Old and new statutory machinery and introductionCare and Support Statutory GuidanceCare and Support Statutory Guidance
14.1The major issues that commonly arise in relation to disputes between local authorities and private sector providers are:
•is the dispute purely contractual, or is judicial review permitted? and
•in judicial review proceedings, how intensive should court scrutiny be?
14.2Where the parties’ rights in relation to the issue in dispute are set out in a contract, judicial review will not usually be permitted unless:
•the local authority is also exercising a statutory function that exists independently of the contract; or
•exceptionally, there is a case of fraud, corruption or bad faith.
1Hampshire CC v Supportways Community Services Ltd [2006] EWCA Civ 1035, (2006) 9 CCLR 484. 14.3It can be entirely appropriate to include complex but precise formulae in contracts but in some cases private providers persuade local authorities to adopt, and in some cases local authorities choose to adopt, complex formulae to guide the discharge of their public law duties, in cases where private providers are involved (for example, to assess how much to pay private providers). Even in public law cases, private providers do sometimes then persuade the courts to embark on detailed scrutiny of how a local authority has implemented such formulae and sometimes this is justified. However, as court decisions periodically remind one, local authorities are generally accorded relatively broad powers and, providing that a local authority manages to avoid tying itself up in knots, the proper approach of a court in judicial review procedings generally is to maintain a supervisory role that accords respect to local authority judgments, and does not descend into commercial litigation by another avenue.
2R (Members of the Committee of Care North East Northumberland) v Northumberland CC [2013] EWCA Civ 1740, (2014) 17 CCLR 117.14.4The concern that commercial operators may abuse the judicial review system has been expressed most forcefully in planning cases, where that concern is perhaps most relevant and pressing:
•describing ‘the discovery by commercial lawyers in recent years that wherever central or local government happens to have become involved, judicial review can become a way of conducting a trade war by other means’;
3R v Hammersmith & Fulham LBC ex p Burkett [2001] Env LR 684.and
•expressing ‘dissatisfaction at the way the availability of the remedy of judicial review can be exploited – some might say abused – as a commercial weapon by rival potential developers’.
4R (Noble Organisation) v Thanet DC [2005] EWCA Civ 782, [2006] Env LR 185 at para 68. 14.5The adult care context is somewhat different, in that private sector providers can be – sometimes with good reason – the only protagonists able to address unlawful decision-making, that not only affects them commercially but also harms the welfare of vulnerable individuals. So, in some cases, it might be inappropriate to apply the dicta in these planning cases to private sector providers in the care sector.
14.6A major issue in recent years has arisen in relation to the duty of local authorities to set their standard rates for care home accommodation having regard to (inter alia) the cost of providing care locally. A number of local authorities adopted relatively complex formulae to ascertain what the local cost of care was, which they then misapplied in some way
5R (Mavalon Care Ltd) v Pembrokeshire CC [2011] EWHC 3371 (Admin), (2012) 15 CCLR 229.sometimes because they did not like the results and sometimes because the formulae were too complicated and perceived as not being realistic. More recently, the courts have upheld some decisions reached by local authorities that have adopted a broader approach, more evaluative and less mathematical, and emphasised the breadth of judgment allowed to local authorities.
6R (Members of the Committee of Care North East Northumberland) v Northumberland CC [2013] EWCA Civ 1740, (2014) 17 CCLR 117.14.7Under the Care Act 2014, the statutory machinery and the nomenclature will shift somewhat and the new provisions appear to possibly make such assessments less problematic for local authorities. However, it is difficult to see this area of controversy being finally resolved any time soon, in the absence of a nationally agreed approach involving all the relevant protagonists.
14.8The first source of future problems is likely to be section 26 of the Care Act 2014, which requires local authorities to specify ‘personal budgets’ for adults (see, for greater detail, paras 9.36–9.44):
26(1) A personal budget for an adult is a statement which specifies–
(a)the cost to the local authority of meeting those of the adult’s needs which it is required or decides to meet as mentioned in section 24(1),
(b)the amount which, on the basis of the financial assessment, the adult must pay towards that cost, and
(c)if on that basis the local authority must itself pay towards that cost, the amount which it must pay.
