A MOTHER who pretended Britain's first school milk co-operative was still sound when it was running up debts of £130,000, has been jailed for four months.

Paula Eltringham, 44, fraudulently claimed European subsidies from the Intervention Board, and got £127,000 of milk from Associated Cooperative Creameries while the company was effectively insolvent.

The "chaotically-run" School Fuel was set up in 1995 to supply subsidised milk to Sunderland primary school pupils after the city council axed the service.

Durham Crown Court was told that £114,000 of School Fuel money went into Eltringham's bank accounts which were used for the firm. She spent some of it on drink, cigarettes, presents, a £3,000 car and takeaway meals.

And, while the mother-of-two was managing director and drawing expenses, she was still claiming Income Support.

She claimed a total of £19,000 over two-and-a-half years, the court heard.

The company was wound up last year owing £127,000 to Associated Co-operative Creameries and £3,000 to other creditors.

Judge Maurice Carr said the company had been set up with honest intentions, but she did not have the business acumen needed.

He said that £74,000 missing from the accounts could not be explained.

"That may well be down primarily to your poor accounting skills, but I have to say you did have the assistance during that time of a professional firm of accountants," he said.

Donald McFaul, in mitigation, said the system for claiming subsidies was complex and that School Fuel was run by "enthusiastic amateurs".

It got into trouble because of long delays between the firm claiming subsidies for milk bought and receiving payment.

It operated on tight margins and needed to ensure that all parents who joined the scheme paid up.

He said Eltringham had not tapped into public funds to live a lavish lifestyle.

Eltringham, of Willmore Street, Millfield, Sunderland, who is of previous good character, admitted fraudulent trading, obtaining milk and subsidies by deception, and false accounting