Council leaders in Hull are likely to be severely criticised in a report by financial watchdogs on Monday.

The findings of the Audit Commission are expected to condemn the former Labour-run council for poor leadership and failing to control the city's housing stock.

The new Liberal Democrat leadership, which took power in May, says it is now turning around the council, which would have become bankrupt.

But Labour councillors claim many of the weaknesses highlighted in the report had already been recognised and acted upon when they were in power.

'Wow factor'

Councillor Janet Toker, Liberal Democrat deputy leader of the council, said a draft version of the report condemned the Labour administration.

"It is an account of total mismanagement," she said.

"The draft was a totally damning report. There was a wow factor reading it, you couldn't believe what you were reading.

"We are now trying to plough our way through the treacle that's been left, we're heading in the right direction."

Control of housing is set to be criticised

She claims the report, published at noon on Monday, shows the council would have been "bankrupt" in three years.

The report is set to criticise Labour councillors over the council's precarious financial position, lack of leadership, and culture of bullying.

The commission is also believed to criticise the housing department and the way the council spent cash raised from the flotation of the city's telephone company Kingston Communications.

'Turning around'

Councillor Daren Hale, deputy Labour leader, said: "The report will make a number of far-reaching criticisms that weren't new to us, we were making provision to tackle them.

"The report does accept the Labour administration was turning things around.

"The claims of financial mismanagement are pure conjecture."

The report is thought to order a raft of measures that must be implemented within months.

If the improvements are not made, Hull MP and Deputy Prime Minister John Prescott may order action be taken to boost the council's performance.