The body in charge of Britain’s borders is to be dismantled only months before the country opens its doors for the London Olympics after it emerged that hundreds of thousands of people have been allowed in to the country without appropriate checks.

Theresa May, home secretary, responded to the political scandal over immigration controls by splitting in two the UK Border Agency, a body created in 2008 to try to improve frontier security.

Ms May pinned the blame on managers going beyond their remit in relaxing border checks, but Labour said she was looking for scapegoats and that lax controls were a direct result of Home Office orders.

The home secretary made a statement to MPs about an investigation into the agency carried out by John Vine, the independent chief inspector of the UKBA. Although ministers had approved some relaxation of controls as part of a pilot programme last summer, the report revealed that the unauthorised slackening of security measures by some officials at the UK Border Force – the law enforcement division of the wider agency – had been going on since 2007.

This had led to 500,000 European passengers not being properly checked on the Eurostar channel tunnel service alone between 2007 and 2011, Mr Vine found.

The report also uncovered a “local initiative” at Heathrow, which allowed students from low-risk countries to enter the UK when they did not have the necessary entry clearance. Mr Vine said this was potentially discriminatory and unlawful.

In her statement, Ms May lamented that the probe had identified a border agency that had “suspended important checks without permission … spent millions on new technologies but chose not to use them … and was led by managers who did not communicate with their staff.”

As a result, the UK Border Force will from March 1 be cut off from the rest of the agency, which deals with all immigration operations.

Matt Cavanagh, associate director at the Institute for Public Policy Research think tank, said that while reorganisation was a “favoured tactic” of ministers under pressure, it was being done at a potentially dangerous time.

“The government is taking a risk attempting yet another structural change at a time when border staff will be preparing for the significant operational challenge of the Olympics,” he said.

Meanwhile Yvette Cooper, shadow home secretary, highlighted the report’s finding that security checks had been downgraded more than 2,000 times after ministers decided to weaken border controls. “It is clear that on Theresa May’s watch border controls were substantially weakened last summer compared to previous years,” Ms Cooper said.

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