TENANTS are facing higher rents to pay for a £1m shortfall in a controversial council repairs deal at the centre of a bitter Labour civil war.

North Lanarkshire - one of the country's biggest council landlords - remains mired in dispute over the future of its £30m-a-year contract with loss-making Mears Scotland.

One Labour councillor - veteran Tommy Morgan - has already lost his job as the local authority's official watchdog after he questioned the deal.

Mr Morgan, who was unseated as convener of audit by just 16 votes to 14, opposed proposals to renegotiate the contract with Mears, run by Willie Docherty, husband of Glasgow's Labour Lord Provost Sadie Docherty.

Officials have suggested that Mears Scotland, which has lost £10m over the last four years, should be allowed to forgo making millions of pounds of savings to the housing account.

The council is currently taking advice from an advocate on whether this is legal.

However, officials have already warned that that Mears Scotland will not be able to provide savings of £973,000 stipulated in the original for 2015-2016.

That means tenants, most of whom are on housing benefits - will have to pick up the bill.

The additional costs, including the Mears Scotland, shortfall would add up to £3m, an extra £84 a year for the average tenant.

However, the council says it has also identified extra savings of £2m to offset against that number. A final decision has not been made.

However, the very suggestion that tenants foot the bill for Mears shortfall has angered internal critics of council leader Jim McCabe.

The North Lanarkshire party remains finely balanced between two camps in what local press is calling "the war of the Labour roses".

Supporters of Mr McCabe argue Mr Morgan was sacked because he was rude to Mr McCabe and others at a "dynamic" meeting of the Labour group.

And Mr McCabe himself said: "I'd like to make it abundantly clear that I had absolutely no complaint regarding Tommy Morgan's work, ability or the way he handled his position as chair of audit and governance."

Mr Morgan has declined to comment on the issue other than to say he is consulting with a lawyer. It is understood he is suing his party.

This could mean Labour's Scottish leader, Jim Murphy, facing a divisive legal action in what was once consider a party heartland.

A report on the state of the housing account - including the £1m Mears shortfall - went before the Labour group this week.

No decision was made on it, it is understood.

The same report will now go before the all-party Housing and Social Work Services committee next week.

However, sources suggest that a final decision on rents in 2015-2016 will not be made until at least next month.

A council spokesman said: "Any rent increase for 2015/16 will be set in due course.

"We have an outstanding track record of investment in our existing housing and an ambitious new build programme.

"We have been able to achieve this despite having one of the lowest rent levels in Scotland and keeping annual increases to a minimum."

David Miles, the chief executive of Mears - which owns two-thirds of Mears Scotland - has stressed his firm's commitment to the joint venture and its contract and highlighted his creation of 100 jobs and 80 apprenticeships. North Lanarkshire Council owns one third of Mears Scotland.