The biggest transfer of public sector staff in the UK yesterday cleared its first major hurdle with the threat that failure to do so could cost 9000 jobs.

But the move by Glasgow City Council to hive off services catering for some of its most vulnerable residents has been condemned as flying in the face of current thinking and leaving employees, from home helps to school caterers, open to the vagaries of the open market.

Six months after mooting the idea, the authority yesterday presented its business plan for an arms-length company which will run its direct and care services (Dacs) - the department which also includes school crossings, janitors and its in-house catering firm Encore - with councillors voting in favour of the proposal.

It will now go to the council's all-powerful executive committee where the Labour majority is expected to see it approved. Work will then begin to have the as-yet unnamed company come into being next April.

The council claims it has little option but to take this approach as the department currently has a rolling deficit which could see external auditors force it to put the services out to the market, resulting in job losses. There are currently a total of 8000 staff in 9000 roles within Dacs.

The move comes just days after the Scottish Government announced that all cleaning, catering and "soft facilities" management services in the country's clinical premises would be exempt from contracting out in future schemes, whether funded through public private partnerships or not.

Fergus Chambers, the Dacs executive director, said a limited liability partnership (LLP) would see the £17m deficit wiped out. It would also make a profit of almost £500,000 within three years.

Staff would be offered performance-related pay as an incentive and would move across with access to the council's pension fund and with their current terms and conditions intact.

Glasgow is also hoping, on the basis of the sheer size of the proposed company, to swallow the staff and core services of other local authorities.

But the proposal was opposed by the main SNP opposition.

At yesterday's specially convened policy, development and scrutiny committee meeting, SNP social work spokesman Phil Greene said: "This is one of the most professional parts of the council, offering a great service to the most vulnerable people in Glasgow.

"The question is why the hell are we doing this? Why are we putting this at risk? If it isn't broke why fix it?

"The only way we can make it not be in deficit, given that staff makes up 80% of the cost, is to change people's terms and conditions."

James Dornan, the SNP group leader, later added: "This was a smooth pitch but inconsistent. In the current market the safest place for services like this to be is in-house."

But Mr Chambers said: "The problem is the service is broke. Doing nothing is not an option. We have a rolling deficit which is illegal and the chances of being called in by the external auditor are extremely likely."

A Scottish Government spokesman said: "We expect local authorities to follow value-for-money guidance."