EQUAL pay claims could lead Scotland’s biggest local authority into a period of “unprecedented” financial pressure, according to the public spending watchdog.

A report from the Accounts Commission said Glasgow City Council faced a “unique” set of challenges, greater than those facing other local authorities.

It said the city was facing a funding gap of £129 million over the next three years and it was unable to reflect the potential impact of equal pay claims in its financial plans.

“The potential scale, once resolved, is likely to be significant and traditional funding options such as the use of existing reserves and receipts generated from asset sales are unlikely to be sufficient to bridge any funding gap,” it said.

“The option of capitalisation, as the council used previously, requires the approval of Scottish and possibly UK governments.

“The council has acknowledged that a separate funding strategy outwith the current financial framework will be required.

“We are seriously concerned about how the potential financial cost of the matter might affect the council’s ability to deliver its services, and we will continue our close interest in this regard.”

Accounts Commission chair Graham Sharp said: “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.

“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.

“We are concerned that the council may be facing a period of unprecedented financial pressure on its services.

“It’s facing a funding gap of £129m over the next three years and the scale of resolving the equal pay claims is likely to be significant.

“While the council has displayed strong financial management, which may cope with the funding gap, the cost of the claims is unlikely to be bridged by traditional funding options. So, it’s a serious concern for anyone with an interest in the city and its citizens – which is why we’ve recommended that the council reflects the potential impact of equal pay claims in its financial planning, and asked the Controller of Audit to report to us as and when the position of the equal pay claims clarifies.”

Glasgow City Council leader Susan Aitken said the local authority was making “substantial” progress in dealing with the issue.

“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,” she said.

“A key part of that means involving Glaswegians more often and more closely in our decision-making and shaping our services.

“So it is important that this report highlights our ongoing work to improve partnership working and community participation.

“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.”