Local services in Aberdeen could be stripped to the bare minimum if the local council goes bankrupt, a senior figure on the local authority has predicted.

The warning came from Kevin Stewart, the SNP deputy leader of Aberdeen City Council, after work was halted on the construction of three city primary schools. Councillors have approved an emergency £5 million bailout to keep building work going on four other schools.

The council's £120 million “3Rs” school building programme was thrown into jeopardy last month after the collapse of the Icelandic bank financing the Public Private Partnerships scheme.

Now Councillor Stewart has said that a task force could be sent in by the Scottish government to run services down unless the second wave of planned £60 million budget cuts are delivered.

Earlier this year, a scathing report into the running of the council concluded that it needed to bring in outside help to cope with serious problems in its management, finances and delivery of services. The Accounts Commission report on Aberdeen City Council recommended a complete organisational overhaul and the appointment of an all-party board to help the council recover.

The council had announced a £35 million cut in its budget, which sparked a wave of local protests and prompted the early retirement of the council's chief executive.

Mr Stewart said: “We are being watched very carefully as a council by various commissions - where we spend money and where we are not spending.”

He added that both the council and the people of Aberdeen were starting to wake up to the grim realities of

the authority's financial problems: “I think some members of this council are beginning to realise that is the case, and some members of the public as well.”

Willie Young, the Labour Secretary, said: “It does appear that whatever the administration of this council touches at moment, rather than turning to gold, it turns to dust.”

The Accounts Commission is expected to step in again next year for a review of the council's books.

Times Recommends

• Should Knox’s trial even have reached the courtroom?
• All that glitters is not sold in Wright’s world
• Believe it or not, Big Brother is your friend