Colleges have been paid tens of millions of pounds to teach students whom they failed to recruit, figures from the Skills Funding Agency (SFA) reveal.
The end-of-year positions for 2011-12, published by the SFA just before Christmas, showed that a net #163;91 million was given to providers for training that never took place. Colleges were responsible for the majority of this - a total of about #163;78 million - with local authority adult learning accounting for most of the rest.
In the worst cases, 23 per cent of some colleges' adult skills allocation went unused. This meant that Southwark College in London, which has now merged with Lewisham College after a financial collapse, was overpaid by #163;2.2 million.
Hertford Regional College, which also failed to deliver 23 per cent of the provision it expected, received an extra #163;1.2 million.
Newcastle College was overpaid by #163;4.7 million, while at South Thames College in London the figure was #163;2.4 million - in both cases, about 12 per cent of the total adult skills budget. Barnsley College missed its target by 20 per cent, or about #163;1.3 million.
K College in Kent, already in financial crisis after a merger left it with deficits as large as #163;16 million, failed to recruit 14 per cent of its allocation.
But the largest single overpayment was to Learndirect, now owned by banking group Lloyds TSB, which received #163;5.3 million above the level of provision it delivered.
Adrian Beddow, PR manager at Learndirect, said that because the under-delivery represented only about 4 per cent of the organisation's #163;122 million allocation, it would not be required to pay it back.
"This money will be reinvested in the organisation as part of our long-term commitment to further improve the quality of adult skills provision in the UK and outcomes for our learners," he said.
Providers that undershot their recruitment targets by more than 3 per cent will have to pay some of the money back, and the SFA is also trying to prevent continued under-delivery in 2013-14 by offering greater allocations to the better performers.
But it has relaxed the rules so that providers that missed the target by 10 per cent or under will not have to pay back the full sum.
The overpayment to providers missing the target by 3 per cent or under, which will not be clawed back, amounts to more than #163;12 million.
A briefing by the Association of Colleges says that colleges are obliged to use any money carried forward to meet student needs for the following year.
It said that the SFA had reduced the amount it paid for colleges' work and the relaxed rules on clawback were intended to give them time to adjust.