A new report issued by the spending watchdog today has praised the local authority for making “steady progress” over the last decade and having a “clear plan” to tackle the city’s challenges.

However, it adds that Scotland’s biggest local authority faces “a unique set of challenges”, greater than those faced by any other council.

A number of local authorities have faced legal challenges from women who have been paid less than men doing the equivalent job, and in Glasgow it is thought the payout may be as much as £500 million.

The Accounts Commission noted the council had achieved savings of more than £100m in the last two years but faces a funding gap of almost £130m over the next three years and is not yet able to reflect the potential impact of equal pay claims in its financial plans.

The scale of resolving equal pay claims is likely to be significant and would be unlikely to be bridged by traditional funding options such as the use of existing reserves or selling assets, says the report.

Graham Sharp, chair of the Accounts Commission, 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.”

The council’s good work with its partners to support economic growth was noted and as was its improved performance across many service areas, including educational attainment, wellbeing of children and young people, and wider health outcomes. The Commission stated it is important this momentum continues.

The council’s effective leadership is also recognised.

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.”