Giving evidence to the Scottish Parliament's audit committee on the first ILA scheme, Eddie Frizzell, head of the Executive's lifelong learning department, said that it had been led from south of the border and "with hindsight" that was a mistake.
The first scheme collapsed amid police investigations into fraudulent claims by some learning providers and was withdrawn in Scotland at the end of 2001. Mr Frizzell's department was criticised in a report by the Auditor-General earlier this year for its lax attitude towards the scheme.
He told the committee: "The new ILA scheme will be very much an ILA Scotland scheme. There are no plans for a parallel scheme in England. The scheme will be designed entirely by us and we will implement it in our own way."
Mr Frizzell confirmed that ILA mark two, designed to get more people into learning with the help of a Government subsidy and a contribution from the learner, will be targeted on non-traditional groups. It will be administered by the Student Awards Agency for Scotland rather than the private Capita Business Services which ran the first scheme.
Mr Frizzell was told by George Lyon, Liberal Democrat MSP for Argyll and Bute, that he had bumped into an ILA provider on the ferry two years ago who told him he had enrolled six people, done some training for them and then sent a bill to Capita.
"The cheque came to him but no one checked whether he had delivered the learning or even whether he was able to deliver it."
Mr Frizzell said "a quality control problem undoubtedly existed". The lifelong learning department may have paid out pound;1.2 million in false claims. It is withholding some pound;3 million from 40 providers until checks are carried out.