The Cabinet of Merton Council met on Monday 13 July 2026, making key decisions on increasing affordable housing supply, confirming an Article 4 Direction for Houses in Multiple Occupation, and updating on the Crisis and Resilience Fund. The meeting also reviewed the council's financial outturn for 2025/26, discussed the budget for 2027/28 and the Medium Term Financial Strategy (MTFS) for 2027-2031, and received an update on Treasury Management activities for 2025/26.

Acquisition of Properties to Increase Affordable Housing Supply

Cabinet approved the acquisition of a target of 125 homes during 2026/27 to increase the supply of affordable housing for residents at risk of homelessness. This initiative will be funded through a combination of freehold purchases and long-term leasing arrangements, supported by £15,081,000 from Round 4 of the Local Authority Housing Fund (LAHF4) and an additional £20,088,000 of council capital. Authority was delegated to the Executive Director of Housing & Sustainable Development, in consultation with relevant executive directors and Cabinet members, to acquire properties that represent best value for the Council. The report highlighted that the estimated saving per acquisition is £10,000 over 12 months, with an estimated saving of £1.25 million for 125 acquisitions. The acquisition programme aims to reduce reliance on nightly-paid temporary accommodation and improve the quality of accommodation provided to vulnerable residents.

Confirmation of Article 4 Direction for Houses in Multiple Occupation (HMOs)

Cabinet recommended to the Council that the immediate Article 4 Direction for small HMOs, covering 13 wards, be confirmed to make it permanent. This decision follows a public consultation where the majority of respondents supported the measure. The Article 4 Direction requires planning permission for all new HMOs, aiming to provide greater planning control over development and address concerns about the cumulative impact of HMOs on local amenities, such as noise, waste, and parking pressures. The decision also noted the entitlement to compensation for the first 12 months where planning permission is refused for development that would have been permitted development but for the direction.

Crisis and Resilience Fund 2026/27 Update

Cabinet agreed the proposed allocations for the Crisis and Resilience Fund (CRF) for April 2026 to March 2027. This fund, which replaces the Household Support Fund and Discretionary Housing Payments, aims to shift from reactive crisis support to building longer-term financial resilience. Merton Council has received a confirmed allocation of £2,258,442 for Year 1, with £482,153 ringfenced for housing payments. The proposals include a transition away from universal Free School Meal holiday vouchers towards more targeted support, alongside continued funding for crisis payments, resilience services, and community coordination. Key interventions include benefit maximisation, employment support, financial literacy programmes, and debt management advice. The report highlighted that the Council's Low Income Family Tracker (LIFT) tool will be central to identifying and targeting support to residents most at risk.

Changes to Corporate Printing and Scanning Services

Cabinet recommended the adoption of Option 2 for the Procurement Strategy for Corporate Print, Post and Scanning Services, which involves fully outsourcing these functions. This decision aims to modernise the service, reduce risk, and achieve recurring savings estimated in excess of £200,000 per annum. Authority was delegated to the Executive Director for Innovation and Change, in consultation with the Lead Member for Finance and Corporate Services, to award the subsequent contract. The outsourced model will cover high-volume printing and posting, hybrid mail, and inbound mail scanning and digital mailroom functions.

Outturn Report 2025/26

Cabinet noted that the financial outturn position for revenue in 2025/26 showed a net underspend of £0.498 million. The report detailed variances across directorates, with significant pressures noted in Housing and Sustainable Development (£6.314m overspend) and Children, Lifelong Learning & Families (£2.397m overspend), largely due to increased costs in temporary accommodation and children's social care. Mitigating actions, including the reduction of agency costs and scrutiny of low-level spending, were implemented. Cabinet also considered and approved adjustments to the Capital Programme, noting that it requires considerable reprofiling.

Budget 2027/28 and MTFS 2027-2031

Cabinet noted the approach to rolling forward the Medium Term Financial Strategy (MTFS) for 2027-31. The report highlighted the significant financial challenges facing the Council, including the impact of inflation, demand-led services, and uncertain government funding. The MTFS update indicated a preliminary budget gap of £9,694,000 for 2027/28, increasing to £33,808,000 by 2030/31. The report also detailed updated assumptions on pay and price inflation, with a revised pay award provision of 3% for 2026/27 and a 2% provision for prices from 2027/28. The Dedicated Schools Grant (DSG) deficit remains a significant pressure, although the Council anticipates receiving a High Needs Stability Grant to cover 90% of historic deficits, subject to the approval of a SEND local reform plan.

Treasury Management Annual Review 2025/26

Cabinet noted the update on Merton Council's Treasury Management activity during 2025/26. The report confirmed that all treasury management activities complied with the CIPFA Code of Practice and the Council's approved Treasury Management Strategy. The Council maintained an under-borrowed position, with borrowing at £38 million, significantly below the authorised limit. Investment income exceeded the budgeted amount, generating £9.8 million against a budget of £8.9 million. The report also detailed the maturity structure of borrowing and investment portfolios, confirming compliance with prudential indicators and investment limits.