Merton Council is grappling with a significant budget shortfall, projected to reach £20 million by 2029, according to reports discussed at the Overview and Scrutiny Committee meeting on 26 November 2025. The scrutiny panels will consider draft savings proposals in November 2025. The Overview and Scrutiny Committee will then consider the panels' comments and provide a response to the cabinet, which is due to meet on 15 December 2025. The final decision on the Council's 2026/27 budget will be taken at Full Council on 25 February 2026.
The council faces a revised Medium Term Financial Strategy (MTFS) gap of £5.385 million for 2026/27, escalating to £20.422 million by 2029/30. These figures account for draft savings proposals, an increase in pay inflation from 2% to 3%, and service pressures related to temporary accommodation and children's social care. The Public reports pack Wednesday 26-Nov-2025 19.15 Overview and Scrutiny Committee provides further details on the proposed savings and the updated MTFS 2026-30.
To address the budget gap, Merton Council is considering a range of savings proposals across various departments. These proposals, detailed in the report pack, were presented to the Overview and Scrutiny Committee for review and feedback and include potential impacts to:
- Finance and Digital
- Housing and Sustainable Development
- Environment, Civic Pride and Climate
- Children, Lifelong Learning, and Families
- Adult Social Care, Integrated Care, and Public Health
Proposed savings include:
- Finance and Digital: Generating additional interest on revenue balances through treasury management.
- Housing and Sustainable Development: Reducing agency staff in Building Control and restructuring services.
- Environment, Civic Pride and Climate: Implementing fees and charges inflationary uplift.
- Children, Lifelong Learning and Families: Improving transport efficiencies for children with Special Educational Needs and Disabilities (SEND).
- Adult Social Care, Integrated Care and Public Health: Maximising independence through a strategic approach to supported living. This proposal aims to expand opportunities for independent living and reduce reliance on residential and institutional care by better aligning existing supported accommodation with the changing needs of people with learning disabilities (LD), mental health conditions (MH), and older adults. The focus is on increasing independence by enabling people to live as independently as possible, for as long as possible, within their own communities.
The council is also exploring ways to increase income, such as through rent reviews and lease renewals in Housing and Sustainable Development. The council also expects to receive income from the administration of the new Affordable Housing Policy income stream. This 'Affordable Housing Policy income stream' refers to increased income arising from the implementation and monitoring of new income for planning applications on 2-9 units which will attract commuted sums for affordable housing. An admin fee for administering the scheme will fund staff resources in the team; delivering the anticipated savings from 2027/28 (saving achievable in 2027/28 as the income is received upon starts-on-sites). A saving of £75,000 is expected from this in 2027/28.
The Overview and Scrutiny Committee is tasked with reviewing these proposals and providing feedback to the cabinet, which will then make decisions on how to proceed. It is a statutory requirement for the council to set a balanced budget.
