Hard-pressed Northern Ireland households are facing potential rates rises in the teeth of a recession after council debts more than doubled in two years, it emerged today.

The substantial revenue loss has soared from £48m in 2006 to £124m this year as a result of the failure to recover debts |by the Land and Property Service.

Councils are now appealing to Finance Minister Nigel Dodds for urgent relief, but could be faced instead with increasing rates or cutting services early in the New Year.

Heather Moorhead, who is the chief executive of the Northern Ireland Local Government Association (NILGA), today said: “It is not the fault of councils, that is what is so frustrating about it.

“Yet it is completely the case that they may have to put up rates at a time when people are facing real hardship.

“The debt would seem to apply to both domestic and business ratepayers.

“No doubt a lot of people are under pressure but it is up to the Land and Property Service and as things stand it is uncollected debt.”

The association’s president, Helen Quigley, is seeking an urgent meeting with Mr Dodds to press for transitional measures with councils facing an immediate shortfall of an estimated £70m.

The Londonderry councillor said: “The fact is that the Land and Property Service (LPS) bit off more than they could chew, introducing a new IT system and attempting to implement a policy change in relation to rates.

“We need not only transitional support but also agreement on how we can work towards longer term solutions to this matter.”

In a letter to Mr Dodds, the former Derry mayor said that councils are currently faced with an extremely difficult position where services may have to be reduced or increases placed on rates at a time when people in Northern Ireland are facing “significant economic hardship”.

NILGA has pointed to a hard-hitting Public Accounts Committee (PAC) report published last month which recommended that “foregone and additional costs of collection as a result of problems with new systems will not be passed onto councils”.

The association said it appreciated that local government staff and the LPS are working closely together but called urgently on the Finance Minister to “alleviate the negative impact”.

The PAC report highlighted deficiencies in the ‘change management programme’ of the Land and Property Service, an amalgamation of three previous agencies and said the service tried to do much in too short a timescale.

While the revenue from rates collection plummeted, the new system also meant the cost of administering it increased from £10.5m to £13m.

“The situation gets more and more ridiculous the more you look at it but it is certainly not scaring people to say that one option out of this could be to increase the rates,” Ms Moorhead added.

In a complex situation, it also appears that the ‘penny product’ — the total expected from the rates — was over-estimated and there are thousands of vacant properties left uninspected over a year to 18 months because the LPS was also not carrying out the normal amount of inspections.

A spokeswoman for the Finance Minister said councils were facing increased financial challenges in the economic environment.

Measures introduced by the Executive, such as the freeze on the regional rate element of domestic rates bills until 2011, will help individuals better deal with the challenges they face, she said.

“Indeed, the average bill faced by local households will be around £1,000 lower over the three years to 2011 than they would have been under direct rule,” she said.

Nevertheless, the minister is keen to listen to the concerns of local government and will be carefully considering the letter he received from NILGA, she added.