCSP) and/or other schemes approved by the Sponsor Department. Any proposal by SLC to move from the existing pension arrangements will require approval of the Sponsor Department.

14.3.2 Any intention by SLC to amend its agreed severance scheme, requires the prior approval of the Sponsor Department.  Proposals on any redundancy exit exercises should be shared with the Sponsor Department for information and SLC must seek the necessary approvals from the Cabinet Office to conduct a redundancy exit scheme. Any exit scheme must also comply with the rules in Chapter 4 of Managing Public Money.

15. Review of Executive NDPB

15.1 SLC’s mission and status will be reviewed from time-to-time by the Responsible Ministers in consultation with the Devolved Administrations. In line with Cabinet Office policy, SLC will be reviewed at least once in the lifetime of each Parliament, or sooner in the event of a significant change in the scope or direction of its primary aims.

16. Winding Up Arrangements

16.1 The Sponsor Department shall put in place arrangements to ensure the orderly winding up of SLC. In the event that SLC is wound up, the Sponsor Department should ensure that the assets and liabilities of SLC are passed to any successor organisation and accounted for properly. If there is no successor organisation, the assets and liabilities should revert to the Sponsor Department for disposal in consultation with the Devolved Administrations.

16.2 To this end, the Departments shall:

• have regard to Cabinet Office guidance on dissolving a public body;
• ensure that procedures are in place in SLC to gain independent assurance on major transactions, financial commitments, cash flows and other information needed to handle the wind-up effectively and to maintain the momentum of work inherited by any residuary body;
• specify the basis for the valuation and accounting treatment of SLC’s assets and liabilities;
• ensure that arrangements are in place to prepare closing accounts and pass to the C&AG for external audit, and that funds are in place to pay for such audits. It shall be for the C&AG to lay the final accounts in Parliament, together with his or her report on the accounts;
• arrange for the most appropriate person to sign the closing accounts. In the event that another arm’s length body takes on the role, responsibilities, assets and liabilities, the succeeding accounting officer of that arm’s length body should sign the closing accounts. In the event that the Sponsor Department inherits the role, responsibilities, assets and liabilities, the Sponsor Department’s Accounting Officer should sign.
• SLC shall provide the Departments with full details of all agreements where SLC or its successors have a right to share in the financial gains of developers. It should also pass to the Departments details of any other forms of claw-back due to SLC.
• SLC will also inform the Departments promptly, and in any event prior to any formal winding up or liquidation of the firm, of any contractual liabilities to any party to which they are subject which might be breached by such winding up or liquidation and of any on-going, pending or contemplated litigation against the company.

17. List of Annexes to the Framework Document

• Annex A - Memorandum of Understanding: Agreed Split of SLC’s Governance Responsibilities between the Departments.
• Annex B – Guidance

WE AGREE TO ENTER INTO THIS FRAMEWORK ON THE TERMS STATED ABOVE

Anne Spinali

Director for HE Reform and Funding

Signed and dated 04 August 2022

(On behalf of the Secretary of State for Education)

Roddy Macdonald

Deputy Director of Higher Education and Science Division (HES)

Signed and dated 04 August 2022

(On behalf of the Higher Education and Science Division of the Scottish Government)

Sinead Gallagher

Deputy Director of Higher Education Division

Signed and dated 03 August 2022

(On behalf of the Skills, Higher Education and Lifelong learning Directorate of the Welsh Government)

Trevor Cooper

Director of Higher Education Policy and Finance

Signed and dated 01 August 2022

(On behalf of the Department for the Economy in Northern Ireland)

Peter Lauener

Chair of the SLC Board

Signed and dated 09 August 2022

(On behalf of the Student Loans Company Ltd)

Paula Sussex

Chief Executive of SLC

Signed and dated 09 August 2022

(On behalf of the Student Loans Company Ltd)