The Controller of Audit’s Best Value Assurance Report has highlighted that the scale of savings needed - over £100 million by 2029 - means senior officers and councillors must work together to find sustainable ways to deliver differently, improve performance and ultimately reduce costs.

The council has ambitious plans to borrow money to improve housing and school buildings. However, the report warns this will need to be managed carefully to ensure that plans are affordable and don’t have a detrimental impact on services.

Progress has been made since the Commission last reported, and many services are performing well, it said. But now the council has been urged to address declining performance in areas including housing, waste and some aspects of street cleaning.

The Accounts Commission recognises the council’s ambitious plans to end poverty and become a net zero city by 2030. Given current progress, however, there remains a significant amount of work to achieve these targets, not least in establishing cost implications.

Jo Armstrong, chair of the Accounts Commission, said: “We cannot underestimate the scale of financial challenge. The council has successfully achieved savings over recent years. But given increasing demand and financial pressures, the council must accelerate its transformation and change programme. Listening to and acting on the views of staff and local communities will be vital.

“The council has real opportunities, including the potential to raise more income. It shouldn’t use the potential of future income, however, to delay making difficult decisions now as challenges will only intensify.”

Responding to the report, council leader, Cammy Day, said: “We’re encouraged by the Commission’s findings, which recognise the good progress the council has made since 2020.

“We’ve delivered a lot of change at a time of huge pressure on our services and on our budget, but we’ve stayed true to our priorities of protecting day-to-day services and investing in a fairer, greener future. Our aims to eradicate poverty and become net zero by 2030 are ambitious, but we need to be aspirational to make sure they stay at the top of our priority list.

“Our focus on getting the basics right for our residents, meanwhile, is also bearing fruit with Edinburgh now a top-performing council in Scotland for street cleanliness, and continued improvements in key areas such as road conditions. We acknowledge, however, that there is still much more to be done and we’ve targeted substantial additional resources into key services such as housing, where we know performance has to improve if we are to tackle Edinburgh’s housing emergency.

“We’re continuing to adopt new technologies to make it easier for residents to come to us for help and, as recognised in the report, we’re looking forward to realising the huge benefits our Visitor Levy proposals will bring from 2026 – which we forecast will raise over £100m for the city by 2030.

“It’s no secret, however, that ever more difficult financial decisions lie ahead. Despite the unique pressures that come with being Scotland’s capital city, Edinburgh remains the lowest-funded council per head in Scotland, which is having a huge impact on our finances. The latest projections show that we will face a budget shortfall of at least £30m next year and we’ll need to work even harder to ensure we can keep on delivering best value for the people of Edinburgh.”