FEARS over the loss of a multi-million pound contract to rivals will see a controversial council spin-off firm broken up, in a move expected to safeguard over 1,000 jobs.

Glasgow City Council has agreed to set up a new organisation with the country's biggest social landlord which will see around 1,600 employees leave its loss-making, yet flagship, arms-length body City Building.

The new joint venture, expected to be rubber-stamped today, means its £200 million repairs and maintenance contract with the Wheatley Group, parent group of the Glasgow Housing Association (GHA), will not have to go out to tender.

Several major firms would have been expected to bid for the contract, which is up for renewal in 2018 and generates over 90 per cent of City Building's income.

Mears Scotland, a joint venture with Labour-run North Lanarkshire Council and headed by the husband of Glasgow Lord Provost Sadie Docherty, has been repeatedly touted by City Building insiders as the most likely challenger.

Willie Docherty, its managing director, was in charge of City Building, along with several Mears executives, when it won the contract six years ago.

One source said: "The ghosts of Docherty and co still haunt City Building and a bid from Mears has always been the big concern. They know the Glasgow housing stock and the materials used inside out.

"Other big contractors, like Mitie or CCG, would have been interested too but wouldn't have the insider knowledge Mears has. If this keeps over 1,000 City Building jobs then it's a good thing."

It is understood the new organisation will be a 50/50 partnership between the city council and Wheatley Group, meaning neither has a controlling stake.

It is also understood the move dispenses with the need to put the deal out to tender for at least 20 years.

It comes on the back of a commissioned report which looked at options from creating an entirely in-house operation to putting the contracts out to tender again.

The creation of a 1.600-strong maintenance team is also another significant milestone in the history of the GHA, which was originally designed to be dismantled after several years but now has a power and influence rivalling that of the city council it broke away from almost 15 years ago.

The landlord has recently taken over a number of major housing associations across Scotland and provides neighbourhood relations teams through to legal services to others in the sector.

One source has previously described the plans as "Glasgow power politics in action", adding: "The council needs a solution and GHA can benefit from it."

A spokesman for Glasgow City Council: “Talks have been taking place with Wheatley Group about a new strategic partnership with the council.

“However, this has still to be further considered by the Wheatley Group board and the council and it would therefore be inappropriate for us to comment further at this stage.”

A Wheatley spokesman said: “The future provision of repairs and maintenance will be considered by Wheatley Board at its meeting on Wednesday.

“Our number-one priority is to ensure our tenants and factored homeowners receive an outstanding service in the years to come, whilst achieving maximum value for money.”