R Members of the Committee of Care North East Northumberland (Claimants) Northumberland County Council (Defendant) Northumberland Care Trust (Interested Party)
| Jurisdiction | England & Wales |
| Judge | Mr Justice Supperstone |
| Judgment Date | 15 February 2013 |
| Neutral Citation | [2013] EWHC 234 (Admin) |
| Court | Queen's Bench Division (Administrative Court) |
| Date | 15 February 2013 |
| Docket Number | Case No: CO/6027/2012 |
[2013] EWHC 234 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT at LEEDS
The Court House
1 Oxford Row, Leeds, LS1 3BG
The Hon. Mr Justice Supperstone
Case No: CO/6027/2012
Aileen McColgan (instructed by Messrs David Collins, Solicitors) for the Claimants
Nigel Giffin QC and Tom Cross (instructed by Chief Legal Officer, Northumberland County council) for the Defendant
Hearing dates: 22-23 January 2013
Introduction
The Claimants are the members of the committee of Care North East Northumberland ("CNEN"), which is an unincorporated association whose members own and/or operate nursing homes and/or care homes in the North East of England and in particular in the area of Northumberland.
The Defendant, Northumberland County Council ("the Council") is the local authority which has statutory duties to provide accommodation and social care services under various statutes including the National Assistance Act 1948.
The Interested Party, Northumberland Care Trust ("the Trust"), is an NHS Primary Care Trust created or continued under section 18 of the National Health Service Act 2006. The Trust enters into arrangements and places contracts on behalf of itself and on behalf of the Council with health and/or social care providers for health and/or social care services that the National Health Service and/or the Council are either required to provide or have power to provide under various statutes for adults in Northumberland.
In this claim for judicial review the Claimants challenge two decisions made by the Defendant on 12 or 13, alternatively 27, March 2012 to fix care home rates in the Northumberland area for the period of three years from 1 April 2012 to 31 March 2015.
The legislative framework
The Defendant has an obligation under section 21(1)(a) of the National Assistance Act 1948 (the "1948 Act") to provide residential accommodation to those adults in its area who, by reason of age, illness, disability or any other circumstances, are in need of care and attention which is not otherwise available to them. By section 26(1) of the 1948 Act a local authority may discharge its duty under section 21 by contracting with a private care home provider who operates for profit. The care home will provide the accommodation in exchange for fees paid to it by the authority, agreed between the parties.
In discharging its duty to provide accommodation, a local authority is required to act in accordance with such directions as may be given by the Secretary of State under section 7A(1) of the Local Authority Social Services Act 1970 (the "1970 Act"). The National Assistance Act 1948 (Choice of Accommodation) Directions 1992 (the "Directions") provide that where a local authority have assessed a person under section 47 of the National Health Service and Community Care Act 1990 and have decided that accommodation should be provided pursuant to section 21 of the 1948 Act, the local authority shall, subject to paragraph 3 of the Directions, make arrangements for accommodation for that person at a place of his choice within the UK (called "preferred accommodation") if he has indicated that he wishes to be accommodated in preferred accommodation. Paragraph 3 of the Directions states, in so far as is material, that the local authority shall only be required to make or continue to make arrangements for a person to be accommodated in his preferred accommodation if:
"(b) the cost of making arrangements for him at his preferred accommodation would not require the authority to pay more than they would usually expect to pay having regard to his assessed needs."
Section 7 of the 1970 Act provides that:
"(1) Local authorities shall, in the exercise of their social services functions, including the exercise of any discretion conferred by any relevant enactment, act under the general guidance of the Secretary of State."
