MORE than £700,000 went missing from Worcester City Council's bank account - and it took two months for finance chiefs to find out.

The hole appeared when an administration error meant money - mainly council tax payments - was paid into Worcester Community Housing's coffers instead of the council's.

The funds have since been reclaimed, although an estimated £5,500 interest has not.

In total, £727,374 was put into the housing association's account during May and June. It is thought that the security firm handling the cash muddled the two bodies' sorting envelopes.

Most of the mistakes came when the two bodies shared space at the council's customer service centre, in Farrier Street, though more than £187,000 was incorrectly banked through WCH's neighbourhood offices.

Councillor Simon Geraghty, responsible for the council's finances, said the error was not picked up because computer safeguards were not in place at the newly-opened service centre, but played down the significance of the error.

"Half a million pounds is a hell of a lot of money, but as the council has handled over half a billion in five years, that puts that into some kind of context," he said.

"The lesson learnt is that with a major project like the customer service centre it is very, very easy for something to go wrong.

"We regret that, but endeavour to use those experiences to ensure that in any system change needed, these errors will not happen."

Coun Mike Layland, chairman of the authority's audit committee, which helps to regulate council spending, has ordered a report into the incident but is satisfied officers were on top of the problem.

"As soon it was discovered it was put right. It's just one of those things that should not have happened, it has, and we need to make sure it doesn't happen again," he said.

Andrew Lycett, the finance director at WCH, said problems of funds being incorrectly banked was "mostly resolved now", adding that the social landlord's new rent office at Farrier House, in Farrier Street, was helping.

He said that there had been no approach from the council over recouping the interest but that he was sure negotiations could take place.

Securitas, the security company that handled the money envelopes, was not available for comment.