The King (on the application of Care North East Northumberland) v Northumberland County Council
| Jurisdiction | England & Wales |
| Judge | Fordham J |
| Judgment Date | 06 June 2024 |
| Neutral Citation | [2024] EWHC 1370 (Admin) |
| Court | King's Bench Division (Administrative Court) |
| Docket Number | Case No: AC-2023-LDS-000114 |
[2024] EWHC 1370 (Admin)
Fordham J
Case No: AC-2023-LDS-000114
IN THE HIGH COURT OF JUSTICE
KING'S BENCH DIVISION
ADMINISTRATIVE COURT
SITTING IN LEEDS
Chris Buttler KC (instructed by David Collins Solicitors) for the Claimant
Joanne Clement KC and Aliya Al-Yassin (instructed by Northumberland County Council) for the Defendant
Hearing dates: 17.4.24, 18.4.24, 3.5.24
Draft judgment: 23.5.24
Approved Judgment
Fordham J Fordham J INTRODUCTION
This case is about weekly fees paid by a local authority to care home operators. The Claimant is an unincorporated association of whom 24 of Northumberland's 70 care home operators are members. The case features the interrelationship between the following: (1) a local authority's general statutory duty of promoting diversity and quality in the provision of services ( Care Act 2014 s.5) and applicable Statutory Guidance (2014 Act s.78); (2) central Government's statutory power to pay conditional local authority grants ( Local Government Act 2003 s.31) and Government documents relating to two such grants; (3) provisions within an agreement (“the 2021 Agreement”) between a local authority and a care home operator; and (4) basic public law duties including legally sufficient enquiry and legally adequate reasons. This case also features an important distinction between fee level sufficiency (a) to cover inflationary cost increases and (b) to sustain the efficient and effective operation of a care home market. The case came before me for the rolled-up hearing I directed at [2024] EWHC 184 (Admin). I am grateful to all Counsel for their comprehensive written and oral submissions, and for patiently helping me understand the voluminous documentation to which they were referring me.
The 2021 Agreement
The 2021 Agreement was a contract between the Defendant (“the Council”) and each relevant care home operator. It is an SP Contract Arrangement as described in the Statutory Guidance (see §11 below). It addresses the relationship between the Council and the care home operator, as to placements of individuals in care homes. It came into effect on 1 April 2021 and governed a three-year relationship: Year 1 (2021/2022), Year 2 (2022/2023) and Year 3 (2023/2024). It has now run its course. There were various banded categories of care home. The focus of this case is on what happened, across all banded categories, with the weekly fees for Year 3.
The Basic Contractual Mechanism
The 2021 Agreement included an annual fee revision, applicable for Year 2 and Year 3. The Basic Contractual Mechanism for the annual fee revision of weekly care home rates was set out at clause 17.2 and Schedule 1. The weekly fees had two elements. Element A was staffing costs. Element B was non-staffing costs. The Basic Contractual Mechanism used National Living Wage as an index for the annual increase in respect of Element A. For Element B, it used an index called “CPIH”. Specifically, it took the published 12-month CPIH inflation index for the January preceding the start of the relevant financial year. CPIH is the Office for National Statistics (ONS) Consumer Prices Index including owner occupiers' housing costs: see §24 below. Alongside the Basic Contractual Mechanism was provision for a further banding rate uplift (clauses 17.4 to 17.6).
The Clause 17 Decision
The Claimant's judicial review claim involves three targets for judicial review. The first target is a decision letter (31.1.23) written by the Council to all providers of care homes for older people in Northumberland, setting out the Council's “intentions” for care home fees in 2023/24 (from 1.4.23). This was the Annual Fee Review Letter which the Council was contractually obliged to write by clause 17.4 of the 2021 Agreement (§15 below). The second target is a decision letter (22.3.23) by which the Council communicated “details of the specific fees for 2023/4”. The pleaded claim and grounds for judicial review (27.4.23) identify the second target as the principal decision then being challenged. The first and second targets are parts of the Clause 17 Decision. The impugned Clause 17 Decision addressed the fee revision for Year 3 (2023/4). It applied the Basic Contractual Mechanism. It declined to add any further banding rate uplift. By way of background, a January 2022 decision letter (28.1.22), implemented with effect from 1.4.22, had taken the same approach for Year 2 (2022/3). I discuss the legality of the Clause 17 Decision at §§31–52 below.
