More than a third of the money spent on the defunct Individual Learning Accounts went on fraud or payments which broke the rules of the scheme, Parliament has been told.

The latest report on the fiasco from the National Audit Office said the mis-spent money was estimated as likely to total some �97m.

The Department for Education and Skills is still unable to estimate how much it will be able to recover.

The amount spent on the scheme was �273m - �70m more than its budget.

Rules broken

According to the audit office report, the cost of fraud and serious irregularities, based on estimates and extrapolations by the department, may be up to �67m.

In addition, the department estimated it had made irregular payments of some �30m.

This is where good quality learning was delivered but the payments did not fully meet the rules.

An example would be where the learning provider did not seek from the learner the full contribution they were supposed to make to their training course.

Skills base

"The department will not know the precise extent of the fraudulent activity until its investigations are complete, and this could take up to two years," the report said.

ILAs were supposed to widen participation in learning, especially for those lacking in skills.

In practice many of those who signed up already had good qualifications.

The department closed the scheme with immediate effect in November 2001, following evidence of significant abuse.