Ok, I'm going to be the first to admit my ignorance here because there seems to be a bit of confusion going on.
1) The OP currently has a Sky Hub (this is a combined modem and router)
2) The OP tried to purchase a Netgear D7000 (which is also a combined modem and router)
3) The OP actually received a Netgear R8000 (this has NO modem and is ONLY a router)
By the LOOKS of it the OP was indenting on replacing the Sky Hub with the D7000 (which entirely makes sense) but since he got a R8000 my understanding is that it does not include a modem and as such he can not replace the Sky Hub because he still needs a modem.
However, as I suggested he can use the R8000 in combination with the Sky Hub as he can use the Sky Hub as a modem but then the R8000 as an improved router.
To my knowledge, no amount of firmware updates or changes can add modem functionality to the R8000 as it is missing the required hardware.
My understanding of MER is that is an authentication method for a modem. There's no MER options on the router because it doesn't need it.
As the OP has the required VDSL modem the only thing stopping this working is Sky's MER implementation.
It doesn't help the OP but he'd be up and running if his ISP was BT, Plusnet, Zen, etc.
To me, this makes no sense. The MER side of things is handled by the Sky Hub (modem). Just plugging in a router you shouldn't have to configure anything other than configuring the WAN connection from the router to the Sky Hub. MER isn't required on the router.
As bremen1984 suggests, Merlin is DD-WRT but only for Asus routers. The OP can't install Merlin, he'd have to install vanila DD-WRT. But regardless, that won't add modem functionality, or MER support.
As I see it the OP has two options:
1) Use the Sky Hub in combination with the R8000 that he received (custom firmware or not)
2) Return the R8000 for the D7000 he originally ordered
Again, the specifics aren't totally clear to me so please correct anything I've said that's wrong.
EDIT: In fact, the thing that has got me confused the most... how has the OP managed to plug his phone line into the R8000 without the Sky Hub?? If he IS using the Sky Hub he shouldn't have to set up MER - am I right??