Train to Gain has not provided good value for money for the taxpayer, according to a report by the National Audit Office (NAO).
The report found the Train to Gain skills brokerage service, launched in April 2006, had by March this year cost the government £1.47bn - but a quarter of providers were performing below the minimum standard, while half of employers said they could have arranged the same training elsewhere.
The success rate of the largest 100 training providers - based on the percentage of workers achieving their learning aims - was found to range from 8% to 99%, with 26 providers having achieved less than the minimum level of performance of 65%.
The report recommended the Learning and Skills Council (LSC) should enforce this minimum level of performance more rigorously and withdraw contracts from those unable to meet it.
The report called for the Department for Business, Innovation and Skills (BIS) and the LSC to use the increased demand for skills during the recession as an opportunity to improve management, and focus resources on the areas of greatest demand and on providing training through only the highest quality providers.
It said: "In our view over its full lifetime the programme has not provided good value for money. Unrealistically ambitious initial targets and ineffective implementation have reduced the efficiency of the programme.
"While the rapid changes to the design of Train to Gain to generate employer demand have presented a considerable challenge for the LSC, inconsistent management and communication have led to confusion among employers, training providers and skills brokers, and have increased programme risks."
But both BIS and the LSC rejected the report's accusation that Train to Gain did not represent good value for money.
A BIS spokeswoman said: "We disagree that Train to Gain has not delivered good value for money, particularly when the majority of employers report that Train to Gain has improved productivity.
"Since 2006, employees have started over 1.2 million courses, 143,000 employers have benefited and satisfaction levels are over 90%."
A spokeswoman for the LSC added: "The vast majority of providers are achieving more than the expected minimum level of performance, though we recognise that there are variations in the success rates of training providers. Performance is actively managed by the LSC to ensure that value for money is achieved."
In April it was revealed that Train to Gain was in danger of running out of money this year as employers took advantage of skills funding during the recession.