Communities Minister Eric Pickles has said Birmingham City Council could have done more to prepare for the giant £757 million bill it faces to settle equal pay claims.
Speaking on a visit to the city the Communities and Local Government Secretary said many councils had taken steps to deal with the problem before it had become a critical issue like in Birmingham.
But he also said the door was open to council leaders to discuss the issue and did not rule out the prospect of further government assistance to help solve the problem.
The council is set to consult on service cuts as a result of the prohibitive cost of paying off mostly women workers who missed out on bonuses that will leave the authority paying out £75 million a year by 2016.
Council leader Sir Albert Bore has warned of the potential consequences after 174 former workers recently won pay claims at the Supreme Court.
The council has been loaned £429 million of the money by government to settle claims, and hopes to be able to borrow more.
Sir Albert warned that if the city council was not able to capitalise the remaining £328 million on its projected bill it could go bankrupt.
Speaking while visiting the site of one of Birmingham’s six economic zones in Aston, after signing over £2 million of funding to help it come to fruition, Mr Pickles said: “The hard truth is that most councils took provision in terms of equal pay over the last few decades.
"It is something I was actively engaged in when I was a councillor. Most made provision several decades ago.”
He added that it was “mainly Birmingham’s problem” and said “A couple of others are in a similar position – but nothing like the magnitude of Birmingham”.
But the Secretary of State also offered assistance to the council to find a way forward.
“It is a very big problem and we are very willing to meet with the council leadership to see if we can find a way out for them,” he said. “I hope that the council can find a way forward but I can’t make any promises.”
Sir Albert has also admitted that “in hindsight” the authority had failed to get to grips with equal pay over many years, but added the legal interpretation of equal pay law had also frequently changed and had always been “in the claimants’ favour”.
The council’s auditor, Grant Thornton, has said while the authority offered value for money and managed its finances well the impact of equal pay costs was a major concern.
The equal pay issue arose in 2006-2007 when lawyers realised councils and health authorities had not implemented new salary rules set up in 1997.
Under so-called single status arrangements, jobs mainly done by women, such as care work, cleaning roles and dinner ladies, were compared directly to jobs dominated by men, like street sweepers, road workers and dustmen.
It was discovered that, while they carried similar basic wages, the jobs mainly done by men carried higher shift and routine bonus payments – prompting thousands of equal pay claims.
Until recently a claim against the council was limited to staff who either still work for the authority or had left within the last six months.
But the recent Supreme Court ruling extended that time limit to six years, meaning claims could go on until 2018.