Care home providers win High Court battle with council over minimal uplift in fees
A group of local care homes has won an irrationality case in the High Court against Stoke-on-Trent City Council over the local authority’s decision to pay only a minimal uplift in fees for home residents.
His Honour Judge Tindal said in his judgment: “I consider this is a very clear case of irrationality by an unexplained evidential gap failing to justify the conclusion and inadequacy of reasons.”
The case concerned a below-inflation rise in the standard rates the authority pays the care homes for their residents.
In 2021, the council agreed a standard contract with care home providers, some of which belong to trade organisation SARCP, which brought the case.
This contract contains a mechanism for an annual adjustment of standard defined as “no less than 1.4% per annum”.
In April 2024 the annual indexation was up for review and Stoke originally proposed no increase for standard residential fees but increases for nursing fees.
When SARCP pointed out this was inconsistent with the contract, Stoke then consulted on a 1.4% increase, while care home operators said a 9.0% rise would be needed.
SARCP challenged this on grounds of: inadequate consultation not properly considered in the decision; failure to consider material considerations; breach of the Public Sector Equality Duty; failure to follow statutory guidance; breach of the Art.8 ECHR rights of residents; Wednesbury unreasonableness.
HHJ Tindal said the parties should focus on Grounds 1, 3 and 4, since the others added little.
Looking at alleged failures to follow guidance or consider relevant statutory factors, HHJ Tindal said: “Quite simply, the [council’s] decision utterly failed to take into account any of this relevant CA Guidance, even leaving aside the claimant's consultation response discussed under Ground 1.
“The decision did not refer to any statutory guidance expressly or impliedly, still less explain how it considered a 1.4% uplift was consistent with it. This is reflected in five quite separate failures to follow guidance, any one of which individually would have vitiated the decision, but together plainly do so.”
He said the 1.4% minimum uplift had “effectively acted as an 'arbitrary ceiling' on the decision rather than a 'contractual floor', since it reflected inflation of 1.4% three years earlier and lacked justification as to its consistency with having regard to 'the actual cost of good quality care’”.
Stoke’s decision implicitly recognised the sustainability of the care market was at risk by acknowledging the risk of loss of provision and by offering support, but it “failed to recognise that the decision to limit fee uplift to 1.4% was the action threatening that sustainability, again if only to explain how it was outweighed by countervailing factors like budget”, the judge said.
Turning to irrationality, HHJ Tindal said this was upheld due to “an unexplained evidential gap failing to justify the conclusion and inadequacy of reasons”.
He said Stoke’s decision “did not give any reasons at all for selecting the increase of 1.4 %, still less weigh the interests of the providers and more importantly the residents.
“Indeed, it did not even explain the significance of the budget. It simply confirmed the original proposal of a 1.4% rise without any reasoning, other than to reassure providers that whilst the defendant's main objective was to keep people in their own home (which perhaps implicitly might explain why the budget had been focussed elsewhere), it wanted to keep providers in the market too and over the next year would roll-out a package of support for them aside from the annual uplift.
“In that way, it adopted an objective of ‘keeping people in their own home’ by not considering its duties to people who were already residents and unlikely to return to their homes. That was irrational.”
This meant Stoke’s decision was “unlawful on multiple grounds”, and the judge told Stoke to pay SARCP £50,000 on account for costs.
Mark Smulian
