An influential House of Commons committee has described the implementation and management of the defunct Individual Learning Account Scheme by the Department of Education and Skills (DfES) as "delinquent" and "appalling".
The DfES handed fraudsters a blank cheque with which to defraud the taxpayer, and ignored advice and warnings from organisations including training companies, colleges of further education and original bidders that the scheme had serious flaws, according to the Public Accounts Committee.
Sir David Normington, Permanent Secretary for the DfES, repeatedly apologised for its mishandling of what he called an "innovative scheme" which could end up costing the taxpayer more than £294m.
"It is a story of inadequate monitoring: a very bad story and I am quite ashamed of it," he told the Committee.
The scheme was set up to bring adult training to a wider audience. But no systematic form of monitoring the credentials of training companies, the validity of the courses or the numbers of people being registered was put in place.
Normington told the Committee that the DfES felt that stringent monitoring procedures would be perceived as bureaucratic, and that this would put training companies and people off registering for the scheme.
The initiative was eventually closed on 23 November 2001. "Alarm bells rang too late," he admitted.
Capita, which provided the IT infrastructure, has persistently denied claims that it was too easy to hack into the system, and defended its position by saying that it had tried to alert the relevant ministers when it became aware of the growing problems.
Ron Aldridge, Capita's executive chairman, explained that he was "mortified" by what had occurred, and claimed that it was quite difficult getting to speak to the relevant minister. "Perhaps we should have shouted louder," he said.
Normington admitted that the full scale of the problem won't be known for two years because of the complex nature of the frauds.
One person has so far been prosecuted, and 151 companies are being investigated for serious fraud.
The whole question of how adult learning is funded has been incorporated into the National Skills Review, expected to be published next June.
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