Calls have been made for Blackpool Council to take on staff made redundant by Jobs, Friends and Houses.
The Gazette revealed yesterday how the building side of the first had been shut down, with the loss of 10 jobs, including five apprentices.
Job, Friends and Houses, which was set up in 2014 to rehabilitate offenders by providing safe accomodation, work and training will continue to operate as a recovery service.
Coun Tony Williams says the authority, which took over control of the company last year, has a responsibility to those abandoned.
The company is now based at Blackpool Council’s headquarters and three quarters of board members are senior managers at Blackpool Council.
He said: “There are a lot of questions to be answered about what has gone wrong.
“The company is now run by Blackpool Council and Lancashire Police.
“We have been told Jobs, Friends and Houses is working closely with Blackpool Coastal Housing.
“Surely there is scope to find jobs for these people within those organisations.
“They have a responsibility to do so, to make sure those who are on apprenticeships do not have to start again.”
Coun Williams also questioned whether a £100,000 loan from Blackpool Council would be paid back.
The authority said it had no concerns about the cash but could not guarantee jobs for those who had been made redundant.
Neil Jack, Chief Executive of Blackpool Council, said: “Unfortunately this is difficult news for the employees but we can assure them that all apprentices will be supported to find alternative work, to get housing advice and to cope with their addictions, while the scheme will continue to work closely with other services designed to help people overcome health problems and get back into employment in Blackpool.
“The recovery and peer support element has been praised in the past and is where we really see the company making a really positive difference to people in Blackpool.
“It is the recovery support which helps to reduce re-offending and improve health outcomes. We are very positive about the future of that service and the positive difference it can make to local residents.”