Capita, which administered ILAs until they were abruptly closed last year, is expected to be chosen to run the scheme’s replacement. But many of the companies which did the training have been driven to financial hardship and bankruptcy by the sudden removal of funding.

John Healey, adult learning and skills minister, told MPs on the education and skills select committee on Tuesday there will be no compensation for the trainers.

When the committee met again on Wednesday, its Labour chairman Barry Sheerman, said: “The minister was as hard-hearted as Scrooge before his conversion. It seems unfair that ministers have got a good cosy relationship with (Capita) yet other businesses they don’t seem to care about.”

Paddy Doyle, group board director of Capita, admitted the company was “embarrassed” by its mistakes but stressed its performance with ILAs was not typical. “Otherwise our share price would not be as healthy as it is,” he said.

Labour’s David Chaytor challenged the company about whether it might have benefited financially from the lack of control over unsatisfactory providers, because its income partly related to the number of accounts set up.

“So, as the scheme got out of hand, there was a financial advantage to Capita,” he said. “Is that why you didn’t shout earlier?”

Mr Doyle denied this. “That is quite absurd,” he said. “That is not how we go about making a profit.”

Asked what needs to be done to protect ILAs’ replacement, he said: “I think the biggest single factor was that the business model proved to be wrong, in terms of non-bureaucratic systems with an IT system mirroring the openness.”

Referring to the events since ILAs were closed, he said: “We have worked closely with the department. We have been tested over recent months. I think we came through this not too badly.”

The committee’s report is expected by the end of next month.

Healey’s evidence to the committee, 38