What Merton Labour isn’t telling you

Merton Council is facing a £24 million funding gap by 2029/30 following Labour Government’s ‘Fair Funding Review’. Liberal Democrats argue the administration is passing the cost of this funding crisis onto residents, through service reductions, increased charges. Merton Council has retained £2.5m in Council Tax overpayments* 

Merton Liberal Democrats have uncovered what they describe as serious risks within Labour’s proposed 2026 Budget, warning it threatens the Council’s long-term financial stability while increasing pressure on local services and residents.

On Wednesday (25th February 2026), Labour-run Merton Council will present its Budget following changes to local government finance under the Government’s so-called Fair Funding Review. The reforms leave Merton facing a projected £24 million funding gap by 2029/30.

Liberal Democrats say the administration is passing the cost onto residents through service reductions (including a £400,000 drop in Merton’s road maintenance budget)**, higher charges (including car parking charges up by 33%)***. In addition the Council is retaining Council Tax overpayments, which should be returned to taxpayers.*

Concerns have also been raised over eleventh hour £1.7m savings proposals for 'service delivery for vulnerable children', including changes to young people's mental health services, children's social care, and fostering support. The Council are demanding the NHS and external partners to pick up extra costs without a formal agreement in place. These significant savings were proposed last minute, outside of the usual scrutiny process. 

A stark warning appears from the Council's Chief Finance Officer in the latest budget papers, that as a result of Labour Council bosses’ latest decisions in the budget, Merton would see “...a permanent and compounding loss of funding for the Council Budget.”

Commenting, Councillor Anthony Fairclough, Leader of Merton Liberal Democrats said:

“Merton Labour is choosing to shift the burden of its funding crisis directly onto residents at a time when many households are already struggling with the cost of living.”

“The Liberal Democrats will continue pushing the Council to protect services, keep costs down and return money owed to residents.”

ENDS

Notes to Editors:

Find the article by the RAC here.