OXFORD City Council faces writing off increasing amounts of unpaid business rates and council tax because of the economy, its chief executive has warned.

Peter Sloman issued the warning after the council wrote off £802,721.90 of “bad debt” over the three months to the end of the calendar year.

The amount included £675,052.74 in unpaid business rates where the debtor cannot be traced or the company has been liquidated, £18,163.04 in unpaid council tax and £109,506.12 in overpaid housing benefit.

The council has a ring-fenced pot to cover the cost of the debt, which stood at £7.6m in April. That has decreased by £1.7m in write-offs this financial year.

But at a meeting on Thursday, Mr Sloman warned the council’s executive board they may need more money set aside as more companies go bust.

He said: “All of these things will continue to have an impact on our budget, and one of the things we will need to think about is whether or not we need to put any more resources in.”

At the meeting, city executive board member for finance Ed Turner said: “We as a council work very hard to collect all the money which is owed to us.

“Unfortunately sometimes, and particularly in the current economic climate, there is some money which cannot be collected, in some cases because people abscond or become insolvent.”

The largest chunk of debt written off was £237,721 worth of business rates owed by the dissolved company Rovacroft Ltd, previously of 15 Cornmarket Street, from the period from June 16, 2009, to September 1, 2010.

At the meeting, officers were not able to explain why the figure was so high, or why the firm had gone for so long without paying its bills.

Other large amounts included £83,221 owed by The Perch and Co Ltd of Binsey Lane and £56,721 owed by a firm called Perera (London) Ltd. Both companies are also dissolved.

TaxPayers’ Alliance campaign manager Eleanor McGrath said: “Residents will be shocked to find that such a large sum is outstanding, although it’s no wonder some are struggling to pay their council tax.

“It’s important that town halls differentiate between those who are avoiding paying and those who can’t afford to. The latter should be helped with easier ways to pay, while the former should be pursued for outstanding bills, otherwise taxpayers are left picking up the tab.

“As for the overpayment of benefits, taxpayers will struggle to understand how such a large sum can be erroneously paid out. The council needs to get a grip on this problem before more taxpayers’ money is squandered.”