The exact size of the shortfall will not be known until the release of the Scottish Government’s budget and grant settlement figures in December but the local authority is calling for residents to help “make the right decisions and do the best we can for the people of the Highlands”.

Budget leader Alister Mackinnon said: “The exact gap is very uncertain as although the UK Government’s budget has been announced, we will not have the Scottish Government’s budget and grant settlement figures until mid-December. We are hopeful however that the Scottish Government will pass on the additional money.

“Over the period 2013/14 to 2018/19 the Highland Council has already had to implement budget savings of £102.1m and council tax rises of 3% in each of the last two years in order to deliver a balanced budget. We have managed to do this without compulsory redundancies and at the same time have still invested in important projects across the Highlands – such as new schools, roads and free wifi.

“Our Reserves however are at the lowest levels in recent history and we are taking action to protect these Reserves from reducing any further. We were estimating a £5m overspend in Quarter 1- but our officers have been working extremely hard to reduce this and we are now predicting a more positive out-turn with an overspend of £2.5m. This is not ideal, but moving in the right direction. We do however have the risk of the cost of another harsh winter ahead of us.

“We have been working with services to produce comprehensive information on our current spending profiles, to identify where there are opportunities for efficiencies and any commercial opportunities. Our focus will be on directing our resources to those areas which will give us the best outcomes and deliver value for money.

“Income generation, commercialisation and efficiencies are a fundamental part of our strategy to protect essential services.

“There will be very hard decisions to make as we plan for a reduced budget over the next 3 years and it is vital that we involve the public, our staff and all members in the choices we make.”

Depute budget leader Matthew Reiss said: “This engagement will involve a range of engagement activities stretching the length and breadth of Highland. We have created a video, leaflet, survey and other materials to help explain the challenge facing us.

“This is an important opportunity to listen to what is important to people, to reshape our priorities and to focus our resources on improving lives and opportunities here in the Highlands.”