Up to 50,000 people may have entered Britain to work rather than study in the first year of the government's student migration controls, a highly critical report by the National Audit Office (NAO) claims.
MPs called for the troubled UK Border Agency to "get a grip and fix the way it deals with student visas" after saying the report exposed one of the most shocking examples of poor management leading to abuse.
The NAO said the agency introduced a points-based system, known as Tier 4, in 2009 without key controls, potentially leading to tens of thousands of migrants entering the UK without any checks as to whether they were attending a college, and it did little to ensure that foreign students left the UK when requests to extend their stay were refused. The report called the flaws "predictable".
The agency withdrew entry clearance officers' powers to test applicants' intentions before it had controls in place over sponsor colleges, the report said.
"The agency implemented Tier 4 before the key controls were in place," the report said. "The Agency withdrew entry clearance officers' powers to test applicants' intentions before it had controls fully in place over sponsors and the documentation required to support an application.
"We estimate between 40,000 and 50,000 individuals might have entered through Tier 4 in its first year of operation to work rather than study.
"This estimate is based on college enrolment rates and changes in patterns of applications and refusals but it is not possible to know with certainty.
"Between March 2009 and February 2010, the [Border] Agency detected thousands of forged college visa letters at some application centres. The agency did not check that those who entered through suspect routes were attending college."
The Border Agency's ability to track down those who have evaded checks was also questioned. "The agency is not as efficient and effective in tracing people as it could be," the NAO report said.
Addresses for almost a fifth of more than 800 migrants wanted by the agency were found in just one week at a cost of £3,000 by a contractor hired by the watchdog.
The Home Office has objected to the NAO's estimate of 40,000 to 50,000 individuals who may have entered the UK to work rather than to study, claiming that is not "robustly based".
Commenting on the report, Margaret Hodge MP, chair of the Commons' public accounts committee, said: "This is one of the most shocking reports of poor management leading to abuse that I have seen.
"It is completely unacceptable that the programme was launched without key controls being in place.
The agency has done little to stop students overstaying their visa. And it is extremely worrying that the Agency does not know how many people with expired student visas are still in the country.
"It should be a real wake-up call to the agency that the NAO were able to track down 147 migrants who are probably here illegally within a week at a cost of only £3,000. The agency needs to get a grip and fix the way it deals with student visas."
Richard Bacon, a Conservative MP on the committee, also expressed astonishment at the way in which the NAO had tracked down suspected overstayers. "The Borders Agency needs to explain why it took the NAO's specialist contractor just one week to find addresses for a quarter of the 812 people which the Borders Agency couldn't trace," he said. "The contractor charged £3,000, which is less than £15 per person located."
Damian Green, the immigration minister, said: "This government has introduced radical reforms in order to stamp out abuse and restore order to the uncontrolled student visa system we inherited.
"These measures are beginning to bite, we have already seen the number of student visas issued drop considerably in the second half of 2011, compared to the same period in 2010."
Universities UK, which represents vice-chancellors, agreed with the watchdog's recommendation that the UKBA should work more closely with sponsors. Nicola Dandridge, the group's chief executive, said: "Higher education is a success story for the UK but there is no shortage of global competition. We must ensure that legitimate concerns about immigration do not end up causing irreversible damage to a profoundly successful British export."
