TAXPAYERS in Derwentside are likely to have to fork out an extra £250,000 to deal with a backlog of housing benefit claims.

Officials are bracing themselves for a third critical report from watchdogs into the year-old backlog, which at one point reached nearly 6,000 unprocessed claims.

It has also emerged that, late last year, rent arrears owed to Derwentside District Council topped £1.9m.

The authority has said that the worst of the crisis is over and claims most of the backlog should be cleared by the New Year - but councillors will today be asked to earmark an extra £262,000 to pay for extra staff and overtime to ease the crisis, on top of the £175,781 its claims department was allocated in the last financial year.

The backlog was sparked by the introduction of a government verification system designed to combat benefit fraud.

The authority, which had also lost several experienced staff and was undergoing an internal reorganisation, was criticised by the Local Government Ombudsman in a report last October.

The ombudsman decided that private landlord Tom Jackman had suffered an "injustice" after the council was up to 18 weeks late in processing housing benefit claims.

The authority was ordered to pay Mr Jackman £750.

A district auditor management letter to the council in December last year also highlighted the issue.

It said: "The financial position of the housing revenue account is becoming increasingly difficult.

"Increasing voids (£517,000 in 1998/1999 and £719,000 in 2000/2001) and rent arrears (£1.1m at March 31, 1999 and £1.9m at October 31, 2000) have added to the budgetary pressures."

In a report for the Budget Panel meeting today director of regulation and resources Keith Robinson anticipated another negative district auditor report.

He said: "The district auditor has ranked the service as high risk in his recent assessment and will be soon producing a report which is likely to be critical."

Leader of the council Alex Watson said the situation was being turned around.

He said: "It is not just us. A lot of councils have suffered because of the changing Government regulations.

"In the long term we will have a much more efficient service."

The Budget Panel will consider the application for the extra cash at Consett Civic Centre at 4pm today.