UNION leaders today called for Glasgow's troubled City Parking to be brought back under direct council control.

The arm's-length external organisation, or Aleo, has posted successive losses since it was created five years ago. Last night we revealed the business is to receive further financial aid from the council – to the tune of £500,000 – on top of several previous rescue packages.

Now Unison, which represents City Parking's workers, says it believes the experiment with semi-privatisation should be brought to a halt.

Chairman of the union's Glasgow City Council branch, Brian Smith, said: "We've always been sceptical about the Aleos. You only need to look at the continual bailouts the council gives to City Parking."

The business provides both on- and off-street parking and is responsible for issuing parking fines.

Unison suggests much of this work is a vital public service rather than a commercial business: without parking attendants keeping yellow lines clear, the city could grind to a halt.

Mr Smith said: "We think there is a need for the services our members provide at City Parking.

"They are required in big cities. Can that be run at a profit or is it a service that needs to be provided?"

The council, however, says the creation of City Parking was a "bold decision" that allowed the local authority to raise millions of pounds in loans.

The council got a capital receipt of £40.2m in return for leasing its car parks to City Parking. The Aleo, however, borrowed this money along with another £4.8m for improvements, by mortgaging four multi- storey car parks. Now it faces crippling repayments.

Papers filed with Companies House show City Parking pushed into the red by interest payments.

The last full accounts show an operating profit of £720,000 in 2010-11 but an overall loss of £1.3m after interest payments of £2m. The official losses between its creation in 2007 and 2011 added up to £4m, according to Companies House.

The council believes the "operating profits" are a better measure of performance than the net losses posted after paying the costs of its loans.

However, the council has stepped in several times to prop up the company and help it overcome its borrowing costs, including a payment of £750,000 to pay off most of its managers.

It also guaranteed City Parking's overdraft of £2m earlier this year after the company looked like it would have difficulty renewing the loan deal.

To date, the local authority has not been asked to pay out on the guarantee.

Yesterday we asked the council what the future holds for the business.

A spokesman said: "The future of City Parking is to continue to operate and provide a service to the city.

"Since it was established in 2007, City Parking has made an operating profit of £1.2m, generated capital receipts of £40.2m and invested £4.8m in the city's infrastructure."

As we reported yesterday, the council say the latest financial move represents a "rebate". The £500,000 – possibly to be followed by more payments – was agreed after delays to the regeneration of the Collegelands, where City Parking has a near-empty car park.

The spokesman said: "The council originally agreed to lease the car park in October 2009, recognising that it was essential to the regeneration of Collegelands.

"The council also entered into a sub-lease with City Parking, which would operate the facility. That was a risk, but it was the right thing to do to support the £100m regeneration of Collegelands. However, the recession has been longer and deeper than had been anticipated and that has had an unavoidable impact on the commercial operation of the car park.

"It's not right that City Parking, as a commercial organisation, is asked to continue to bear that risk on behalf of the council."

The spokesman said the Collegelands car park remained "integral" to the neighbourhood's regeneration and stressed new developments were finally getting under way nearby.

City SNP leader Graeme Hendry said: "Collegelands car park was always likely to fail due to overly optimistic assumptions and allowing free parking on roads all round it. Why would you use the car park when you can park for free on the road outside?"

His party, like the unions, has always been sceptical about City Parking, saying the capital receipt is "hanging like a noose round their necks". He added: "The SNP pointed out that this always seemed to be more about releasing capital than providing service thus risking long-term pain for short-term gain.

"There have been many poor business decisions with large amounts of investment in the likes of Collegelands and future technology that was never likely to bring a return.

"City Parking may be saved by the temporary closure of the Buchanan Galleries car park as this will drive traffic to them. However I lack any confidence this will provide a long-term solution.

"It's time to be up-front about the full business case and question whether they can and should continue as they are?"