The National Audit Office today finally released its long-awaited report into the fiasco that was the Individual Learning Accounts scheme, criticising the government's relationship with professional services provider Capita.

The ILA scheme, launched in September 2000, proved far more popular than was anticipated, with the government's Department for Education and Skills committed to a million account holders over two years. Instead, this figure was reached six months early and by May 2002 takeup had increased by a further 50 percent.

Total expenditure amounted to £273.4m, way over the £199m allocated budget.

But today's report criticises the government's pilot schemes. It says so much time was spent planning the proposals, which proved unpopular with the public and potential providers that tests were rushed. No business model was even drawn up to evaluate the possible costs of the project.

But perhaps the most damning part of the report concerns the NAO's relationship with Capita.

"The risks in effect always remained with the department. The relationship bore little resemblance to a partnership," said the report. "Capita was not involved in the project board and the department left Capita to implement the system.

"The department should have monitored more closely the information supplied by Capita and the escalating demand for accounts, especially given the innovative nature of the scheme and increasing numbers of complaints," it added.

This lack of monitoring meant the department was unaware that 13 providers had registered over 10,000 accounts and 20 had received payments in excess of £1.5m.

The department is currently checking claims for over 560 providers and it still has concerns with 133 providers who have claimed £67m between them. It is likely to be up to two years before this work is completing.

The full report can be viewed here.