Where does our money come from? 

The council gets its money from a range of different sources, with the majority coming from Council Tax, Business Rates and grants from central government. 

Between 2010 and 2024, the balance of this funding has changed. In this time, Council Tax has risen at a slower rate inflation while central government grants have declined – at first decreasing and more recently increasing, but at a rate too slow to catch up. More than a decade of underfunding means the council is £16.7million worse-off than we would have been if our funding had gone up in line with inflation over the last 10 years. 

Where does our money go? 

The council delivers hundreds of services from collecting your bins and caring for older and disabled residents to fixing potholes and looking after our much-loved parks and libraries to name just a few. 

There are some services, such as collecting your bins, which we are legally required to deliver but some of the things we pay for, such as free swimming for kids, are not required by law but are nevertheless important and help our residents to live full and happy lives. Many of the legally required services have seen a significant increase both in the number of people using them, and the amount that it costs us to deliver them, which is putting a big squeeze on our finances – and this is the case for councils up and down the country, not just Merton. 

Helping families who have been made homeless 

For example, the council has a duty to offer temporary accommodation (the name for emergency housing) to local families who have been made homeless. Over the past two years, the number of homeless families needing our help has rocketed from 350 to 657. We have a duty to make sure that every local family has a safe, warm and secure place to call home. But the same rising rents that have driven families into homelessness is making it more expensive for the Council to house them in emergency accommodation. 

Supporting children with Special Educational Needs and Disabilities 

The council is also responsible for ensuring that children with Special Educational Needs and Disabilities (SEND) receive the support they need with their education. This could mean extra staff if they remain in a mainstream school, a place in a specialist school, or help with transport to their place of education. 

Over the last seven years, the number of children we provide additional support to has risen to 2,587 – an increase of 141%. The funding we receive from government for this hasn’t kept up with demand. 

Caring for Merton’s older and disabled residents 

The biggest area of council spending is Adult Social Care. This is a complex service, which provides a wide range of care and support for to and disabled residents in Merton. 

As with other services, the number of residents needing specialised care and support is rising every year. For example, over the last three years, the number of people in care homes paid for by the council has increased by 15%, from 1,925 in 2021 to 2,212 in 2024. This increase has happened while the average care home costs have gone up by 22% in just two years. 

These pressures mean that we’re now spending almost £70 million a year to look after some of our most vulnerable residents – about £10 million more than we were spending just three years ago. 

What does this mean for our budget? 

These are just some of the examples of how since 2010 the funding the council receives to run our services has not kept up with the rising demand for residents needing to use them. 

These pressures are being felt in councils across the country, to the extent that even neighbours in areas such as Croydon have effectively had to declare bankruptcy. However, thanks to our careful financial management and innovative approach to making our services run as efficiently as possible, we have managed to set a balanced budget year after year. We’re not going to let the people who depend on our services down, and our budget will continue to protect the services you rely on, deliver value for money, and invest in what matters to you.  

We are working with the new government on fixing the problems with funding for public services, but this is not an overnight fix and so for the time being Until the imbalance between the money we’re require to spend and the money we receive is addressed, we will continue to face difficult decisions on Council Tax, fees, and funding for the services we are working hard to protect. 

Our budget for 2025/26 invests in our homelessness, social care, and SEND services to protects them for those who need them, and this is partly funded by a 4.99% increase in Council Tax. This increase is made up of two parts: 

• A 2% increase to the Adult Social Care Precept – all the money from this increase will go directly to services which provide care and support for older and disabled residents including placements in care homes and dementia services. 
• A 2.99% increase that will go towards our general funds that will help pay for our homelessness and SEND services. 

We don’t want to have to make this increase, but if we don’t, we would have to make severe cuts to your frontline services that we are working hard to protect. 

We have again kept Council Tax lower than neighbours in Sutton, Kingston, and Croydon. However, we know that any rise can present real problems. That’s why we are continuing our Council Tax Support Scheme, which will reduce bills for around 10,000 Merton households.  

For those who aren’t eligible, we are continuing to help with family finances through food support, benefits and debt advice, emergency grants, jobs and training guidance, and free school holiday activities and meals. For more information on the wide range of support available, visit merton.gov.uk/CostOfLiving or call 020 8066 4086.