SWINDON'S benefits and collection service has suffered a £1.7m blow-out. Swindon Council has agreed to hand £850,000 to contractor Liberata to deal with a backlog of claims and letters.

The company will pay the remaining £850,000.

Cabinet member for resources Nick Martin said the money would be recovered by making the service more efficient.

A report says the council anticipated savings of up to £500,000 last year and another £350,000 this financial year.

"In March 2005 it was evident there were significant backlogs of work in the revenues and benefits service, with almost 14,500 items of benefit correspondence waiting to be processed," the report says.

The backlog created a blow-out in waiting times for new benefits claims from 35 days last February to 51 days just a month later.

Unanswered new claims also rocketed to 783 last March and were predicted to rise to an "unprecedented" 860-plus in April this year.

Coun Martin said the council had agreed to foot half the bill for extra workers to tackle the mountain of paperwork.

By August, it had been cut from 14,500 to 1,095 outstanding items, of which almost half had been investigated and awaited a resident's reply.

Coun Martin said the council had no option but to negotiate changes.

"Council chief executive Sir Mike Pitt sat down with the CEO of Liberata and banged the table and got a deal," Coun Martin said.

"We moved from being a poor revenue service to being an excellent one."

Liberata took over running the council's housing benefit and tax collection after the collapse of the contract with WS Atkins in 2002. The company and the council are in negotiations to extend the company's £3m a year contract, which runs out in November.

Liberata strategy director Charlie Bruin said it was not the "usual thing" to top-up a contract but the backlog made the move necessary.

He said the company had increased its benefits workforce from 40 to 60 to tackle the paperwork.

"The easiest way to address a backlog is to tackle it head-on by putting twice as many people as usual to work on it," Mr Bruin said.

"We agreed with the council to put more people on it and it would be judged by its success.

"The benefits service is now excellent.

"We are quite happy to work with Swindon."