The MSI Fund Grant Allocation Decision
The third target is the Council's decision (9.5.23) approving the use of a grant called the Market Sustainability and Improvement Fund (the “MSI Fund”) for a top-up fee rate increase. Amended grounds impugning the third target were added, as a benign and disciplined example of “rolling judicial review”. The third target is the MSI Fund Grant Allocation Decision. The impugned May 2023 decision approved the use of £770k of the Council's MSI Fund grant (£3.56m) for the overall fee rate increase of 1.5% from 1.4.23. When I say “overall” it is because a grant-based increase also applied to Element A (staffing costs). By way of background, an October 2022 decision (11.10.22) had approved the use of £330k from a previous grant called the Market Sustainability and Fair Cost of Care Fund (the “MSF Fund”), for an overall fee rate bump of 2.45% for 4 months at the end of Year 2 (1.12.22 to 31.3.23). I call it a “bump” because it was a time-limited increase. That means the fees reverted to their previous level at midnight on 31.3.23. I discuss the legality of the MSI Fund Grant Allocation Decision at §§53–60 below.
Years in the Life of a Banded Fee
To help understand the sequence of events, I will take an example. I will use the non-staffing costs (Element B) for a banded category of care home (called Gold Standard Residential with 31–40 registered beds). Tracing this chosen banding rate through Years 1 to 3, here is what happened to it. (1) Under the 2021 Agreement, the fee was £228.31 at the start of Year 1 (from 1.4.21). (2) Applying the Basic Contractual Mechanism of CPIH (4.9% at January 2022) it increased to £239.50 (from 1.4.22). (3) By reason of the October 2022 decision using MSF Fund grant, this was bumped by the overall 2.45% to £245.37 (from 1.12.22 to 31.3.23), reverting to £239.50 (on 31.3.23). (4) By the impugned January and March 2023 decisions, applying the Basic Contractual Mechanism of CPIH (8.8% at January 2023) it increased to £260.57. (5) By the impugned May 2023 decision using the MSI Fund grant, it increased by the overall 1.5% to £264.47 (backdated from 1.4.23).
Sufficiency for a Sustainable Effectively Operating Market
I referred at the outset to a distinction between fee level sufficiency (a) to cover inflationary cost increases and (b) to sustain the efficient and effective operation of a care home market. It is the latter – sufficiency to sustain the efficient and effective operation of a care home market – with which the general statutory duty, the Statutory Guidance and clause 17.4 of the 2021 Agreement are concerned.
The General Duty
By s.5(1) of the 2014 Act, Parliament imposed the general duty on a local authority to “promote the efficient and effective operation of a market in services for meeting care and support needs with a view to ensuring that any person in its area wishing to access services in the market has” three things: (a) “a variety of providers to choose from who (taken together) provide a variety of services”; (b) “a variety of high quality services to choose from”; and (c) “sufficient information to make an informed decision about how to meet the needs in question”. As a general duty (or target duty), this does not confer individual rights, but it nevertheless capable of enforcement in an individual case: R (Care England) v Essex County Council [2017] EWHC 3035 (Admin) at §§6, 50.
The Sustainability Factor
By s.5(2)(d) of the 2014 Act, Parliament required a local authority, in performing that general s.5(1) duty, to “have regard … in particular” to “the importance of ensuring the sustainability of the market”, both “in circumstances where it is operating effectively”, and also “in circumstances where it is not”. This mandatory relevancy (s.5(2)(d)) has been described as the “sustainability factor”: see Care England at §6.
Clause 17.4
Clause 17.4 of the 2021 Agreement (§15 below) poses a question about banding rates and whether, when increased using the Basic Contractual Mechanism, they will “be sufficient to sustain the efficient and effective operation of a marketing care home accommodation for older people in Northumberland”. As everyone in this case agrees, there is a clear relationship between this language and s.5(1) and (2)(d).
The Statutory Guidance and SP Contract Arrangements
The Statutory Guidance issued under s.78 of the 2014 Act is called the “Care and Support Statutory Guidance”. It recognises (at §4.97) that “contract arrangements” which local authorities make with service providers (which I will call “SP Contract Arrangements”) should be considered to ensure that the SP Contract Arrangement does not have “negative impacts on the sustainability, sufficiency, equality, diversity and value for money of the market as a whole – the pool of providers able to deliver services of appropriate quality”. That includes “framework agreements, spot contracting or any ‘qualified provider’ approaches”. The 2021 Agreement is a SP Contract Arrangement. It uses a ‘qualified provider’ approach (rather than the post-tendering ‘approved list’ used for a framework agreement’: Statutory Guidance §4.39). The Statutory Guidance (§4.97) therefore supports the view that there is a clear...
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