Merton Council Announces 4% Council Tax Increase for 2026/27
Residents in Merton, South London, are facing a council tax rise as the Labour-led authority proposes a 4 per cent increase for the 2026/27 financial year. The council argues that despite this hike, rates will remain lower than those in neighboring boroughs, aiming to mitigate the impact on households during ongoing cost-of-living pressures.
Details of the Proposed Tax Hike
The proposed increase includes a 2 per cent rise for core services and an additional 2 per cent precept specifically ring-fenced for adult social care spending. For a typical Band D property, this translates to bills increasing from £1,598.05 to an estimated £1,661.97, resulting in an annual rise of approximately £64.
The council cites the government's "Fair Funding Review," set to take effect in April, as a key driver behind the decision. This review categorizes Merton as a "low-needs, high-resourced authority," which influences funding allocations. Under the current 'Core Spending Power' model, the government assumes Merton will raise council tax by 5 per cent annually over the next three years—the maximum allowed without a referendum. This model suggests residents should be paying £2,060 in 2026/27, significantly higher than the borough's proposed rate.
Budget Implications and Funding Gap
By opting for a 4 per cent increase instead of the assumed 5 per cent, Merton Council is effectively budgeting with less spending power than the government anticipates. This decision means the council will receive less grant funding, as the formula presumes higher local tax income than what will actually be collected. The long-term impact is substantial, with Merton's funding gap—the difference between spending needs and available funding—now forecast to be £5.78 million higher than originally estimated by 2029/30.
Combined with a projected 0.75 per cent growth in housing numbers, the tax increase is expected to generate £134.2 million for local services. Council Leader Ross Garrod emphasized the administration's commitment to affordability, stating, "We promised to keep your bills as low as we can to help your family with the cost of living, and we have. Freezing the main element of council tax is a choice we have made as a Labour Council, on the side of hard working families in Merton."
Cuts and Efficiency Savings in the Budget
The 2026/27 budget also includes over £7.2 million in cuts and efficiency savings across various departments. Key reductions include:
- Adult Social Care: £2 million in savings, with £435,000 from reviewing Section 117 aftercare packages and £500,000 from using predictive AI to manage demand and reduce hospital admissions.
- Children’s Services: £533,000 saved by reshaping social care teams and £97,000 from reorganizing the Virtual School, alongside cuts to youth participation funding.
- Administrative Changes: A 35 per cent reduction in the in-house Design Studio salary budget, fewer agency staff in Building Control, and the merger of the Complaints and Information Governance teams.
Political Opposition and Criticism
The Liberal Democrat opposition has criticized the cuts as "panicked" and "shameful," alleging that some measures were introduced at the last minute. Councillor Anthony Fairclough commented, "Labour claim they are doing all they can to support residents with the high cost of living. Yet behind the scenes they are introducing inflation-busting increases to council services and attempting to pass the cost of young people’s health services onto the NHS. They are desperate to cover up the impact of massive cuts the government is forcing on them."
Merton's final budget proposals will be decided at the Full Council meeting on February 25, where further debates and potential amendments are expected.
