GLASGOW faces an “unprecedented” financial crisis as it moves to settle an equal pay claim of up £1 billion with watchdogs warning they are “seriously concerned” about the impact on public services.

A huge bill is looming to compensate female workers for being paid less than men for carrying out equivalent jobs over several decades.

More than 6,000 claimants are owed between £500 million and £1 billion in payouts and the council has been unable to say so far how it will meet the cost.

Now the Accounts Commission has raised fears that Glasgow is facing a period of unparalleled financial pressure on services at a time when it is already shouldering with a potential budget shortfall of £129 million.

The Commission said the scale of the settlement is likely to be “significant” and is unlikely to be bridged by traditional measures such as digging into reserves or selling assets.

This leaves the most likely option of “capitalisation” which would allow the council to receive a loan from the Scottish Government to raise the cash needed with payments spread over several years.

But this would also affect the council’s future budget settlements for many years to come.

“The scale and complexity of Glasgow’s socio-economic challenges are unique in Scotland and, like all local authorities, it’s facing considerable financial pressures,” said Graham Sharp, chair of the Accounts Commission.

“The council has made steady progress since our last report and has a good track record in making savings, but we are seriously concerned about the impact that resolving equal pay claims could have on how the council delivers public services, and we will be continuing to take a close interest in that issue.”

The ongoing pay dispute centres on the way some jobs were graded several years ago.

Women employed as carers, cleaners, catering staff, classroom assistants and clerical staff were paid £3-an-hour less than men in low-paid roles operating within the local authority.

In 2005, the council accepted flaws in their pay arrangements with settlements offered to staff who had raised equal pay claims.

But in March last year, a landmark hearing at the Employment Appeal Tribunal found that 6,000 women were now entitled to make additional claims.

The city is already facing a funding gap of £129 million over the next three years and is currently unable to cost the claims in its financial plans.

Work on developing a separate funding strategy is being carried out by the council in parallel with discussions with claimants.

However, the Accounts Commission praised Glasgow’s improvement in many fields, such as educational attainment in city schools, the wellbeing of children and greater health results.

This is despite having to make cuts of £102.5m through its Transformation Programme over the last two years.

Council leader Susan Aitken said: “The challenge of resolving equal pay is substantial and it would be unusual if it wasn’t a focus for the audit team. However, it is a challenge we are committed to deal with and we are making substantial progress.”

“At the heart of any Best Value audit is the question of whether the council is delivering quality services that respond to the needs of individuals and communities – and I’m pleased that clear and steady progress in Glasgow has been recognised.

“We are still relatively early in the current council term, but the City Government has translated its priorities into a positive strategic plan for the council and the city, which has the support of all parties”.

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A City Council spokesman added: “Officers are working on the financial aspect of equal pay as part of the wider project to resolve cases. That work is ongoing.”

However, Unison is to ballot members for strike action after the union said it had lost confidence in the council to settle the claims.

Members said they had been “betrayed” by council negotiators who ended months of discussions to instead work out a deal behind closed doors.

But the council has denied this and said it remained committed to discussions on an offer that will be made in December, with its equal pay team working “as fast as possible” on the issue.

Unison will issue papers to 2,000 members in Cordia and 2,700 in Education from August 28 in the ballot which closes on September 18.

Branch chair Carol Ball said: “In light of the Council’s failure there is no alternative other than to now formally ballot members in our branch on strike action.

“The purpose of strike action would be to force the Council to negotiate and agree a proper settlement package within an acceptable timescale.”

But a Glasgow City Council spokesman said: “This is simply untrue. The Council has committed to make an offer in December, which it will do, and we are committed to discuss the component parts of that offer prior to that”.

Scottish Green MSP Patrick Harvie said: “This report lays bare the scale of the major challenges facing Glasgow.

“It highlights a clear need to invest in front line services like homelessness, where the council has failed to house half of those it has statutory duties for, and recycling, where performance has gone backwards since 2011.

“So it’s deeply troubling that the SNP-led council is assuming that their own colleagues in the Scottish Government will impose a budget cut of £130 million over the next three years”.