Care homes in Swansea win dispute with council over level of fees

In Heart of Wales Care Ltd & Ors v The Council of the City And County of Swansea [2026] EWHC 899 (Admin) (17 April 2026), His Honour Judge Jarman KC concluded: “In my judgment it is appropriate to grant a declaration that the decision is unlawful. That means it must be taken again. It is not desirable, in my judgment, that I should set out here the matters which the council should take into account in re-determining the appropriate uplift for 2025/25.

“The council is under a statutory duty to demonstrate that it fully understands the cost of care, must collaborate with the providers to understand fair and sustainable costs, and must be transparent in that process.”

The claimants in the case were commercial providers of residential adult care homes in the area of the defendant council.

Each commercial provider is contracted to the council to provide places for adults in need of care in furtherance of the council's statutory duty to provide such care.

The agreements provide for an annual review of the rates to be paid by the council for the provision of such care "using the normal consultation process" with the claimants.

For the year 2025-2026, the rate was set at a 6.1% increase over the previous years on the grounds of "affordability", even though modelling used by the council suggested that the costs to the claimants of providing care had risen in the same period by about 9%, the judge noted.

The claimants challenged that decision by way of judicial review on three grounds:

The council did not, in setting that rate, comply with the National Framework for the Commissioning of Care and Support in Wales: Code of Practice (the Code).
The council did not consult with the claimants before setting the rates, as required by the agreements and/or by the serious implications of setting the rates.
The council failed to take into account material considerations, including guidance that the council should take steps to reduce discrepancies in pay and benefits between care staff employed in the private sector on the one hand and by local authorities on the other.

On ground one, it was alleged that in setting the rate for 2025-26, the council did not understand the full costs of care, did not set rates which are fair and sustainable, and did not act transparently in the process.

The Code of Practice was issued in 2024 by the Welsh Ministers under the Social Services and Well-being (Wales) Act 2014. It is section 35 of the 2014 Act which places upon local authorities in Wales a duty to meet certain adults' needs for care and support as part of their social services functions.

The power of the Welsh Minister to issue the code is contained in section 145.

Subsections (3) and (4) provide:

"(3) A local authority must, when exercising social services functions—

(a) act in accordance with any relevant requirements contained in a code (subject to section 147), and

(b) have regard to any relevant guidelines contained in it.

(4) A code may specify that section 147 does not apply to a requirement contained in the code."

The judge said: “It is not in dispute that the Code sets out various standards, which contain both requirements and guidance. The standards relied upon by the claimants are 6, 7 and 8.

“Standard 6 refers to supporting ethical and fair work practices and provides that statutory partners should support employers to improve status, well-being and working conditions in social care to achieve parity across statutory, private and third sectors. It also provides that 'Commissioners should ensure that providers are paying at least the Real Living Wage to their social care workers'.

“Standard 7 deals with the requirement to understand the costs of care and provides that statutory partners 'must demonstrate that they understand the full costs of directly provided and contracted care in their area' and 'must work collaboratively to understand fair and sustainable costs of delivering care to inform decisions relating to fee setting'. Further, there 'must be a consistent and transparent approach to fee setting processes'.

“Standard 8 deals with setting fair and sustainable fees, and provides that statutory partners 'should use local, regional and/or national methodologies or benchmarks to determine a fair and sustainable prices for quality care and support' and 'must be transparent and consistent when setting fee rates ensuring that they are assessing fair and sustainable costs of care and support and ensuring public value'. It is further provided that contractual uplift mechanisms 'must include appropriate inflation mechanisms to keep pace with rising cost'.” (Judge’s emphasis).

Five particulars of failures by the council were set out under ground 1, in respect of which there was some overlap. The judge summarised the main points in the submissions of the claimants' counsel as follows:

A failure to understand the full cost of care, and in particular the changes in NI (Standard 7).
A failure to work collaboratively to understand fair and sustainable cost of care (Standard 7).
A failure to be consistent and transparent when setting fees (Standard 8).
A failure to include contractual provisions which ensure that uplifts keep pace with inflation.

Analysing ground 1, the judge said: “It is convenient to take i) and ii) above together. At the time [the council's group accountant] was undertaking his modelling, significant adjustment to employers NI contributions had been announced. […] This potentially increased the amount of such contributions, but this depended on how many staff at any given provider fell within the increased threshold.

“[The council's group accountant] acknowledged that was something the council did not know 'unless we ask' but it did not ask. Further, the earning threshold for such contribution was to be lowered from £9100 pa to £5000 pa thus again potentially bringing more employees in scope and potentially higher contributions, but no questions were asked about this.”

