Backlogs are still being reduced too slowly more than a year after Home Secretary Theresa May moved to deal with a string of fiascos by bringing immigration back under ministerial control and boosting resources, a public spending watchdog warned.
The National Audit Office found the service continued to be plagued by poor IT, weak workforce planning and low morale despite the decision to abolish the much-criticised UK Border Agency in favour of direct Home Office control in March last year.
While the switch had resulted in some improvements, it found, in some key areas it had "not progressed as far as we would have expected".
The chairwoman of the Commons public accounts committee Margaret Hodge expressed frustration at the slow pace of change, especially the failure to improve data after a £347 million IT system failed to bring all the benefits it was supposed to.
The Labour MP said it was "simply not good enough" that the Home Office was not able to say where it had shaved almost £6 million from its budget, leading the NAO to warn services could be at risk from future spending cuts.
After a raft of damning reports, Ms May abolished the UKBA and replaced it with UK Visas and Immigration and an Immigration Enforcement command, which were brought under the control of ministers.
The NAO said that while all "straightforward" cases had been cleared, there were still 301,000 open cases - including more than 25,000 live asylum claims and 175,000-plus where officials did not know whether illegal immigrants were still in the UK.
Efforts by staff to catch up were hampered by having to use "multiple and complicated legacy systems" - including some on paper - after the Immigration Case Work (ICW) programme was closed in August last year having "achieved much less than planned".
A new £209 million IT system "still has far to go to have a significant impact", it added.
The move back into the Home Office had only resulted in one in five workers feeling more positive by December, it found, pointing to "weak workforce planning" as one of the factors in the failure to improve results.
A decision to change the mix of grades of civil servants dealing with asylum at one point resulted in 120 leaving before sufficient replacements were found, "hindering the ... ability to keep on top of cases", the report said.
The lack of a clear plan for efficiencies meant the service faced a "tough challenge" to improve in the face of more cuts.
"The directorates have made good progress in some areas, such as communications and oversight, but they have made slow progress in improving process efficiency, staff capability, and the quality of data and systems," the NAO concluded.
"In some areas, such as specific backlogs, workforce planning and the IT landscape, problems identified back in 2012 have not progressed as far as we would have expected by now.
"Overall it is also too early to identify any impact from organisational improvement on customers and stakeholders and the department has not yet set longer-term time horizons in which it expects to make improvements across the border and immigration system.
"To achieve value for money in its immigration work, the department must progress faster with its changes and address the challenges it has struggled to tackle. It must sustain performance under the pressure of reducing budgets."
Mrs Hodge said: " The department has still not solved some of the big problems of the former UK Border Agency.
"It's unacceptable that over 25,000 asylum claims are still waiting to be dealt with and the department does not know if over 175,000 people who have no right to be in the UK have left or not.
"How the department expects to recover its position and deliver a proper service without good management information is beyond me.
"The fact its data is still inconsistent and of poor quality is frustrating, with the department failing to record the minimum amount of information required to make a decision for a third of asylum claims.
"The department is not helping itself, as it has failed to solve its IT problems - despite spending £347 million on a new system, it has not delivered what was expected. Given its poor track record, I have little confidence that the further £209 million it is spending on another IT system will be money well spent.
"It is simply not good enough that the department has not tracked its progress in reducing costs by £594 million.
"The department knows it has remained within budget, but it simply does not know where it has made these savings or whether they are sustainable. The department, therefore, cannot give Parliament assurance that these cuts will not negatively impact on its future performance."