MPs have said they are "staggered" by the lack of quality assurance in the government's ill-fated individual learning account scheme, which became the subject of an inquiry this week.
The absence of proper checks allowed fraud to spread "like a virus" among some training providers, causing the government to suddenly adopt a "scorched-earth response", members of the Commons' education select committee claimed.
Department for Education and Skills officials admitted to the committee's inquiry that weak quality controls had contributed to the scheme overspending by £62 million so far - 30 per cent over its £200 million budget.
The cost is likely to rise as the department pays off some of the training providers who had signed up ILA learners shortly before ministers pulled the plug on the programme in November, amid fresh fraud allegations.
Derek Glover, DFES director of adult learning, told the committee that the scheme was designed to encourage new learners who might have no qualifications and to maximise the number of training providers that could take part.
A replacement scheme is planned that would aim to maintain this flexibility while introducing new controls, he said.
Barry Sheerman, the committee's chairman, responded: "It seems an odd aspect of the scheme that there was no quality assurance and no criteria for qualifications."
Mr Glover said the government started to suspect last June that take-up of ILAs that was outstripping predictions was "not a genuine expansion of interest in learning".
It introduced a new "provider agreement" as a condition of registration in an attempt to ensure that all learning providers were genuine. But Peter Lauener, director of the DFES learning delivery and standards group, admitted that third-party selling of ILAs was still allowed "as a way of getting more people into learning".
David Chaytor, Labour MP for Bury North, condemned this as a "Costa Brava timeshare approach" that made it "inevitable that a degree of unscrupulous practice would take place".
Mark Simmonds, Conservative MP for Boston and Skegness, said he was staggered by the lack of quality controls in the scheme.
Roger Tuckett, chief executive of Henley Community Online, said that the government had refused to recognise its provider agreement as a binding contract with legitimate learning providers, putting many of them out of business. He warned that "hundreds, if not thousands" of people working for learning providers would lose their jobs as a result.