RENT arrears owed by former tenants to a council slated by inspectors rose by a staggering 1,300 per cent in six years.

The Government is poised to send in managers to take over the housing department at Labour-run Chester-le-Street District Council.

The move follows a damning Audit Commission report that found 'very serious' failures and warned of possible service cuts.

The council's debt recovery and management, housing benefit advice to tenants and failure to set aside sufficient money to write-off 'bad debt'' are criticised in the report.

The council, one of the country's smallest, has 5,300 houses, but is owed a total of £641,000 in unpaid rent - equivalent to £120 per house.

It has emerged that the council is considering selling off its entire housing stock - as neighbouring Sunderland did - which would wipe out its rent arrears.

Coun Linda Ebbatson has taken over the housing portfolio from Mel Robinson who resigned. The council has appointed Pauline Walls, formerly of Durham City Council, as principal management officer with responsibility for rent collection. Anne Smith, formerly of Wansbeck District Council in Northumberland, is the new housing policy and strategy officer.