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Care home briefing 106 – Care homes and fee increases

The Judgment of HH Judge Raynor QC was given in Manchester on 9th November 2011. It concerned an application for Judicial Review made by the Sefton Care Association and others in respect of a decision by the Sefton Council not to increase the payments made to them for the financial year April 2011/April 2012. The Judge decided that a number of the complaints made by the Claimants were justified. He quashed the decision of the Council and ordered it to reconsider the matter having regard to the submissions made by the Care Association.

The Claimants asserted 7 reasons why their application for Judicial Review should succeed. In summary, these were:

(i) the Council had failed to assess the actual cost of care, contrary to the general guidance of the Secretary of State under section 7(A) of the Local Authority Social Services Act 1970;

(ii) the Council had failed to assess the risks of its decision to care homes and to residents, contrary to its duties at common law and/or Article 8 European Convention on Human Rights (Right to respect for private and family life);

(iii) the Council had failed to take into account relevant local factors;

(iv) the Council was unable to demonstrate that fees to be paid to the care homes were sufficient to allow them to meet assessed care needs and to provide residents with the required level of care services;

(v) the Council did not properly consult with care home proprietors;

(vi) the Council was in breach of its general equality duty under section 49A Disability Discrimination Act 1995; and

(vii) the Council was driven to an improper degree by budgetary considerations.

The Judge’s findings

(i) The Judge agreed with the Claimants that the Council had failed adequately to consider the actual costs of care.

(ii) He held that if the care homes could prove that the fees were set at a level significantly below the actual cost of the provision of care then the Council’s risk assessments would be invalidated in failing to take that fact, and its implications, into account. He observed that the Laing and Buisson national guidelines for 2010/11 indicated fees significantly higher than were paid by the Sefton Council.

(iii) The Council had failed to have due regard to local factors relevant to such costs including local pay levels and property costs. The Council should have regard to the fact that it was the dominant provider in the market.

(iv) Historically, the Council’s fees had been sufficient to allow care homes to meet assessed care needs and to provide residents with the level of care services they could reasonably expect. However, it was now uncertain that the Council could demonstrate that the fees were sufficient to allow it to meet assessed care needs and provide residents with an appropriate level of care services.

(v) The Council had not consulted with the care homes in any meaningful sense with regard to the proposal to freeze the fees. The fees had been frozen in the previous year (in April 2010). More specifically, the Council’s intention to freeze the fees for 2011/12 was not communicated to the care homes at a formative stage and the Council did not initiate any dialogue with the care homes. The Council did not engage with the Claimants on the concerns they had expressed. The Judge said that the Claimants’ concerns regarding the future “were simply discounted, with no attempt being made by the [Council] to obtain substantiation of the [care homes’] contentions”. He held also that the Council’s procedures contrasted poorly with their processes up to and including 2009. He said that because of this failure of consultation, on this ground alone, he would quash the decision.

(vi) With regard to the alleged failure to comply with the general equality duty under section 49A Disability Discrimination Act 1995, the Judge held that the conclusions of the Council’s Head of Corporate Improvement in its Equality Impact Assessment document were open to challenge because of the failure to investigate with the care homes and have due regard to the actual costs of care. However, the Judge accepted the Council’s argument that if the assessment of the usual cost of care was done properly (i.e. in accordance with the 1992 Directions, the statutory Guidance and the Agreement) then there was no further need for the Council to consider the public sector equality duty when fixing its fees. [The 1992 Directions are the Choice of Accommodation Directions set out in the Local Authority Circular LAC (2004) 20. The Guidance is issued under section 7(1) of the Local Authority Social Services Act 1970. The Agreement is the October 2001 agreement issued by the Department of Health and made between the Statutory and Independent Social Care, Health Care and Housing Sectors entitled “Building Capacity and Partnership in Care”].

(vii) The care homes lost on their claim that the Council had failed to balance the relevant factors against budgetary considerations and, instead, had been driven to an improper degree by budgetary considerations i.e. regard to the Council’s limited financial resources. The Judge accepted that the decision by the Council to freeze the fees was taken because of the budgetary constraints facing the Council.


The Council’s decision of 16th December 2010, freezing the fees, was quashed and the Council was ordered to reconsider its decision. A similar decision was reached in the Administrative Court in Leeds on 2nd December 2011 at the suit of East Midlands Care Ltd. The case of the Fairer Fee Forum against Staffordshire County Council has settled. Possibly, the flow rate of these type of cases will now diminish.


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.