The Cabinet of Merton Council met on Monday 13 July 2026, approving a significant expansion of the Council's affordable housing supply by acquiring 125 homes in 2026/27. The meeting also confirmed the permanent introduction of an Article 4 Direction to control the conversion of properties into Houses in Multiple Occupation (HMOs) across 13 wards, and agreed the proposed allocations for the Crisis and Resilience Fund for the upcoming financial year.

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 aims to reduce reliance on costly nightly-paid temporary accommodation. The Council has secured £15,081,000 from the Ministry of Housing, Communities and Local Government (MHCLG) through Round 4 of the Local Authority Housing Fund (LAHF4), with an additional £20,088,000 of council capital allocated to support these acquisitions. 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. Furthermore, Cabinet considered and authorised the Executive Director of Housing & Sustainable Development to enter into contractual arrangements of 10 years or more with institutional and pension-fund backed providers for the supply and use of units, subject to procurement procedures. The estimated saving per acquisition is £10,000 over 12 months, with a projected total saving of £1.25 million for 125 acquisitions.

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

Cabinet recommended to the Council the confirmation of an immediate Article 4 Direction for small HMOs covering 13 wards. This Direction, which began on 24th March 2026, requires planning permission for all new HMO conversions. Following a public consultation period, the majority of responses (82%) supported making the Direction permanent. Key themes supporting the confirmation included a desire for greater planning control, concerns about the cumulative impact of HMOs on local amenities such as noise and waste, the importance of maintaining community character, and the need to protect tenants. Objections raised by a small number of landlords focused on increased costs and potential impacts on housing supply and affordability. 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.

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. The proposals include a transition from universal Free School Meal holiday vouchers to a more targeted approach, with continued funding for these vouchers only for the Summer 2026 holidays. Mitigation measures include expanded Holiday Activities and Food (HAF) provision, a ringfenced discretionary crisis fund for families with children, continued crisis payments, and targeted benefit maximisation and financial advice services. The fund will also support resilience services such as benefit maximisation, employment support, financial literacy, savings initiatives, affordable credit access, debt management advice, and help with core bills. Indicative proposals for Years 2 and 3 include further development of these resilience services, with a focus on financial literacy, food support through a community pantry and distribution hub, and enhanced support for carers.

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 a fully outsourced model. This approach will cover high-volume printing and posting, hybrid mail, and inbound mail scanning and digital mailroom functions. The proposed contract is valued at approximately £1 million per annum over five years. Benefits include recurring savings estimated in excess of £200,000 per annum, modernisation of services, reduced risk, and improved business continuity. 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.

Outturn Report 2025/26

Cabinet noted that the financial outturn position on revenue for 2025/26 showed a net underspend of £0.498 million. The report also detailed the outturn position on the Capital Programme, with adjustments to the programme requiring considerable reprofiling. Key pressures were noted in Housing and Sustainable Development, particularly concerning temporary accommodation costs, and in Children, Lifelong Learning and Families due to increased demand and cost pressures. Mitigation strategies, including reviewing high-cost temporary accommodation placements and strengthening financial discipline, were highlighted. The report also provided an update on savings delivery, with 95% of the 2025/26 savings target achieved.

Budget 2027/28 and MTFS 2027-2031

Cabinet noted the approach to rolling forward the Medium Term Financial Strategy (MTFS) for 2027-31. This report presented an initial re-pricing of the MTFS as the first step towards setting a balanced budget for 2027/28 and future years. The updated forecast budget gap, considering revised pay and price inflation assumptions and the PFI contract end, shows a cumulative gap of £9,694,000 in 2027/28, rising to £33,808,000 by 2030/31. The report also highlighted the significant Dedicated Schools Grant (DSG) deficit, which stood at £69.126 million at the end of 2025/26, and noted the government's intention to provide a High Needs Stability Grant covering 90% of historic deficits, subject to the approval of a local SEND 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 generated was £9.8 million, exceeding the budgeted £8.9 million. The report also detailed the maturity structure of borrowing and compliance with prudential indicators.

The meeting was held on Monday 13 July 2026.