Training centres could have been ripping off the government for over a year due to poor tracking and reliance on 'honest' self-regulation. PC Advisor has learned the government's Individual Learning Accounts scheme was always wide open to abuse by firms claiming to train people in IT and other skills.

Education and skills secretary Estelle Morris announced yesterday that ILAs would be suspended from 7 December this year after evidence appeared suggesting some companies had been abusing it.

The Department for Education and Skills (DfES) would not comment on how many companies and centres were under investigation but rumours have indicated the figure to be in the region of 250 firms.

"I have concerns about the way some ILAs have been promoted and sold. There is growing evidence that companies are abusing the scheme," said Morris.

The ILA scheme was announced in February last year to encourage people in full- and part-time employment to take up training courses to improve their skills in certain areas, with an emphasis on IT.

The government scheme, open to the first million people who applied, offered a £150 contribution towards one of the appointed schemes to which the account holder would have to add £25 of their own money. This was replaced on 1 August of this year with a discount scheme of up to 80 percent of individuals' contributions to a basic IT scheme.

Industry sources have told PC Advisor that a loophole in the scheme had enabled training centres to claim for ILA contributions for people who had registered for courses but had never actually turned up — money for nothing, when they were only supposed to claim for students who had attended.

The DfES told us that training centres did not receive subsidies until "the learners receive their training".

But the DfES then revealed it is the responsibility of individual centres to keep proof of enrolment and training when they claim for the subsidy. The centres and participating companies have to keep their own records and the DfES only investigates "cases where there is cause for investigation".

Training firms abusing ILA funding is the dark side of this, but other firms have turned the paucity of foresight used when setting up the scheme into sound business ideas.

We discovered computer maker Carrera SSC, for example, was utilising ILA funding to refurbish and sell out-of-lease corporate PCs for £25. The company has shipped over 2,500 refurbished ex-corporate models in the last two weeks alone. Each machine comes installed with three training packages, hence the subsidy. Carrera made around £10 profit per machine.

"People are supposed to go to colleges on training courses, but they don't have the time," said Nicholas Smith, marketing manager at Carrera SSC. "We're packing [our corporate trade-in machines] with the training software so that people can learn at their own pace at home."

Part of Carrera's argument is that PC makers can buy IT training software at a fraction of the amount the government is paying — so firms that simply supply software worth, for example, £50 to £100 can still claim the full £150 subsidy.

One of the key points of ILAs, which the DfES made clear, was that training must take place in a recognised centre, and money must not be used by computer manufacturers to fund the refurbishment of old machines.

"ILAs are intended to fund actual learning, not the equipment to facilitate learning," said a spokesperson at the DfES who regurgitated the rules of the scheme with no reasoning or explanation as to why the government views firms providing more than the scheme was set up to do the same as training firms claiming for ghost students.

But at PC Advisor we think this particular misuse of the scheme has more value than the scheme itself. Not only are people being given the opportunity to learn at home in their own time but they have the opportunity to buy a fairly recent computer for £25.

People who have set up an ILA or want to needn't worry, however. They will still be entitled to funding under the scheme provided the course is booked with an ILA centre before 7 December.