The City of Edinburgh Council has made “considerable progress” towards balancing its books, according to the Accounts Commission.
The local authority watchdog raised significant concerns in December 2014 over the council’s financial position, including a £67 million gap in savings required to meet future funding levels.
But an Accounts Commission report published on Thursday said while it still faces major challenges, Edinburgh Council now “has a clear strategy for reducing its spending through changing the way it delivers services and reducing its workforce.”
The council met its £39 million savings target last year and is on track to deliver further savings of up to £49 million in the current financial year.
“Councillors and senior managers now have a shared understanding of the problems and the actions needed to solve them which will include some difficult decisions,” said the report.
“Changes include a new ICT (information and communications technology) contract, more online transactions and a new workforce strategy which will see a reduction of five per cent of total staff numbers by the end of next month, saving £25 million a year.”
Accounts Commission chair Douglas Sinclair said: “The council is now on a far sounder financial footing than it was a year ago.
“It has had to make tough choices on reconfiguring services and this hasn’t been an easy time, not least for its employees.
“Edinburgh is not out of the woods yet and it is still early days with many of its planned actions.
“But it is in a much stronger position to meet the challenges that lie ahead.”
In its conclusion, the Accounts Commission said: “The council has managed to achieve all this, despite a high turnover in its senior managers.
“It will need to ensure that it now has a period of stability in its CLT over the next few years.
“It has also shown that it is prepared to make difficult decisions, with reductions in its workforce and the services it provides.
“But, it will need to monitor the success of these changes and be able to demonstrate that decisions, such as retaining in-house estates services, represent best value.
“It is important that elected members and senior managers continue to provide good leadership of the council, and that its transformation programme is fully implemented and delivers the planned savings.
“The council will continue to face significant challenges and uncertainties in the coming years. But it is now in a stronger position to meet these future challenges.”