The much-criticised UK Border Agency is accused by Whitehall's spending watchdog of cutting too many staff too quickly and is now having to hire extra people.
A report by the National Audit Office (NAO) found that the UKBA increased the pace of its staff reductions even though it was aware that an automated system designed to save money was a year late and tens of millions of pounds over budget.
More than 1,000 staff over and above the planned reductions were lost in 2011, performance dropped and there is little evidence of the strong leadership needed to resolve the problems, the report says.
A voluntary system where staff work a set number of hours each year, rather than each week - so they can work longer hours when it is busier during the Olympics, summer or Christmas periods - was taken up by 62 per cent of staff in the first six months of 2011/12, reducing the overtime bill. But only a third of staff at Heathrow airport joined the scheme.
The report says changes were introduced cautiously, "partly through concern about industrial relations, but also piecemeal, without evaluating their potential impact".
In April 2011, 22,580 staff were employed by UKBA, but this had dropped to 20,469 by April this year.
"In 2011-12, the agency's workforce reduced by over 1,000 more than planned, despite the fact that progress was slower than expected in the ICW (immigration case work) programme and workforce modernisation at the border, and no agency-wide skills strategy was yet in place," the report says.
"The result of this disconnect was, in some places, a dip in performance and the need to hire new staff or increase overtime. Agency performance has dipped in some specific areas, in part due to implementing staff reductions faster than originally planned. For example, performance in London and the South East has come under pressure due to staff shortages."
The NAO says a new computer system, which aimed to improve efficiency and cut costs, has "significant problems" and despite early successes, "has slipped by a year and is over budget".
Amyas Morse, head of the NAO, said: "The UK Border Agency and the Border Force deserve credit for taking on an ambitious programme of change, but both organisations face a steep climb to ensure this work delivers both value for money and a good service.
"The real leadership test will be whether the agency can transform casework processing without relying solely on new IT, and whether the Border Force can improve its workforce practices and raise productivity."
A Home Office spokesman said: "We're under no illusions about the scale of the challenge in transforming the UK Border Agency and Border Force and we have already saved huge sums of taxpayers' money, overhauled our business planning and improved performance in key areas of our work.
"Both organisations have now been reorganised into smaller, more focused agencies capable of delivering the further improvements that the public expects and deserves to see."
20 February 2012