A campaign to give every household in Merton £100 council tax rebate has been backed by Mitcham and Morden MP, Siobhain McDonagh.

Labour councillors claim that Merton’s Conservative council is “hoarding” an unnecessary amount of cash in its reserves.

And now residents have begun signing a petition that will be presented to the full council along with a motion endorsing the cash pay-out.

Ms McDonagh said: “So many people have contacted me over the summer to say how unfair it is that the council is keeping their money when they need it much more.”

Merton’s reserve fund is in excess of £10m and is expected to reach almost £11.4m by next year.

Councillor Mark Allison added: “It’s not just Labour councillors, but now a lot of residents think that the council is hoarding away their money.

“There’s a groundswell of opinion on this and I think the public feel they’d rather have their money than see it needlessly sit in the council coffers.

“Even after returning this money, the council would still have £3,5m for contingencies and emergencies although you would hope this is a fund they would never need to dip into.”

He added: “Hundreds of people have signed the petition already and we’ll be taking this to the next council meeting on November 26.”

But Merton Council’s leader, councillor David Williams, dismissed the idea as “deeply irresponsible”.

He said: “If you do this now, where will you find the money next year or the year after? You can only squander your savings once.

“This is coming from a Labour MP and former Labour council who virtually brought Merton to its knees. They’re having a bit of a laugh really.

“In 1998 there was only £78,000 left in the bank - hardly enough to last five minutes if something went wrong. It’s been a painful challenge for us to bring the reserves back again.“