One attraction of learning accounts is their simplicity. Individuals open an account and can spend the money put there by the Government with any learning provider they choose. The individual paid a share, the Government paid the rest - up to 80 per cent on IT courses.

Fifteen months in, the system’s simplicity has become its downfall. Attracted by the prospect of easy cash, large numbers have signed up for accounts. The million mark was passed in June 2001. Four months later, it is now two-and-a-half million. There has also been evidence of dishonesty by some learning providers. Some people did not realise they had signed up. Others were given a very hard sell. Complaints have alerted trading standards and the police. The scheme has now closed. So what has gone wrong?

It is tempting to put all the blame on a few unscrupulous providers but bad practice only flourishes in weak systems. The big weakness in the learning account system is its lack of quality control. To register as a provider and claim government money, a company must sign a declaration that it would observe the rules, and enclose a couple of policies. Nothing more. You could set up a company for pound;50, devise a distance learning package in your front room and make your money back on the first account. It is no surprise that there has been a big increase in distance learning start-ups offering courses with learning accounts attached.

What is more surprising is the difference between this light touch and the bureaucracy required to claim Learning and Skills Council funds. The increase in regulation in the FE sector was prompted by the misuse of franchising and some over-claims from a small number of colleges. Distance learning was often involved. In response, a draconian audit regime has been introduced for the entire sector. A risk-based approach might look a little more closely at distance learning and take a cheaper, lighter touch on everything else.

Control is one problem with the individual learning account system but it is not the only one. The Government could step up controls but might not increase participation or raise standards.

The trouble with learning accounts is not lack of control but that the accounts are not really about learning at all. Governments, academics and expensive consultants spent years designing all manner of issues - apart from their role in helping people learn.

A sum of pound;150 does not buy much. Individuals could either buy distance learning packs or use accounts to pay fees for college courses already funded by the Government. The alternative was to group individuals to employ a lecturer, provide a room and pay for a computer suite. It was possible to pool accounts when they were vouchers but this became difficult to manage when the scheme was individualised. The national learning account system missed the point that cost-effective, quality learning involves groups not individuals.

The main responsibility for funding institutions falls to the LSC. It is moving tentatively towards a single funding system and last week issued a circular explaining its funding formula for 2002-03. The biggest change is in the language. If you wasted the 1990s learning to speak units and to translate the tariff, 2002 will be a time to learn a new language. The new formula calculates the cash sum for each course from a national set of rates, deducts 10 per cent for achievement and adds various uplifts for expensive programmes, area costs and disadvantage.

The actual change for the further education sector in 2002-03 will be diminished by the LSC’s desire to avoid funding turbulence. The values in the new formula will match the values in the old, while the LSC works out its costs. The LSC is gearing up to take action but it could usefully learn a cautionary lesson from learning accounts. The Government can and does buy outputs, individuals can and do buy courses. However, no one can buy learning and skills without the willing participation of the individual and, often, only with the active involvement of third parties - teacher, family, or employer. Learning can be done at a distance but do not rely on it.

Julian Gravatt is director of finance at the City Lit, London