The Child Support Agency has been condemned by MPs as “one of the greatest public administration disasters of all time”.

A report, ostensibly charting reforms undertaken in 2003, has calculated that attempts to improve the CSA will have cost more than £850 million by the time the ailing operation is scrapped.

The Public Accounts Committee said that parents with caring responsibilities could be losing £520 a year in maintenance payments because of the agency’s many failures. Edward Leigh, chairman of the committee, said that it was by no means clear that the new Child Maintenance and Enforcement Commission (CMEC), which will replace the CSA from 2008 onwards, would win parents’ confidence.

The committee of MPs recommends that the Treasury considers giving the CMEC extra powers to look at individual tax records to determine absent parents’ income, and use the tax system to collect arrears if they refused to cooperate, as happens in Australia.

The report noted that more than £2 billion, or 60 per cent of the money owed, was now “uncollectable”. It also criticised the spending on external consultants. The Department for Work and Pensions paid £91 million for advice on a series of reforms between 2001 and 2005, but only a third of the money could be accounted for.

After 13 years, about 250,000 absent parents owe maintenance, of whom 127,000 have paid nothing to support their children. One per cent of those with maintenance debts – about 2,500 people – owe £50,000 or more. But the key problem was the failure to track down and punish errant fathers, the MPs said. That had led to a “culture of noncompliance” among absent parents.

The CSA’s enforcement directorate is dealing with only 19,000 cases, and in 2005-06 only 15 people were given jail terms for failing to pay maintenance. Tougher enforcement was one of the priorities of a CSA reform plan announced last year, and the agency is now using private-sector bailiffs to collect the money. The CMEC will be able to deduct money direct from nonpayers’ bank accounts, as well as take away their passports or driving licences, tag them and impose curfews.

Mr Leigh concluded: “The reform of the Child Support Agency has been one of the greatest public administration disasters of recent times. More than one in three nonresident parents fail to pay money they owe.”

Chris Pond, the chief executive of the One Parent Families charity, said:“The Public Accounts Committee’s report is a timely and devastating reminder of the lessons to be learnt.”