Report says another 74,500 cases 'cannot be traced' while the immigration minister hails elimination of backlog from system

An "amnesty" has been quietly granted to more than 160,000 asylum seekers over the past five years by a UK Border Agency that MPs have concluded is still "not fit for purpose", in a damning report published on Thursday.

The Commons home affairs select committee report says it is indefensible that officials have been unable to trace a further 74,500 asylum seekers, among a total of 450,000 unresolved "legacy" cases.

The agency has been working through these cases since it was first declared not fit for purpose by then home secretary John Reid in 2006.

The MPs say that fewer than one in 10 of those trapped in this historic backlog of asylum cases has actually been removed from the country but they add this should not be a surprise as some of the cases date back nearly 20 years.

The cross-party committee regards what it describes as an "amnesty policy", alongside renewed delays to the much heralded e-borders system to count people in and out of the country, as further evidence that the agency is still not proving effective.

The report says that work has at last been concluded on 403,000 of the 450,000-strong backlog of cases. Just over 38,000, or 9%, had their claims rejected and have been removed from Britain. Just over 161,000, or 40%, were granted leave to remain and 74,500 have been "archived" because the applicants cannot be found and it is not known whether they are in the UK, have left the country or are dead. A further 129,000 cases are officially classified as "errors".

The MPs say the 161,000 granted leave to remain is such a large proportion that this amounts in practice to an amnesty. They also disclose that ministers have allowed agency caseworkers to grant permission to stay to applicants who have been in Britain for six to eight years, rather than the 10 to 12 years that applied at the start of the programme.

They have also allowed cases involving people who could not be traced to be "parked in a controlled archive".

"We understand that ministers would have been unwilling to announce an amnesty for the applicants caught up in this backlog, not least because it might be interpreted as meaning that the UK was prepared more generally to relax its approach to migration; but we consider in practice an amnesty has taken place, at considerable cost to the taxpayer," conclude the MPs.

The confirmation of a backdoor amnesty is particularly damning, given that both Conservatives and Labour sharply attacked the Liberal Democrat leader, Nick Clegg, for promising a much less generous "earned route to citizenship" for irregular migrants who had been in Britain for 10 years, spoke English and had no criminal record.

But the immigration minister, Damian Green, opening a new detention centre at Morton Hall, Lincolnshire denied there was an amnesty.

"There's absolutely no amnesty. What we've done is get through to the bottom of that huge problem we inherited. The main thing is we've now eliminated this backlog from the system so that we can get on with the everyday job that the previous government couldn't because they had that backlog," he said.

The MPs say the backlog clearance will be completed within its original five-year target but that is only being achieved as a result of major redeployment of permanent staff and significant extra expenditure on temporary staff. The agency has yet to publish the cost of the programme. Meanwhile a backlog in new asylum applications is developing although its size is not yet clear, says the report.

The MPs say it is understandable that fewer than one in 10 asylum seekers have been removed from Britain, as the longer a case is left the more likely it is that the asylum seeker will have married and had children and will be allowed to stay for family reasons.

Keith Vaz, the committee's chairman, said: "Though progress has been made, it is clear that the UK Border Agency is still not fit for purpose." He said it was particularly worrying that the agency had been without a permanent head since Lin Homer moved to the Department of Transport five months ago.

Labour's immigration spokesman, Gerry Sutcliffe, said: "This is a scathing report … which illustrates the gap between what this government promised and what it is delivering. Following the government's decision to cut over 5,000 staff from [the agency], we have repeatedly warned the Home Office that enforcement will suffer as a result. This report shows that managers and staff consistently say there are not sufficient resources to track and return illegal immigrants.

"In addition, the report states that legacy asylum applications are increasingly being given permission to stay rather than the government seeking their removal. In the last few months there has been a significant decrease in the percentage of applicants and dependants sent home."

Jonathan Ellis, director of advocacy at the Refugee Council, said: "Too many asylum seekers have been left living in limbo without a decision on their case for too long, without any rights to play their part in British society. In those years, many will have settled down with families and made strong bonds with their local communities while it has been unsafe to return to their own countries, so granting permission to stay in the UK is in many cases the fairest, most humane thing to do.

He said the agency "must now ensure another backlog does not accrue, and focus on making the right decisions first time round".