The Cabinet of Merton Council met on Monday 13 July 2026, discussing a range of significant issues including the acquisition of properties to increase affordable housing, the confirmation of an Article 4 Direction for Houses in Multiple Occupation, and an update on the Crisis and Resilience Fund. Key decisions made included approving the acquisition of 125 homes for temporary accommodation, recommending the permanent confirmation of the Article 4 Direction for HMOs, and agreeing proposed allocations for the Crisis and Resilience Fund for the upcoming year.

Acquisition of Properties for Affordable Housing

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 aims to reduce the Council's reliance on expensive nightly-paid temporary accommodation. The acquisition 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 noted that the criteria and assumptions for the LAHF4 unit mix ensure the proposals do not create a General Fund budget pressure. Cabinet also considered the merits of long-term contractual arrangements with institutional and pension-fund backed providers for the supply and use of these units.

Confirmation of Article 4 Direction for Houses in Multiple Occupation

Cabinet recommended to the Council that the immediate Article 4 Direction for small Houses in Multiple Occupation (HMOs) covering 13 wards be confirmed, making it permanent. This decision follows a review of public consultation responses and a recommendation from the Development and Planning Applications Committee. The Direction, which came into effect on 24 March 2026, requires planning permission for all new HMOs in Merton. Cabinet also noted that there is an entitlement to compensation for the first 12 months where planning permission is refused for development that would have been permitted development but for the Article 4 Direction. The consultation responses indicated strong public support for the Direction, particularly from residents, with a majority of respondents supporting its permanent confirmation.

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 replaces the Household Support Fund and Discretionary Housing Payments, with a focus on building longer-term financial resilience. Merton's confirmed Year 1 allocation is £2,258,442, with £482,153 ringfenced for housing payments. Early proposals totalling £563,458 were agreed in March 2026 to ensure a smooth transition. The report detailed proposals for the remaining balance of £1,212,835.10, covering October 2026 to March 2027, alongside indicative proposals for Years 2 and 3. A key aspect of the update was the proposed transition away from universal Free School Meal holiday vouchers to a more targeted, needs-based approach, with funding redirected towards interventions that build financial resilience.

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 operational risk, improve business continuity, and deliver recurring savings. 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, extensions, and variations. The estimated annual cost of the outsourced contract is approximately £1 million, with potential for further savings through cross-council digitisation and process redesign.

Outturn Report 2025/26

Cabinet noted that the financial outturn position for revenue in 2025/26 showed a net underspend of £0.498 million. They also considered the outturn position on the Capital Programme and approved adjustments to it, noting that the programme requires considerable reprofiling. The report highlighted significant pressures in Housing and Sustainable Development, particularly concerning temporary accommodation costs, and in Children, Lifelong Learning and Families due to demand pressures. Mitigation measures were implemented throughout the year to manage these pressures. The report also detailed the Dedicated Schools Grant (DSG) deficit, which stood at £69.126 million at the end of 2025/26, and welcomed the government's announcement of a High Needs Stability Grant to address historic deficits.

Budget 2027/28 and Medium Term Financial Strategy (MTFS) 2027-2031

Cabinet noted the approach to rolling forward the MTFS for 2027-31. This report presented an initial re-pricing of the MTFS, updating it for known changes and pricing updates to recast the budget gap. The revised MTFS gap was projected to be £9.694 million in 2027/28, rising to £33.808 million by 2030/31. The report highlighted the impact of updated pay and price inflation assumptions, with pay inflation increased from 2% to 3% for 2027/28 due to economic forecasts influenced by geopolitical events. The Council faces significant financial challenges in setting a balanced budget, which will be addressed through strategic workstreams focused on cost-effectiveness and income generation.

Treasury Management Annual Review 2025/26

Cabinet noted the update on Merton Council's Treasury Management activity during 2025/26. The report outlined variations from the Treasury Management Strategy approved in February 2025. The Council maintained an under-borrowed position and remained a net investor, with investments totalling £195.3 million and generating £9.8 million in income. The report confirmed compliance with all treasury management principles and prudential indicators, including debt limits and investment limits. The Council's borrowing remained well below its liability benchmark, indicating a strong liquidity profile with no new borrowing planned until 2028/29. The report also detailed the repayment of a £4 million LOBO loan, resulting in significant interest savings.