THE controversial construction firm run as an arm's length body of Glasgow City Council has posted its third successive annual loss as pressure mounts for it to be broken up.

City Building, once a flagship arm's length external organisation (Aleo), suffered a loss of £4.1 million in the year to March 2015.

Plagued by both high costs and speculation over its future, the company in its latest annual accounts has admitted it continues "to face adverse economic pressures".

The latest loss comes on top of £4.3m in 2013/14 and £1.2m in 2011/12 despite picking up substantial business from its council owners working on Glasgow's Commonwealth Games.

However, the financial bottom line in official accounts does not include "discounts" that City Building provides to the local authority on contracts. These, the business said, amounted to £5m.

Revealed: Plans to dismember flagship Aleo City Building

A spokesman for Glasgow City Council, defending City Building, took a sideswipe at the SNP administration in Edinburgh, suggesting the paper discounts were compensating for cutbacks.

He said: “Despite challenging market conditions, City Building has won more than £1.2 billion of new business and returned a substantial discount to the council at a time when the city is facing unprecedented cuts to its budget from the Scottish Government."

The business has three main divisions: construction, repairs and maintenance, and manufacturing at Royal Strathclyde Blindcraft Industries, which employs disabled people.

The council spokesman stressed the social good provided by City Building.

He said: "It also continues to make a huge contribution to meeting city priorities through its commitment to a first-class apprenticeship programme and its work with RSBi; which has become one of the most successful social enterprises anywhere in the UK."

However, it has already emerged that the new administration in Glasgow led by former Labour minister Frank McAveety, pictured below, is mulling dramatic action at the Aleo.

Senior officials are in talks over proposals for half the City Building workforce to become employees of the country's biggest social landlord, the Wheatley Group, the parent of Glasgow Housing Association.

There are mounting concerns it could lose its £200m repairs and maintenance contract with the Wheatley Group when the deal comes up for renewal.

City Building staff also fear the firm's previous leadership, now running a rival joint venture with North Lanarkshire Council, could steal the contract, which currently generates over 90 per cent of its income.

Former City Building managing director Willie Docherty, husband of Glasgow's lord provost Sadie Docherty, has poached several senior executives from City Building.

Mr Docherty is pictured below, second from left, next to Steven Purcell, third from left, who was the Labour leader who created City Building.

There is no mention of the risk of break-up in the annual accounts. City Building's managing director, Graham Paterson, in the annual accounts said that turnover in construction had dropped largely because of the completion of big Commonwealth Games contracts.

The company's net liabilities soared to £150m over 2014-15 thanks to its pension liabilities.

Mr Paterson said: "The financial statements have been prepared on the going concern basis as management believes that, despite there being a substantial negative net worth as a result of the pension position, any shortfall in that area is guaranteed by Glasgow City Council."

However, Mr Paterson acknowledged the pension deficit could mean greater company contributions to the pensions pot in the future.

Opposition councillors have long questioned the value of City Building and other Aleos, which were created under the regime of former Labour leader Steven Purcell before the financial crash of 2007-08.

The city council's own internal watchdogs this summer alerted the police to the actions of one of City Building's managers amid concerns over tenders.

Below: City Building's annual accounts: