The government is promising far tougher security to deter abuse and fraud in designing a scheme to succeed its collapsed individual learning accounts.

A successor scheme will have in place stronger security measures and more rigorous monitoring

Education department

In its response to a highly critical report by MPs, the Department for Education and Skills accepts that there were inadequate checks on those claiming ILA money for providing training.

But it is clearly not close to announcing any new scheme, and is refusing to compensate training providers who lost out when ILAs were halted suddenly last November due to fraud.

The scheme overspent its budget by more than �93m.

The Commons education select committee's report into the handling of Individual Learning Accounts (ILAs), published last month, condemned the department for "serious failings".

Click here for the original report.

The committee said the lack of quality assurance "made it almost inevitable" that the scheme would be abused.

ILAs, which provided accounts worth up to �200 a year, were stopped across the UK at the end of 2001 amid allegations of widespread fraud.

Rigour

The department says tighter checks on learning providers "will be at the heart of the new scheme" - probably with the Learning and Skills Council taking a lead role.

"There will be a rigorous approach to the initial registration and accreditation of providers together with stronger financial controls in a successor scheme," it says.

The ILA scheme was run for the department by management consultants Capita - who gave any training provider who joined the system unlimited access to individuals' accounts.

The department says "a small number of unscrupulous learning providers took advantage of this to abuse the programme".

The scheme was halted when it realised that an unscrupulous provider could trawl through the online accounts database and submit claims for money for anyone on the system whose account had not already been used.

Hindsight

In providing the latest figures on abuse, the department says more than 5,000 such claims were made.

"With the benefit of hindsight, all parties now agree that there was a higher level of risk than was anticipated," the department says.

"A successor scheme will have in place stronger security measures and more rigorous monitoring and management of the security arrangements across the entire operation to guard against those who are intent on mis-use."

What is still not clear from its response is whether the Treasury had a hand in the announcement that the scheme was being initially suspended, before it was shut suddenly due to fraud.

The select committee had said "we cannot know how large a part the desire to rein in over-spending played in the demise of the ILA" - and demanded to see the paperwork.

The department tells the MPs they are not going to get anything more than they have had already.

No compensation

Its forecast of the "final overspend" for the financial years 2000-01 and 2001-02 is �93.6m.

The committee had recommended that the department should at least re-imburse bona fide learning providers who could demonstrate that they had been financially disadvantaged by the accelerated date of closure of the scheme.

The department says it has received some representations from providers for compensation for losses and has some sympathy, but cannot agree.

Up to the end of May, a total of 5,526 claims worth �10.6m had been paid since 21 November.

New scheme

There is no word on the timetable of the successor scheme, other than the constant references to the need for it to be better designed.

At the time the committee's report came out one of the biggest providers of training, Pitman Training, said that if a new scheme was not announced quickly there would be few trainers left to operate it.

The Adult Skills Minister, John Healey, said: "We are now moving closer to settling the design."

But he was moved in the last cabinet shuffle.

The new Adult Learning Minister, Ivan Lewis, is expected to take part in a Commons debate on ILAs on Thursday afternoon - but without announcing any successor scheme.