Council tax in Rutland is set to rise by just two per cent – half the previous proposed increase – after a last minute reprieve on schools funding.

Rutland County Council's cabinet will meet on Tuesday February 17 to discuss the proposal – ahead of a vote on the 2026/27 budget later this month.

A report published by council leader Gale Waller (Lib Dem) this week revealed that the government has announced it will fund 90 per cent of local authorities' so-called Dedicated Schools Grant (DSG) deficits.

These deficits are effectively debts that local councils have built up over time to ensure schools in their area are properly funded.

For Rutland, this currently stands at £10million and is estimated to be £26m by 2028/29.

The council will be required to cover 10 per cent of that cost with its own reserves – but will unlock government funding for the remainder of the balance.

As a result, council bosses now believe they can restrict the council tax rise to just two per cent.

This means the Band D rate – for an average home – will increase by £44.38 to £2,263.33 in 2026/27 from £2,218.95 last year.

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In her report Coun Waller states: "This marks the most significant national shift in the treatment of Dedicated Schools Grant (DSG) deficits in more than a decade. 

"Through the new High Needs Stability Grant, the government has confirmed that 90 per cent of Rutland's DSG deficit at March 31 2026 will be funded nationally, with further support available for deficits arising in 2026/27 and 2027/28, subject to an approved plan. 

"This avoids the financial cliff edge previously facing councils and provides much needed stability while wider reforms to special educational needs and disabilities take place.

"The government's revised approach represents a transformational improvement in the council's financial risk profile. 

"Years of disciplined financial management mean the council is well placed to meet the requirements of the new national framework. 

"Critically, past decisions by councillors to prioritise sustainability and resilience now enable the council to meet the required 10 per cent local contribution and unlock more than nine times that value in Government funding.

"This shifts Rutland from carrying a growing, unfunded national pressure to being able to substantially mitigate a longstanding financial risk."

Increases to council tax are split into two components – one part to fund all services and another separate rise to fund adult social care, the council's biggest cost at £26.9m. 

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The adult social care part of any council tax increase is set by government at 2 per cent.

Other costs for next year include £6m for recycling, waste services and street cleaning and £5.2m for highways and transport.

The council also faces a £4m housing benefit bill and must also spend £1.7m on public health.