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Care home briefing 145 – Care home fees and The ‘usual cost’ model

Our previous care home briefings have reported on challenges to local authority policies relating to care home fees.1 At the end of last year the Court had to consider a further challenge, this time to the “Usual Cost” of fees to be paid to care home providers.2

The local independent care home provider association had challenged the local authority’s “Usual Cost” Model on which the council had based its decisions as to the fees to be paid. In particular, the local authority’s model was challenged because of the staffing ratio calculation (i.e. the number of staff hours required per resident) which was said to be mathematically flawed and thus unreasonable to adopt. It was also challenged because the model took account of the additional fees paid by self-funded residents which, it was alleged by the Care Home Association, were not relevant.

In setting and reviewing the fees that they will pay, councils are to have regard to the actual cost of providing the care and other local factors. They should also have regard to the best value requirements under the Local Government Act 1999. This approach is covered by the guidance contained in Circular LAC (2004) 20. When assessing “Usual Cost” the Council should be able to demonstrate that this cost would be sufficient to meet the assessed care needs and provide residents with the level of care that they could reasonably expect to receive (disregarding resident and third party contributions).

The Court held that the economic model adopted by the Council here was significantly flawed and therefore could not be relied on. Accordingly the policy the Council decided to adopt was one which no reasonable council could properly rely on if the issues had been considered properly. The Court also accepted that it was inappropriate to rely upon the additional fees paid by self-funders as the LAC Guidance directed those fees to be discounted.

The challenge to the policy adopted by Torbay Council was therefore successful.

Andrew Parsons
t: 020 7227 7282

March 2015
© RadcliffesLeBrasseur

1 Previous briefings can be found using the search bar
2 R (Torbay Quality Care Forum Limited) v Torbay Counsel (2014) EWHC 4321


This briefing is for guidance purposes only. RadcliffesLeBrasseur LLP accepts no responsibility or liability whatsoever for any action taken or not taken in relation to this note and recommends that appropriate legal advice be taken having regard to a client's own particular circumstances.