Under section 7(1) the Secretary of State has issued formal statutory guidance in Local Authority Circular LAC (2004) 20 ("the Circular"). Paragraph 2.5.4 of the Circular states as follows:
"One of the conditions associated with the provision of preferred accommodation is that such accommodation should not require the council to pay more than they would usually expect to pay, having regard to assessed needs (the 'usual cost'). This cost should be set by councils at the start of a financial or other planning period, or in response to significant changes in the cost of providing care, to be sufficient to meet the assessed care needs of supported residents in residential accommodation. A council should set more than one usual cost where the cost of providing residential accommodation to specific groups is different. In setting and reviewing their usual costs, councils should have due regard to the actual costs of providing care and other local factors. Councils should also have due regard to Best Value requirements under the Local Government Act 1999."
Paragraph 3.3 provides:
"When setting its usual cost(s) a council should be able to demonstrate that this cost is sufficient to allow it to meet assessed care needs and to provide residents with the level of care services that they could reasonably expect to receive if the possibility of resident and third party contributions did not exist."
Separately from the formal statutory guidance, in October 2001 the Department of Health had issued what was described as "an Agreement between the statutory and the independent social care, health care and housing sectors", entitled "Building Capacity and Partnership in Care" ("Building Capacity"). Paragraph 6.2 of Building Capacity states:
"Providers have become increasingly concerned that some commissioners have used their dominant position to drive down or hold down fees to a level that recognises neither the costs to providers nor the inevitable reduction in the quality of service provision that follows. This is short-sighted and may put individuals at risk. It is in conflict with the Government's Best Value policy. And it can destabilise the system, causing unplanned exits from the market. Fee setting must take into account the legitimate current and future costs faced by providers as well as the factors that affect those costs, and the potential for improved performance and more cost-effective ways of working. Contract prices should not be set mechanistically but should have regard to providers' costs and efficiencies, and planned outcomes for people using services, including patients."
The factual background
Mr Hunter, who is Chair of CNEN and also Managing Director of Sovereign Care (North East) Limited which owns four care homes in the north east of England, sets out in his first witness statement made in these proceedings the consultation process that was conducted by the Defendant in relation to the new contract that would be effective from 1 April 2012. At paragraph 8 he states:
"The providers were very keen to explain to the Council that we were committed to delivering a quality service to the residents in our care homes. The Council set high quality standards and we wanted to ensure that the service provided to vulnerable people was as good as it could be. However, these high quality services are expensive to deliver and we are facing substantial, rising costs. We therefore saw the consultation period as the opportunity to explain to the Council that, if they shared our agenda for the delivery of high quality services, they needed to set fee levels which met the costs of providing those services."
The first meeting that Mr Hunter had with the Defendant was on 11 October 2011. There was a further meeting between the Claimants and the Council on 9 November 2011. No formal proposals were put forward at these meetings. At a meeting on 1 December 2011 the Defendant presented CNEN with two proposals for consideration. The first involved a three year contract in which the then current "inflator" (2.16%) would be applied in each of the years but this would be offset by "efficiencies" of 3%, 1.5% and 0% in the first to third years of the contract in Grades 1–3 homes. The second involved placing all homes on the current Grade 4 rates, applying the 2.16% inflator in each of the three years and allowing for a 1% "quality bonus".
Mr Hunter comments that the costs of running a Grade 1 home are significantly more than the costs associated with a Grade 4 home. The Option 2 proposal would have meant that the rate for a Grade 1 home would have reduced from £466 to £419, a reduction of 10%. Grade 2 and Grade 3 rates would have reduced by 9% and 7% respectively.
Ms Bowie, the Defendant's Associate Director of Strategic Commissioning and Safeguarding in the Adult Services and Housing/Community Services Business Unit, stated at the meeting on 1 December 2011 that the two proposals were put on the table to open up discussion (see Minutes of meeting, C65–67).
On 15 December 2011 there was a further meeting attended by Ms Bowie, together with Mr Bradley, the Defendant's Head of Finance in the Community Services Business Unit, and the Claimants (Minutes at C68–72). The next meeting was on 3 January 2012 (Minutes at C77–78). Ms Bowie states in her witness statement at paragraph 68 that at that meeting she:
"queried whether the Claimants had any proposals they wished to put forward. Unfortunately, the Claimants were not...
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