The council said that the increase was agreed to help support its investment in roads. Of the rise, 3% will be used to balance the budget and 1.84% for investing in roads.

The council said that Council Tax reduction recipients will continue to be protected (generally Bands A-C).

The increase would enable a fund of £20 million for capital schemes and an additional £1.3m of annual revenue for road maintenance.

The budget will see an increase in the council’s reserves to improve its medium to long term financial strategy and a more resilient position to address a number of challenges and risks which lie ahead.

Councillors also agreed a proposal to invest £1m of additional funding in a “Highland Deal for a sustainable future” - a Skills for Work Charter which will develop a range of initiatives and opportunities to retain young people, address poverty and reverse depopulation trends in rural areas. A further £0.5m is to be earmarked for rural transport projects.

Alister Mackinnon, budget leader, said: “This budget is a road to recovery for the council. We need to build our reserves for a sustainable future; make the best use of our resources to transform the council; build our resilience; and make substantial improvement to our roads.

“These are ambitious budget proposals which also seek to invest in people, skills, plant and places for a more sustainable future.”

Margaret Davidson, leader of the council, added: “The reduction in available capital money is a huge issue for us and will mean we have difficult choices to make, so this investment strategy for our roads will be tremendously important for people in the Highlands.”

Alasdair Christie, depute leader, commented: “A budget should not just be numbers on a page but should embody our values – and this budget does just that. I would like to thank members across the chamber for their contribution and support in creating a council budget which drive improvement, provide financial stability, and go some way to address poverty and rural deprivation delivering positive outcomes for people in the Highlands.”