9 Dec 2011

Local care homes set to benefit from High Court ruling

Local care home providers in Leicestershire are set to benefit from a ruling in the High Court, which could bring an end to the current freeze on local authority funding. The decision coincides with a report by the Public Affairs Committee calling for more monitoring of care home finances following the collapse of Southern Cross earlier this year.

The decision in East Midlands Care Ltd (EMCARE Ltd) v Leicestershire County Council is likely to mean that the Council will have to re-open discussions with local care home providers many of whom are represented by and members of EMCARE Ltd to re-negotiate their funding agreement for 2011-2012, taking into account the rising costs associated with providing their services.

The judicial review hearing concluded that Leicestershire County Council was acting illegally by imposing a freeze on the fees it paid to Leicestershire care homes for a second successive year. In his ruling, the Judge commented that ‘at the very least’ the local authority should have sought to make itself aware of ‘the actual costs of care’ and that there should not be a significant imbalance between these costs and the funding that the provider receives. The case follows a number of similar cases involving Sefton Council and Pembrokeshire County Council.

Statutory duty

Local authorities have a statutory duty to ensure that there is adequate provision for the care of elderly and vulnerable people. Based on this ruling, it may now be unlawful for them to contract out services to operators, based on arbitrary funding agreements, without showing due regard to the actual cost of care and the impact that changes in provision could have on the individuals concerned.

While the ruling will help to clarify the legal duties facing local authorities, it is unlikely to be welcomed. Many Councils have been struggling to maintain funding for elderly care in the face of major public sector spending cuts and growing demand from an ageing population.

Local authorities could be forgiven for feeling that they are stuck between a rock and hard place, being responsible for the provision of elderly care but lacking the cash resources to meet demand.

Care home operators will of course welcome the decision. It may now be possible to re-negotiate funding arrangements with their local authority and to secure more funding if they can show that costs for services have increased.

Care home operators will be hoping that an end to the freeze on fees is now in sight. However, with no guarantee that any increases will match the current rate of inflation the ruling is unlikely to stave off an impending financial crisis in the sector.

Questions?

If you have questions regarding the impact of this ruling please contact Lisa Botterill on 0116 318 3711 or email lisa.botterill@shakespeares.co.uk