Student loans boss was hired despite warnings about his abilities

MINISTERS pressed ahead with the hiring of a Student Loans Company boss despite concerns having been raised about him in the recruitment process, according to the public spending watchdog.

Steve Lamey was appointed chief executive officer in June 2016 but dismissed the following year without compensation for gross misconduct in public office. He was suspended after two staff members made formal allegations about him, and later sacked after it was found he breached guidelines on integrity, objectivity, accountability and leadership as well as the Treasury’s managing public money guidance.

Prior to his appointment, the then Department for Business, Innovation and Skills (Bis) had concerns about Mr Lamey and warned it would be “too risky” to put him in the job. His most recent employer had declined a request to provide references, the National Audit Office (NAO) reported.

He had worked at HM Revenue and Customs until 2012 but after considering his references, Bis officials initially recommended to ministers that the recruitment process should be re-run.

After advice from the special adviser for appointments, who pointed to an appraisal from HMRC that stated his achievements put him “in top performer territory”, and a meeting between Mr Lamey and a minister, Bis revised its advice.

They then included an alternative option of appointing him with an extended probationary period.

During his time as student loans chief, two whistleblowers separately raised concerns about him.

As a result, investigations were carried out into the claims.

Not all of the allegations were upheld but “unacceptable management practices” were found, including some claims of bullying, harassment and poor management behaviour.

Concerns were raised about his language and tone in an appraisal meeting and one of the investigations found that it “amounted to bullying”.

Labour’s Meg Hillier, who chairs the public accounts committee, criticised both government departments for their failings. She said: “This is a story of the failure of two departments to effectively monitor a public body under their watch.

“The concerns raised by officials about Mr Lamey’s appointment should have been taken more seriously by Bis.

“And it shouldn’t have been down to whistleblowers to alert DFE [Department for Education] to Mr Lamey’s wrongdoing.

“The Dfe’s review must make sure this doesn’t happen again.”