LIVERPOOL City Council fears that its direct services organisation (DSO) could be wound up by the Department of the Environment, with the loss of 7,000 jobs.
For the second year running, the council has failed to meet financial targets set by the DoE. But this year the council has incurred the biggest debt of any of the eight worst DSO offenders.
The councils losses reached nearly 3 million on its high-ways and sewage operations more than 2 million worse
than the second largest loss-making DSO, Hereford and Worcester.
Councillor Frank Anderson, chairman of the Liverpool DSO Board, said he was petrified that the organisation would be wound up.
'The government would look on it as an opportunity to bash local government in the run-up to a possible election,' he said.
'If the government does issue a Section 14 order barring the DSO from tendering for work, TUPE regulations would not apply to former council staff, because the DSO would not be a going concern, he added.
The DoE has confirmed that it is within its power to issue such an order.
Mr Anderson said the council will protest in the strongest possible terms to the DoE, blaming the present problems on inflexible government strictures.
Along with Liverpool, the other seven councils picked out by the DoE as the worst offenders were: Hereford and Worcester, Hull, New Forest, St Helens, Salford and Southwark.
Each will have a month to account for its losses and explain what it is doing to rectify them. If it fails to convince the DoE, the department can order jobs to be retendered and bar the relevant DSO from tendering for the work.