MPs this week said it was both staggering and bizarre that quality checks were not made on the thousands of training providers who ran the Government’s flagship learning scheme.

They also questioned why no one knew what people achieved when they took out an individual learning account.

The scheme was open to abuse from day one, said MPs. They demanded to know why lessons had not been learned about the dangers of third parties delivering learning. Known as franchising, the practice caused a series of scandals involving colleges between 1993 and 1997.

One MP described the learning accounts scheme as resembling a time-share. Nor, they said, had ministers realised how easily fraud could be committed using computers.

The pound;260 million training subsidy scheme was pulled in December. It left thousands of learners in the lurch and has led to bankruptcies and job losses among the training providers. Ministers said there was evidence of fraud and they had no option but to close the scheme.

This week the education select committee held the first of four special inquiries into the scheme.

Barry Sheerman, chair of the committee, said: “Someone would say it was odd that there was no quality assurance concerning the providers and no check on the quality of what had been achieved. It is quite bizarre.”

Meg Munn, Labour MP, said: Literally anyone could come along, say they could provide training, and say they were up and running ... How were individuals supposed to know someone was a genuinely good provider when nobody else had bothered to check?” Peter Lauener, director of the learning delivery and standards group at the Department for Education and Skills, said individuals had access to advice and made their own choices.

He was asked if the department had over-reacted by closing the scheme. Couldn’t it have just “fixed it” by closing down rogue providers, so the suffering of bona fide providers was unnecessary?

Mr Lauener said that would have been too risky. Some providers would just have registered under a different name.

Caroline Lambie, from training provider Hairnet, said she was shocked that there was no vetting. This enabled abuse to take place, but also damaged the concerns of legitimate providers.

James O’Brien, of the Association of Computer Trainers, was the whistleblower who first revealed the fraud. “All of this was avoidable. The lack of quality control could have been corrected very easily. They could have the learning providers make themselves known to local learning and skills councils.”

He was critical of Capita which handled the central database. The enrolment form was one page with name, address and bank account. “It had a tick box. If you ticked it the money was paid.” Once learners had their password they could tap into anyone else’s number. Money just disappeared, he said.

All the learning providers supported the idea of ILAs but said there had to be compensation for people whose business had been affected - and they wanted a date for when a successor scheme would be implemented.