CSA reforms 'set to cost £850m'

But the money has so far failed to deliver the necessary improvements to efficiency and service, with lone parents and their children missing out on £3.5 billion in unpaid maintenance, said the House of Commons Public Accounts Committee.

If the reforms introduced since 2000 had worked as intended, an additional 50,000 children could have been lifted out of poverty, even without any increase in rates of compliance by absent parents, the cross-party committee said.

Committee chairman Edward Leigh condemned the CSA reform programme as "one of the greatest public administration disasters of recent times" and branded the computer system provided by private-sector contractors EDS "a turkey from day one".

The system still had more than 500 defects three years after it was introduced, and the Department for Work and Pensions failed to act on warnings that the changes it was trying to introduce were "on the edge of what was achievable". Furthermore the department paid external consultants £91 million for advice on the reforms between 2001 and 2005, but was unable to account for where more than a third of the money went, said the report.

Mr Leigh warned that it was "by no means clear" that the new Child Maintenance and Enforcement Commission (CMEC), which will replace the CSA, will be able to regain parents' confidence. Ministers must keep "an iron grip" on CMEC to ensure it does not repeat the debacle of the CSA, he said.

The report suggested that the Treasury should consider giving CMEC the power to look at individual tax records to determine absent parents' income, and use the tax system to collect arrears if they refuse to co-operate, as happens in Australia. It noted that some 60% of the £3.5 billion owed to the CSA - more than £2 billion - is now considered "uncollectable", though ministers have no plans to table legislation to write it off.

About 250,000 absent parents owe maintenance money, of whom 127,000 have paid nothing to support their children. Some 1% of those with maintenance debts - around 2,500 people - owe £50,000 or more. But the weakness of efforts to track down and punish "deadbeat dads" have led to a "culture of non-compliance" among absent parents. The CSA's enforcement directorate is dealing with just 19,000 cases, and in 2005/06 failure to pay maintenance led to only 15 jail sentences as well as five driving licences being confiscated and 35 suspended.

Tougher enforcement was one of the priorities of a CSA improvement plan unveiled last year, and the agency is now using private-sector bailiffs to collect cash. CMEC will be able to deduct cash direct from non-payers' bank accounts, as well as take away their passports or driving licences, tag them and impose curfews.

The plan was the second round of major reform at the CSA, following a £539 million shake-up of the system between 2000 and 2005. The new reforms will cost £230 million over three years, but the transition from the old system to the new one will not be completed until 2012/13.