Mr Oldham KC on behalf of the council submitted that collaboration was a “vague concept”. Finally, he submitted that in any event the changes were referred to in emails and in the minutes of the meeting on 15 January 2025 and the subsequent report to Cabinet and Council. These were taken into account and so there was no breach.

Considering this, the judge said: “I accept that latter submission as far as it goes, but what was not known was how that would impact on the full cost of care of any given provider, which in turn would depend on the number of employees brought into scope by the changes in the thresholds. As [the council's group accountant] acknowledged, the officers did not know this and could only know by asking the providers, but this was not done. In my judgment this failure clearly amounted to a lack of collaboration within the meaning of the Code.”

Turning to consider point iii, the judge considered that the setting of 6.1% was “not transparent” and that there was a failure to explain sufficiently how that figure was arrived at in light of the information on the actual cost of care.

Finally, turning to point iv of ground 1, the judge said: “Mr Purchase KC [counsel for the claimants] repeats that the council's choices of inflation figures are unexplained and unsupported and did not keep pace with rising costs.

“[…] Mr Oldham KC [for the council] repeats the points made above but goes further and points out that standard 8 requires that contractual uplift mechanisms must include appropriate inflation mechanisms to keep pace with rising costs. He submits that the agreements in the present case do that in clause 10.5.”

The judge did not consider this matter further, but noted that the other conclusions expressed above were sufficient that ground 1 was made out.

Turning to ground 2 and the alleged lack of consultation, the judge said: “Mr Purchase KC relies on two bases for the duty to consult. The first is the agreements between the parties, which provide for what is called the 'normal process' of consultation in clause 10.2. The second is that it would be conspicuously unfair in the circumstances of this case if the council did not consult with providers before setting the uplift.

“Mr Oldham KC also relied upon the agreements, in submitting this is a private law issue and not a public law issue. He makes the point that in R (SARCP), the claimant was not a contracting party, and that it was for that reason it was held that a consultation claim could be brought. He submits that the consultation challenge in the present case is not independent of the agreements.

“I do not accept that latter submission. In my judgement, as in such cases as Bevan and Northumberland, there is a sufficient public law element in the issue of consultation about care home fees. The statutory requirements of local authorities include an understanding of the full cost of care, collaboration, and transparency.

“In my judgement an important element of those requirements will be achieved by consultation with providers. Further or in the alternative, the fact that in the present case the council proceeded to set the uplift when it did not know of the impact of the NI changes makes the failure to ask providers about such impact conspicuously unfair. To that extent, ground 2 is made out, on the same basis as this aspect of ground 1. I do not consider that the contractual position can obviate the need to ask about this.”

Turning to ground 3, the judge observed that to some extent, the issues overlapped with those under ground 1. Therefore to the extent indicated earlier in the judgment, they were also made out under ground 3.

He continued: “Additional points are made by the claimants that material considerations were not taken into account. These include guidance in the Code to support employers to improve status, well-being and working conditions in social care to achieve parity across private and public sectors, and to ensure that providers are paying at least the RLW [real living wage] to care staff. It is further alleged that the council failed to take into account the toolkit guidance for local authorities to attempt to agree fees, or the data produced as part of the interim exercise. Mr Purchase KC relied on irrationality under this ground, albeit that permission to proceed on a free-standing irrationality challenge has been refused.”

Counsel for the local authority submitted that as a rationality ground had been refused, then it could not be relied upon under ground 3 either.

Judge Jarman KC said: “In my judgment, it does not follow from the refusal of permission on a free-standing ground of irrationality that it cannot be relied upon in the context of material considerations. I accept that these matters in principle were material considerations, but I am not satisfied that there was a failure to take them into account, over and above my conclusions under ground 1 above.”

The judge then rejected the claimant’s application to add ground 4 – ‘a lack of authority to make the decision under challenge’.

Concluding the judgment with the issue of relief, Judge Jarman KC said: “I have considered whether it is necessary to quash the challenged decision because it is unlawful, especially in light of the council's refusal to accept that it had to comply with the statutory requirements. A declaration does not have coercive effect, but public bodies are expected to comply with the law as declared by the court (see Craig v HM Advocate [2022] UKSC 6).

“In my judgment it is appropriate to grant a declaration that the decision is unlawful. That means it must be taken again. It is not desirable, in my judgment, that I should set out here the matters which the council should take into account in re-determining the appropriate uplift for 2025/25. The council is under a statutory duty to demonstrate that it fully understands the cost of care, must collaborate with the providers to understand fair and sustainable costs, and must be transparent in that process.”

Lottie Winson