Plans to put £100 in the pocket of every Merton council taxpayer were voted down in an embarrassing defeat for the borough’s new Labour administration.

The first major piece of policy put to a full-council vote by the minority leadership was defeated by Conservative, Liberal Democrat and Independent councillors at a meeting on Wednesday evening.

The rebate, staggered over the next four years, was to come out of the authority's reserve funds and was a key Labour manifesto pledge prior to May's local elections.

But branding the move reckless, Merton Park Independent leader, Councillor Peter Southgate said: “So, what started as an opportunistic and transparent attempt to buy votes now comes home to roost.

“The new administration finds itself – perhaps unexpectedly – called upon to fulfil its manifesto promises. This is the moment for Labour to understand the reality of life as a minority administration.”

Councillor Diane Neil Mills, the Conservatives’ Finance spokesman added: “This was a cheap gimmick from Labour which could have proven costly for the financial health of the borough.

“How on earth can Labour propose short term spending of this kind whilst dithering over the decision to build a new school that Wimbledon desperately needs and a new pool that residents want to see in Morden?”

The proposals would have seen £6.8m given back to taxpayers over the next four years, with £1.7m withdrawn from the council's reserve fund in December.

Labour’s cabinet member for finance, Councillor Mark Allison, said: “This has been Labour’s policy for two years or more.

“We are a party that listens to its grassroots and we saw the benefits of that when we were elected in May. We’re now the largest party in Merton and as a result, we’re intent on keeping our promises.

“It’s the people’s money, times have been hard and they need it more than we do. Council tax is a regressive tax that hurts the poorest so giving some of it back will help.”