The Student Loans Company spent Pounds 1.5 million in the academic year 1993/94 on "computer development costs" - an increase of nearly Pounds 1 million on the previous year's spending.

Douglas Trainer, president of National Union of Students, Scotland, said: "35,000 students were without loans this Christmas. How can this amount of money be spent on a computer system that let us down so badly?" The figures appear in the company's annual report which came out last November without the usual press conference. They reveal that computer development costs rose from Pounds 168,000 in the academic year 1992/93 to Pounds 1,489,000 in 1993/94.

Colin Ward, assistant managing director of the Student Loans Company, denied that the company's problems had been due to any failure of the computer system. "We had a communications, not a programming, problem," he said.

The computer development costs arose because the original system that had been installed in 1990 needed updating. "This is a perfectly normal process," Mr Ward said. "This investment will save us money in the future."

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The figures are represented on a pie chart in the annual report - but appear to bear little relation to the actual shading on the chart. An equally peculiar pie chart appears elsewhere in the report. The company states that 48.1 per cent of students are up-to-date or ahead with repayments - but the shaded area representing this percentage on the pie chart covers more than half the circle.

Mr Trainer said: "Controvery and confusion have surrounded the company in all its operations this year, and the use of inaccurate graphics in the report will do nothing to clear this up."

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Mr Ward said that the inaccurate graphics were simply a mistake. "The charts are just a graphical representation," he said. "The crucial thing is that the numbers printed are accurate."

An audit of the company by Coopers & Lybrand, commissioned by Gillian Shephard, the Secretary of State for Education following allegations of corruption, is nearly complete and will be reported to the Public Accounts Committee.