Taxpayers' money earmarked to encourage people into education and training is being pocketed by fraudsters and unscrupulous companies that are abusing the flagship individual learning accounts scheme, experts have warned.
Firms offering near-useless, unrecognised training courses, or even fraudsters selling nonexistent courses, have been receiving government grants worth £150 a student through the ILA system.
The government has launched an investigation into wide-ranging allegations of abuse and has changed its rules for registering training providers under the scheme.
Lecturers' union Natfhe has warned that ILA fraud could become a major sleaze scandal as civil servants clamour to meet ambitious targets and proper checks on training providers are overlooked.
As of July, some 1.2 million people had taken out ILAs, which are open to those over 19 years old. Some 800,000 people have spent money from their accounts, which is released directly to registered training providers when students sign up for courses.
The first million account holders received £150 from the government if they invested £25 of their own money. Subsequent account holders have access to discounts of up to 80 per cent for a wide range of training courses.
The Training Standards Council has catalogued numerous cases of abuse, including a company in Warwickshire that has been doorstepping people and asking them to sign up for free educational courses.
Once an individual's signature has been obtained, the companies, as registered training providers under the ILA scheme, are able to claim the ILA grant direct from the scheme's administrators.
"But those who signed up are given... no actual support or real learning opportunities," the TSC will say in the September issue of its magazine, TS Today .
The TSC has reported many similar cases, often with fraudsters purporting to be representing the government, and has issued warnings to the public.
Paul Mackney, general secretary of Natfhe, said: "The problem with targets being set is that everyone becomes committed to seeing it delivered without looking at what lies beneath the figures."
Another area of concern involves companies using the ILA name to attract students.
The "Trinity College and University", a US-registered organisation, is operating within the law by selling mail-order degree certificates under its own name, without requiring its customers to take part in any learning programme or assessments.
The organisation's publicity material says that the college is a UK-registered training body and its customers are entitled to ILA awards. "Your UK government grant is waiting for you to claim it without any conditions or obligations whatsoever," it says.
It is unclear whether Trinity received any taxpayers' money from the ILA system. The college told The THES this week that it is no longer taking new ILA applications and it is "fully accredited as a recognised educational establishment by the Department of Education and Employment".
A spokesman for the Department for Education and Skills was unable to confirm Trinity's claims as The THES went to press. But he said the government had required all registered providers to re-register and sign a set of principles governing areas such as marketing. There will also be more rigorous requirements for all new providers.
Letters have been issued to all providers, warning that cases of abuse would be taken very seriously and a series of audit visits, to the providers that have caused most serious concern, have been initiated. Warnings have also been issued to learners.