Merson told the Express & Star: "I'd be shocked if Milner is at Villa next season. When a club like Manchester City come in at £20m, if they want him they'll go again. A few extra million is nothing to them.
"It's a lot of money to turn down but the worrying thing for me is that Villa haven't come out and said he's not for sale. It's all the encouragement that City need.
"He will want to go and win something. Villa had a phenomenal season last year and yet they won nothing.
"It just shows you how difficult it is for Aston Villa Football Club - and that was with a lot of players playing a lot of games. The team was pretty settled all the way through."