A ROW over creeping privatisation of Scotland's biggest council has deepened after it emerged the IT firm at the centre of the dispute was behind the farmers' payments fiasco that left taxpayers facing up to £125 million in fines.

Glasgow is embroiled in renewed conflict over the multi-million pound plan to outsource control of its computer networks to Canadian firm CGI Group, which already has major contracts with Edinburgh and Scottish Borders.

The move has triggered claims that council IT - which underpins schools, social work, benefits provision and payroll - is on course to become the first public service in Scotland to be wholly privatised.

But sources have now pointed to CGI Group's role in the Scottish Government's heavily-criticised system to process agricultural subsidies, which left nearly 20,000 farmers without their EU payments, with some unpaid for several months.

The delays meant the Scottish Government was threatened with European fines of up to £125million, while a damning report by watchdogs “a significant conflict of interest held by a contractor on the programme”.

The deadline for paying European subsidies to farmers was extended from 30 June to 15 October at the eleventh hour.

It has also emerged that the Montreal-based IT firm also played major role in the Obamacare crisis, which saw the outgoing President's pioneering health insurance policy plagued by an embarrassing series of delays and errors.

CGI Group's contract with the US federal government was not renewed.

Speaking about plans to derail the outsourcing of Glasgow's IT service, a source said: "Is there a revolt? Yes.

"This is symptomatic of a lack of interest in the detail of governing, allied with civil services' inability to get its head round IT contracts is a recipient for disaster after disaster.

"There's a tendency to believe the last IT consultant they have spoken to.

Another said: "The Labour Group has reservations and has asked the chief executive for more details on the implications for staff, finances, etc.

"It was presented as the 'only show in town' and best value, but we need evidence of that. The track record in Scotland is a concern."

In a letter to the unions, council leader Frank McAveety said: "The unnecessary scaremongering in your letter about a 'privatisation agenda' betrays your lack of understanding of the commitment of the Labour Group to find the best way to provide services despite year on year severe budget cuts.

“The trades unions will be consulted on the future progress regarding the ICT contract. However those possibilities are poorly served by the making of ill-founded allegations and scaremongering on their part.”

The Herald revealed yesterday how the authority was proposing a deal running into hundreds of millions of pounds with CGI Group to manage all its IT services.

The firm's seven-year arrangement with Edinburgh is worth almost £190million.

According to Glasgow, the original contract developed by Edinburgh "was countersigned by more than 50 public bodies, including Glasgow, to allow access to a similar style contract if that was desired".

But Glasgow's move to follow Edinburgh has fuelled claims local government and wider public sector IT is on the cusp of being run by a small handful of private operators. On top of the system for EU subsidy payments to famers, CGI has also Scottish Government contracts and provides the IT work for training quango Skills Development Scotland.

At a heated meeting of the city council's ruling Labour on Monday several councillors were furious at being presented by their chief executive with "the only show in town".

Although it will be for politicians to decide, The Herald also understands there have been warnings that if the council misses the tight time table for the 2018 handover it could cost the public purse potentially tens of millions of pounds.

A CGI spokeswoman said: "The recent contract agreement that was set up with City of Edinburgh Council allows any of the Public Sector Partners who signed up to utilise this agreement.

"We are aware that Glasgow City Council is currently considering the potential of using this vehicle when their current arrangement ends in March 2018. This is one of a number of options open to them."