MORE than 100 jobs are set to be shed at Scotland's largest jobs quango under police investigation for alleged misuse of European Union funds.

Jobs and Business Glasgow (JBG), an arms-length firm run by the Glasgow City Council, is seeking 150 redundancies, with the first tranche set to leave the organisation by July.

The move comes just three months after the council used emergency powers to suspend several senior officials at the body after police were brought in to investigate the alleged misuse of EU funds.

It also came to light in March that a further four members of the board, all but one of the organisation's independent directors and including prominent business world figures, had quit.

The job cuts have been linked with the current crisis engulfing the organisation as it seeks to plot a future with several sources of income, including EU funding, now likely to have been cut off from JBG because of the police probe.

It has also been hit city council cuts

With the organisation's latest figures showing it engaged with over 16,000 unemployed people, supported over 3500 into work, assisted more than 7500 into training and helped 500 people to start up a business, there are concerns over the wider impact of such a drastic cut to staff levels.

Of 440 JBG employees, fewer than 300 staff were eligible to apply for the voluntary severance scheme.

One sector source said: "Funding from the council has been cut by a few million as will the streams from other employability sources. As for Europe, JBG now has a tarnished reputation which makes it harder for them to secure cash, hence letting people go.

"Who picks up the slack though? We're talking about work with some of Glasgow's most vulnerable kids. The council will need to step in within some capacity and JBG retreat to its core business."

The organisation, which was known as Glasgow Regeneration Agency until a relaunch in 2013, had received about £4 million in EU funding.

A routine audit by the Scottish Government in late 2015 found discrepancies in how the monies were accounted for. However, the city council said there was “no evidence of personal gain”.

The January suspensions included the organisation’s chief executive, its head of employability, youth and learning boss and head of enterprise, business and the economy.

It receives funding from organisations including Skills Development Scotland and Job Centre Plus as Glasgow's main provider of apprenticeships.

A JBG spokeswoman said: “In response to major public sector cuts and funding losses, Jobs and Business Glasgow offered a voluntary severance scheme for all staff in a bid to reduce its headcount by 150.

"The organisation has received the required submissions from the workforce and is now in the process of reviewing applications. The board is grateful to Jobs and Business Glasgow staff for its continued support and dedication over this period and will ensure that, for those that are accepted on to the Scheme, help will be provided to find alternative opportunities.”

A source within the council said that while it had not offered voluntary severance this year, managing to reduce its numbers through natural wastage and redeployment, its raft of arms-length bodies "will all have their own plans".

A council spokesman said: “We have consistently said that public spending cuts would require a smaller workforce – and no part of the council family is immune to those pressures.”