Millions of pounds unclaimed by employers for Train to Gain were diverted to pay for university student grants, government accounts show. Train to Gain, which was intended to be a central part of efforts to give Britain world-class skills by offering free training through the workplace, failed to attract the expected number of employees last year, and more than pound;200 million went unspent, as FE Focus reported last month.

But the accounts of the Department for Innovation, Universities and Skills show the money was not spent elsewhere in further education. The Learning and Skills Council, FE’s funding body, had an overall underspend of pound;280 million.

At the same time, the department spent pound;128 million over its budget for grants for the living expenses of university students, which were reintroduced last year and are due for expansion to two-thirds of higher education students this autumn.

A spokesman for the department said it was “common sense” for taxpayers’ money to be allocated to where it can be used to best effect. “We keep our budgets under review against performance of our programmes,” he said.

John Denham, the Innovation, Universities and Skills Secretary, has been critical of employers who fail to take up the free training available and admitted that more than pound;100 million of Train to Gain money had been spent elsewhere.

He said: “Some employers are failing not only to spend their own money on staff training, but also failing to spend ours as well. This represents a missed opportunity for businesses and a missed opportunity for those who work for them.”

But the diversion of cash is troubling for FE: it has already seen money moved from traditional adult education - which has lost 1.5 million places since 2005 - while colleges were encouraged to direct their efforts towards skills training for employers.

Paul Mackney, associate director of the National Institute of Adult Continuing Education, said: “It looks as if money has been taken from adult education to spend on Train to Gain, but that’s not been spent and has been transferred to higher education.

“We have always said we thought it unlikely that employers were the best agents for delivering adult learning. These figures suggest we were correct.”

Colleges say the likelihood of an underspend becomes apparent early enough in the year to make it possible for them to adapt their programmes and use the money elsewhere, if there is the political will to change the funding rules.

Martin Doel, chief executive of the Association of Colleges, said: “We are very disappointed that the underspend from Train to Gain wasn’t made available to FE where it could have been used to support students’ learning or to make up the fall in funding for adult learning.

“Given that there is potential for underspend again this year and given the possible effects of the credit crunch on employer training budgets, the AoC is pressing to make Train to Gain funding more directly available to fund training for individuals.”

This year, training providers will have to attract nearly double the number of workers to spend the pound;600m-plus Train to Gain fund.