The government's attempt to run an online university has been described as a "disgraceful" waste of money by a committee of MPs.

According to the Commons education and skills select committee, tens of millions of pounds were thrown down the drain.

Costing some £44,000 per student, it proved more expensive then either Oxford or Cambridge.

Then education secretary David Blunkett established the UK e-University (UKeU) in September 2003, but it attracted just 900 students.

It was later closed after running up a bill for taxpayers of some £50 million.

Committee chairman Barry Sheerman said the scheme was "a terrible waste of public money".

"The senior executives failed to interest any private investors and showed an extraordinary over-confidence in their ability to attract students to the scheme," he added.

"Any private company which rewards underperformance of this scale would normally face severe criticism from its shareholders."

Major failings

Among the problems highlighted in the report was a failure to determine levels of demand for online education.

And e-Univeristy bosses were awarded large bonuses despite failing to attract private investment for the scheme.

There was also strong criticism of the way in which the body was set up, with the MPs saying there was no direct accountability to ministers.

The chief executive of the Higher Education Funding Council for England was the accounting officer responsible for the expenditure of public money, but not for the operating decisions of organisation.

'Too much freedom'

According to the MPs, the university had "too much freedom to spend public money as it wished".

"The UKeU should have been held fully accountable for its spending as soon as private companies decided not to invest," said Sheerman.

"The government should learn the lessons from this disaster and develop a well rounded e-learning strategy to support universities existing online projects.

"The global market for e-learning is an estimated $18 billion and the UK should not miss out."

'White elephant'

Paul Holmes, a Liberal Democrat committee member, said the government had been "too eager to involve the private sector when there were experienced educational providers within the public sector who could have lent greater expertise to this project at much less financial risk".

"There was no formal market research to establish the demand for the proposed remote learning package and the colleges and the Open University, who currently provide this type of training, were not properly involved," he added.

"Instead, at the height of the dot com boom, the government wasted millions of pounds of public money on an ill-thought out, poorly planned white elephant.

"Frankly, taxpayers and people seeking distance learning from the UK's education system deserved better."