Why are Edinburgh's public services facing financial challenges?

It comes as The Herald revealed that the city hit by a housing emergency is engulfed in a 'frightening' £1.7 billion sea of debt which is set to rise by £1bn by the end of the decade raising concerns about its financial sustainability and its effect on the running of vital services.

But how does the council pay for the public services it provides, what does it pay for and what are the financial challenges?

How does Edinburgh Council fund its services?

There are several key sources. The largest funding source is a Scottish Government grant which amounted to £552.075m in 2023/24 but the council says Edinburgh receives the lowest per capita funding among Scotland's 32 councils.

It also raises funds through council tax which is collected from residents based on property value bands. In 2025-26 Edinburgh implemented an 8% council tax increase - the largest in two decades - to try and address budget shortfalls.

It also raises money through fees and charges with income coming from  parking fees, planning applications, and licensing.

Revenue is also generated commercially from council-owned enterprises like Lothian Buses and Edinburgh Trams and through sales of property.

What services does the council provide?

It is responsible for a wide range of services, including: the management and provision of schools and services for early years and special education, social care, offering temporary accommodation to house the homeless and manage council housing.

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It is also in charge of handling bin collections, recycling, and street cleaning as well as maintaining roads, pavements, and public transport infrastructure.

The council is also responsible for operating and providing libraries, museums, parks, and community centres and oversees building regulations and business licensing.

What are the main financial challenges facing the council?

The council projected a funding gap of £26.4 million for 2024–25.  But that is the tip of a financial blackhole iceberg with the council predicting a funding black hole of £223m over the next ten years.

The Herald revealed that the city which has been hit by a self-declared housing emergency is engulfed in a 'frightening' £1.7bn sea of debt which is set to rise by £1bn by the end of the decade raising concerns about its financial sustainability and its effect on the running of vital services.

It is facing increased costs in homelessness services and health and social care.

And the council says it has suffered a decade of "chronic underfunding" which has necessitated £400m in savings over ten years - around a third of what it was spending on maintaining public services in 2023/24.

George Street, Edinburgh (Image: Gordon Terris /Herald&Times) The council has also been hit by rising costs such as wages and funding gaps in future projects, which has led the council to look at increasing its huge debt burden through extra borrowing.

How is the council addressing these challenges?

It wants unrestrained power to raise council tax and impose next taxes - having already brought in a visitor levy.

It says it is continuously identifying areas to reduce costs without compromising essential services and is looking at increased borrowing to fund future projects like the building of new affordable homes.

It has looked to increase council taxes, and fees for services like parking and planning applications.

It has looked to focus resources on critical services and exploring alternative delivery models.