(2)In the case of an adult with needs for care and support which the local authority is required to meet under section 18, the personal budget must also specify–
(a)the cost to the local authority of meeting the adult’s needs under that section …
14.9It seems easier for a local authority to specify the actual cost it would incur in meeting the adult’s needs by going out into the market than, as present, to base its standard fees on an assessment, doing the best it can, of what it costs local operators to provide services.
14.10On the other hand, it seems clear that the Care Act 2014 does not intend to permit a ‘race to the bottom’ in terms of fees and that, for various reasons, local authorities will have to continue to pay careful regard (albeit using such methods as they consider appropriate) to local costs given that, in reality, and in some areas more than others, the standard rates that local authorities are willing to pay can have a depressing effect on market rates that the local market may not be able to absorb while at the same time providing good quality care.
14.11First of all, there are in the interests of service users to consider. By virtue of section 30 of the Care Act 2014 and the Care and Support and After-care (Choice of Accommodation) Regulations 2014, adults are entitled to be accommodated in the care home/shared lives/supported and after-care accommodation of their choice providing certain conditions are met, including that the adult or a third party pays any additional cost, beyond the amount provided for in the adult’s personal budget (see, further, paras
11.48–
11.52 on ‘top-ups’).
14.12The consequence of this machinery is likely to be that, more than ever before, it will be in the interests of adults to ensure that the sum allowed for care home accommodation, in their personal budget, is sufficient to afford them a reasonable choice of good quality accommodation, without the need to resort to ‘top ups’. But even if an adult is not contemplating a top up arrangement, the adult will certainly want to have a real choice of accommodation available at the standard rates in the adult’s personal budget (where the case is a standard rate case). And that could well lead them, in the future, to examine very carefully the rates that local authorities are prepared to pay for different types of accommodation, just as much as care home providers have done this far.
14.13A particular reason why that may be emerges from the advice given by the Care and Support Statutory Guidance:
11.25. The Act states the personal budget must be an amount that is the cost to the local authority of meeting the person’s needs. In establishing the ‘cost to the local authority’, consideration should therefore be given to local market intelligence and costs of local quality provision to ensure that the personal budget reflects local market conditions and that appropriate care that meets needs can be obtained for the amount specified in the budget. To further aid the transparency principle, these cost assumptions should be shared with the person so they are aware of how their personal budget was established. Consideration should also be given as to whether the personal budget is sufficient where needs will be met via direct payments, especially around any other costs that may be required to meet needs or ensure people are complying with legal requirements associated with becoming an employer (see Chapter 12). There may be concern that the ‘cost to the local authority’ results in the direct payment being a lesser amount than is required to purchase care and support from the local market due to local authority bulk purchasing and block contract arrangements. However, by basing the personal budget on the cost of quality local provision, this concern should be allayed.
14.14Second, there is the local authority duty to promote diversity and quality provision in their local market: see para
7.79. Standard rates set too low may cause providers to be unable to improve or even maintain the quality of their service, can lead to a build-up of liabilities and, ultimately, may result in some providers becoming unable to continue in business. In any event, local authority standard rates will inevitably impact on providers’ profits. Accordingly, local authorities will no doubt continue to be challenged, on the basis that their standard rates fail adequately to take into account local market intelligence and/or the costs of local provision, and fail to take into account the different rates and costs applicable to different types of accommodation in different types of areas, so as to conflict with the duty to promote well-being (at section 1) and/or the market shaping duty at section 5 (see para
7.79):
Promoting diversity and quality in provision of services
5(1) A local authority must 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–
(a)has a variety of providers to choose from who (taken together) provide a variety of services;
(b)has a variety of high quality services to choose from;
(c)has sufficient information to make an informed decision about how to meet the needs in question.
14.16Paragraph 4.27 and onwards of the Care and Support Statutory Guidance emphasises the need to commission services having regard to cost-effectiveness and value for money, but also so as to:
•ensure that fees will enable the agreed quality of care to be provided;
•ensure that care providers’ staff are properly remunerated (at ‘at least’ the minimum wage level) and are provided with effective training and development;
•allow for retention of staff;
•take into account guidance on minimum fee levels (as specified at paragraph 4.31 of the Guidance);
•ensure that there is a range of appropriate and high quality providers and services for people to choose from.
In principle, a local authority could abuse its dominant position as a purchaser of services so as to breach the provisions of Chapter II of the Competition Act 1998 but no case of actual abuse has ever been established.