A government agency has been forced to implement emergency distribution measures after it was revealed that around 150,000 students in England faced delays in receiving financial support designed to help them stay in education.

The Learning and Skills Council (LSC) was responding to administrative problems with a privately hired contractor which had meant that many students from lower income backgrounds faced the prospect of starting the new term without their Education Maintenance Allowance (EMA).

Despite private data handling firm Liberata having a 5 year contract worth around £80 million to oversee the administration of the weekly allowance, the scrapping of an online application process earlier in the summer and consequent problems dealing with paper forms meant that the LSC was forced to intervene to prevent young students being left out of pocket at the start of the new academic year.

Mark Haysom, Chief Executive of the LSC, said “Less well-off students starting courses without funding is simply not acceptable. We’ve arranged for colleges to have access to funds as a matter of urgency so that no student in this situation will lose out.”

“This is a very regrettable and distressing situation. It is a matter of the utmost priority to resolve this issue swiftly.” Mr Haysom added that Liberata had taken on over 400 new staff to deal with problems.

The allowance, available to all 16-18 year olds in further education, is received by around 540,000 young people in the United Kingdom every year, but MPs and student leaders had claimed that the delay could force many to drop courses through financial necessity.

The emergency steps taken by the LSC mean that all further education colleges in England, which attract most of those receiving the awards, will be contacted and offered financial support which will then be passed on to students. The organisation has also said that it will monitor the situation in schools and other institutions with eligible students.

The LSC originally refused to confirm any decision on the allocation emergency funding, instead committing to backdate applications to the date on which a student started their course, in line with the organisation's policy over the last five years.

This prompted South Cheshire College to introduce its own policy to support students financially, with Principal David Collins claiming that punctual delivery of the EMA “can be the difference between students continuing to study or dropping out and getting a low-paid job.”

Similarly, Wes Streeting, President of the National Union of Students called for a full emergency relief programme, saying “It would be immensely helpful if other colleges could do the same [as South Cheshire College] until these delays can be resolved and a full and thorough investigation can be launched."

He added “In the meantime, the Government should guarantee that colleges taking this approach on behalf of their students will be fully reimbursed.”

Whilst it is now expected that all students entitled to the allowance will receive adequate financial support, it is unlikely to prevent criticism of the government’s policy of employing private companies to oversee work related to education, and in particular the role of schools secretary Ed Balls. As well as the problems with the internet based EMA application, technological faults left tens of thousands of primary school pupils in England facing lengthy delays in the marking of their SATs. Both operations fall under the jurisdiction of Mr Balls.

David Laws, the Liberal Democrats schools spokesperson criticised the government's delay in dealing with the problems, saying; “After the shambolic mismanagement of the SATs, this is yet another example of an outside company making an utter mess of delivering an important service to students."

“Ministers may blame private companies for these administrative disasters, but it is the government which is ultimately responsible for ensuring it selects firms capable of delivering.”

He continued “The secretary of state must explain what he is actually doing to sort out this fiasco.”

In a similarly critical statement, Beth Walker, Vice President of Further Education for the NUS said: “every year, students have to struggle through unwieldy levels of bureaucracy to obtain the EMA. The government must keep its side of the bargain by not putting students at risk through bad contracts, shoddy procedures and ropey technology, as has too often been the case in the past."

The problems faced in England will not affect those eligible for the allowance in Scotland, as the administration powers are devolved to the Scottish Parliament. At present, Local Education Authorities are responsible for distribution of the allowances to Scottish students.