Council defeats High Court challenge over care home fees increase

Essex County Council has successfully defended a judicial review challenge to the fees it proposed paying to operators of care homes.

The claimant in Care England, R (on the application of) v Essex County Council [2017] EWHC 3035 (Admin) sought to challenge a decision taken by the local authority in July 2016 to increase fees.

Care England considered these increases to be too small. The prices the council decided to pay were on average £163.57 per person per week below the cost of care in the case of residential care, and £108.56 per person per week in the case of nursing care, it argued.

It was given permission to apply for judicial review on four grounds:

1. Essex was in breach of its duty under subsections 5(1) and (2) of the Care Act 2014. These subsections cover the local authority’s duty to promote the efficient and effective operation of a market in services for meeting care and support needs, and the matters a local authority must have regard to in particular in meeting that duty including in subsection 5(2)(d) “the importance of ensuring the sustainability of the market (in circumstances where it is operating effectively as well as in circumstances where it is not)”.
2. The council had failed to follow relevant guidance issued by the Government.
3. The council had failed properly to consider whether the July 2016 decision complied with that duty and that guidance. [It was subsequently agreed that this ground added nothing to the first two]
4. The July 2016 decision was Wednesbury unreasonable.

On the market sustainability issue, counsel for Care England submitted that the July 2016 decision undermined rather than promoted the efficient and effective operation of the market.

Mr Justice Lavender rejected this ground. He found amongst other things that:

• The council did, when it was making the July 2016 decision, have regard to the importance of ensuring the sustainability of the market for residential and nursing care. This was apparent from the terms of the pricing report, and was confirmed by evidence from the then Cabinet Member for Adults and Children (Cllr Madden).
• There was no doubt that Essex did obtain information about the care home market in the county. That was apparent from the pricing report, the confidential appendix, the costs of care report and the Cabinet Member’s statement. The judge was not persuaded that Essex did so little to inform itself about the market that it could not say that it had regard to the sustainability factor.
• In relation to a submission that the defendant council was in breach of subsection 5(2)(d) because it did not consider the possibility of an increase in fees which fell between options 2 and 3 in the pricing report, i.e. an increase which was greater than the actual increase (option 2), but less than the increase needed to take fees to the levels set out in the Cost of Care Report (option 3), the Cabinet Member had stated that, when making the July 2016 decision, his consideration was not limited to the matters set out in the pricing report. The councillor had also said that, when he made the decision, he was confident that the new fees would ensure the efficient and effective operation of the care home market, would ensure that it remained sustainable in the long term and would enable the various care homes to deliver the agreed care packages at the required quality of care. It was obvious that, if he had considered that option 2 was insufficient for these purposes, he could have explored alternatives between option 2 and option 3.

Judge Lavender also rejected the claimant’s contentions that the council had departed from the Secretary of State's Care and support statutory guidance in five respects.

He also dismissed claims that the July 2016 decision was Wednesbury unreasonable.

On this ground the judge said: “The July 2016 decision was a decision to increase the fees paid to care home providers (despite the absence of any contractual obligation to do so). The Claimant's case was that an increase in rates was a good thing from the point of view of promoting the sustainability of the market, but that the increase decided on in July 2016 was too small.

“The Claimant's case, therefore, must be that there was a certain level of increase which was necessary if the section 5 duty was to be met. What that level was (assuming there was one), and, in particular, whether it was more or less than the level of the increases decided on in July 2016, is not a judgment which this court could easily make on an application for judicial review, and certainly not on the evidence in this case.”

As for the reasoning in the pricing report, the judge said it was appropriate to recall Cllr Madden's  evidence that his consideration was not limited to the matters set out in that report. It was also relevant to note the following:

“(1) It does not follow that, because some increase in fees was considered appropriate, the increase had to be one which addressed in financial terms each of the sources of financial pressure experienced by care home providers. That is not a necessary consequence of having regard to the sustainability factor.

(2) The section 5 duty cannot be viewed in isolation. The Defendant faced other competing pressures and duties, including the limits on its resources and the duty to obtain value for money.

(3) Indeed, as I have said, the section 5 duty itself could be seen as requiring a council not to increase fees by too much. Mr Purchase [counsel for Care England] disparaged what he called "a supposed need to promote competition", but the promotion of competition is inherent in the duty to promote an efficient and effective market.

(4) It was the Defendant's responsibility to strike a balance between these different considerations. The matters identified by Councillor Madden were all relevant to that exercise. The weight to be given to different factors was a matter for the Defendant.

(5) As I have said, the evidence before the Court does not justify a conclusion that the only rational way of having regard to the sustainability factor was to increase fees (which the Defendant was under no contractual obligation to increase) by more than the increases decided on in the July 2016 decision.”

The judge dismissed the claim for judicial review.

Cllr John Spence, Essex’s Cabinet Member for Health and Adult Social Care, said: "The Council has noted the judgement and is pleased with the decision.

"As outlined in the judicial review, the cost of care analysis does not reflect the cost to providers. The council in fact pays in excess of the actual costs to providers (on average).

"The council can confirm that a full enquiry took place prior to any decisions being made and councillors were provided with comprehensive and regular updates from officers."

Cllr Spence added: "There is no evidence to suggest an issue with market sustainability in Essex. Few homes are closing and if they do it is rarely for financial reasons. Any homes that may have closed are often taken over, demonstrating there is a viable market for providers. An independent assessment carried out by CQC also shows a positive picture in relation to quality with in excess of 80% of providers rated as good or outstanding.

"The council recognises that the care sector faces cost pressures and has lobbied government on social care issues. We are also keen to be involved with the development of the green paper which presents an opportunity to improve care and support for older people in Essex and tackle the challenge of an ageing population."

Professor Martin Green OBE, Chief Executive of Care England, said: “It is particularly disappointing that the judge hearing this case formed the view that the councillor who made the decision had carried out a sufficient enough enquiry into the sustainability of the Essex care home market; when that enquiry was based not on the information that had been presented to him by council officers, but on his own knowledge and assumptions.

"Despite the court’s ruling, Care England remains particularly concerned that the council’s decision jeopardises the sustainability of the care home market in Essex.”

Care England also claimed that, at present, there seemed "to be a divide between the judiciary in their thinking and approaches to deciding cases where local authorities are challenged on how they decide the rates they will pay for residential social care for older people".