THOUSANDS of low-paid female workers were celebrating last night after Liverpool City Council was handed £35m of Government cash to help meet their equal pay claims.

The city council is among 34 local authorities which will be allowed to borrow £455m to cover new pay deals and make one-off back-payments to staff including dinner ladies, cleaners and care workers.

The move follows growing embarrassment that town halls – struggling with crippling costs – were dragging their heels on complying with a court ruling dating back to 2004.

Although no details of the deal were released, the Daily Post understands that Liverpool will receive the full £35m it had requested. Knowsley Council will get a smaller sum.

Cllr Steve Hurst, Liverpool’s executive member for corporate performance, hailed the announcement as “extremely good news” for up to 7,000 staff, mainly women.

He added: “Historic agreements, common to local authorities across the country, mean that women workers in jobs such as care, catering and cleaning may not have been eligible for bonus payments given to men in equal value jobs.

“This announcement means that we can now move to the next stage of starting to calculate individual offers for members of staff who may have a potential claim.

“Any offer which may be made will depend on the job and grade, length of service and the hours that the individual employee works.”

The pay discrimination dates back to the 1970s and 1980s, when the likes of bin men and male road sweepers were handed bonuses of up to 40% – bonuses denied to dinner ladies on the same headline pay.

In July, the city council revealed that its full liability to equal pay claims was estimated to be £60m – suggesting the 7,000 staff are in line for an average payment of £8,500.

Across the country, local authorities face a bill of at least £3bn for up to 400,000 low-paid women. A number of court cases have been brought by no-win, no-fee lawyers to win six years’ back pay.

Mr Healey, the local government minister, said: “Local government workers have the legal right to fair pay like anyone else, but some councils have let unequal pay persist for decades.

“I’m determined to see councils settle their equal pay obligations. Good progress has been made over the past year and I want to see councils go further and faster, working closely with the trades unions.”

The announcement allows the 34 town halls to raise £455m, either by borrowing against their assets or selling assets – a process known as capitalisation.

It is the second time the government has intervened. Earlier this year ministers allowed 46 councils to borrow £550m, to make a total of £1bn, from the private or public sector.

Separately, it was revealed yesterday that Justice Secretary Jack Straw, is now considering capping payments to no-win, no-fee lawyers, describing some fees as “nothing short of scandalous”