Student Grants and Loans: Fraud (Hansard, 8 February 1995)

Lord Lucas
My Lords, local education authorities, the Student Loans Company, the Universities and Colleges Admissions Service, the Department for Education and the police are all taking action to identify and eliminate fraudulent grant applications.

Lord Campbell of Croy
My Lords, I am grateful to my noble friend for that reply. Can he confirm recent reports in the press of organised widespread criminal activity, including forgery and invention of non-existent students? If they are correct, should not counter-measures be accelerated since the money lost could be used to help genuine students who are finding it difficult to make ends meet?

Lord Lucas
My Lords, I can confirm that over the past year or two we have been aware that there has been a considerable increase in fraudulent applications for grants and loans. We have, along with the authorities that I mentioned in my first reply, taken substantial measures to combat this, including the recently announced grant to UCAS of £120,000 to develop further the measures that it already takes. I would of course be reluctant to go into any details as to what measures are being taken since that information could only help people to succeed where we hope they will not.

§ Baroness David
My Lords, can the Minister give us a real assurance that the Student Loans Company is itself being well run and there has been no corruption there at all, because there have been allegations that it is being run appallingly badly? Can he give us any reassurance that those faults have been corrected?

Lord Lucas
My Lords, as those who attended Monday's debate last week will be aware, we very much regret the administrative problems at the Student Loans Company which caused inconvenience to tens of thousands of students. I can confirm what I said then, that those problems have now been overcome and that we are putting considerable efforts into making sure that they do not re-occur. The noble Baroness mentioned the subject of fraud. As she will know, Coopers are conducting a forensic audit into certain matters which have been brought to our attention by a former employee of the Student Loans Company. I do not wish 210 before that report is made public to comment in any detail but I can say that they are matters more of principle than of amount.

§ Lord Hailsham of Saint Marylebone
My Lords, can my noble friend give the House some indication in figures of the extent of this abuse?

Lord Lucas
My Lords, the Audit Commission believes that the total of identified fraud is about £2.3 million. It is inevitable that there will be some unidentified fraud but given the efforts we are making we do not believe that that is particularly large.

§ Lord Dormand of Easington
My Lords, how many applications are found to be fraudulent?

Lord Lucas
My Lords, I can give the noble Lord the figures for the Student Loans Company. In 1993–94 there were 67 proven cases of fraud and in 1994–95 to date there have been 41 cases.

§ Lord Morris of Castle Morris
My Lords, what assurance can the Minister give the House that the £120,000 over two years given to UCAS to set up computerised tracking devices is going to be enough to crack this problem in two years? If the answer is that he cannot be certain, will he now give us a commitment that appropriate support to UCAS will continue until this fraud is eliminated; and can he further confirm that universities will not be put to additional expense in solving this problem which is none of their making?

Lord Lucas
My Lords, of course I cannot give the detailed confirmation that the noble Lord asks for. However, I can say that we treat the problem extremely seriously and will do all that is reasonably in our power to eliminate it.

§ Lord Boardman
My Lords, my noble friend referred to proven cases. Can he say whether there have been any prosecutions and with what result?

Lord Lucas
My Lords, I am afraid I do not have the information my noble friend asks for, but I shall write to him.

§ Lord Orr-Ewing
My Lords, can my noble friend remind the House what percentage of total student grant applications are fraudulent?

Lord Lucas
My Lords, the answer is something less than a tenth of 1 per cent.