Glasgow faces financial pressure over unresolved equal pay claims

7 Aug 18

Scotland’s largest council faces “unprecedented financial pressure” as a result of unresolved equal pay claims, auditors have warned.

According to a report to be considered by the Accounts Commission this week, Glasgow City Council is not yet in a position to reflect the “substantial” number of equal pay claims in any of its financial forecasts, but its commitment to settle the claims could impact on service delivery.

The cost of meeting the equal pay bill, which some claim could top £500m, is in addition to the existing funding gap of £129.1m predicted by the council over the next three years.

In January, Glasgow agreed not to appeal a court decision over its pay grading system, paving the way for talks with unions to take place. Thousands of former and current staff are expected to claim compensation or pay rises as a result of the ruling.

“With its commitment to resolve outstanding equal pay claims, the council now faces a period of unprecedented financial pressure,” the best value assurance report said.

The potential financial implications were likely to be “significant”, it added, and the funding gap created too large to be bridged by the use of reserves or the sale of assets. The option of capitalisation would require the approval of the Scottish Government and possibly Westminster.

Work on a separate funding strategy was being taken forward by the council in parallel with discussions with claimants, although no timescale had been set for resolution.

“As the cost of the settlement of equal pay becomes clearer the council will need to update its financial plans and consider any impact this may have on how it provides services in future,” the report concluded.

Overall, auditors found Glasgow had made “steady progress” since its last best value report in 2009 and had a record of strong financial management. Its 2016-18 Transformation Programme had delivered savings of £102.5m, it added, although it was unclear how the long term non-financial benefits would be measured.

It is also on track to deliver five major infrastructure projects, worth £386m, by 2024, and working well with its City Region Deal partners to boost economic growth.  

Glasgow has also been reviewing its use of arm’s length external organisations (ALEOs) and plans to bring care and community safety services back under council control. The financial and service implications of these changes would need to be closely monitored, auditors said.

The report will be discussed by Accounts Commission board members on Thursday, who will then decide in private whether further action is required.

A spokesperson for Glasgow City Council said the council remained committed to settling outstanding equal pay claims and was confident that it would be able to meet that financial commitment.

“All parts of local government are facing financial pressure and we’re pleased that they’ve reflected the impact of our successful transformation programme,” he added.

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