Forest Care Home Ltd & Ors, R (on the application of) v The Welsh Ministers & Anor

A local authority setting fees for contracted residential care must act within its statutory discretion and comply with applicable guidance. It may consider its own financial resources, but must also assess and balance the consequences for providers and vulnerable residents. A cost model is a tool, not the decision-maker. Departures from the model or guidance require rational justification, and the authority must consider relevant local evidence, current and future costs, and foreseeable effects on service quality and continuity. The court reviews legality and process rather than substituting its own fee. Contractual procedures must be followed before third-party contributions are sought.

The claimant care-home companies sought judicial review of Pembrokeshire County Council’s approach to setting the 2010–11 fees payable for residential and nursing care supplied to residents placed under the Council’s statutory responsibilities. They challenged the alleged failure to make and notify a fee decision, the methodology used to populate the Laing care-cost model, reliance on the Council’s financial constraints, and steps taken to prevent them seeking contributions from residents’ relatives and other third parties.

The Council conceded that its treatment of capital costs was unlawful and agreed that the rate decision should be reconsidered. The remaining issues concerned the lawfulness of the staffing, data, inflation and financial-resource decisions, and whether the proposed third-party contributions were contrary to the contractual arrangements.

1. Outcome. The application succeeded on the challenge to the fee-setting methodology. The decision to set the fee at £390 per resident per week was set aside. The Council was directed to remake the decision lawfully by 31 January 2011. The challenge concerning third-party contributions was refused.
2. Statutory duty and discretion. Under National Assistance Act 1948, section 21, an authority may consider its resources when deciding whether a person crosses the threshold of need. Once that threshold is crossed, lack of resources does not excuse failure to provide the statutory accommodation and care. Subject to providing the minimum statutory requirement, the authority retains a wide discretion over the nature and standard of provision.
3. Guidance and process. Under section 7 of the Local Authority Social Services Act 1970, the Council was required to follow applicable guidance unless it had good and sufficiently compelling reasons to depart from it. The greater the departure, the more compelling the reasons required. The guidance required strategic, transparent and evidence-based commissioning, with proper regard to providers and residents.
4. Fee methodology. The Laing model was a servant of the decision-maker, not its master. The Council could depart from its parameters for compelling reasons, but any criterion outside the model’s obvious assumptions required rational justification and explanation. The capital-cost adjustment was unlawful because capital costs concerned return on capital invested in physical premises and equipment, not an arbitrary component attributable to non-physical care standards. The Council also failed to consider relevant local staffing factors, the possible effect of excluding smaller homes, and the real-term effects of inflation and increased holiday entitlement.
5. Resources and proportionality. The Council was entitled to consider its financial position, provided the minimum statutory duty was met. It nevertheless had to balance affordability against service quality, sector stability, and the potential seriousness and likelihood of adverse consequences for elderly and vulnerable residents. Article 8 considerations reinforced the weight of residents’ interests.
6. Third-party contributions. The contracts allowed additional funding only where the resident chose more expensive services and the Council agreed. The claimants’ proposed letters sought contributions without following that mechanism and would have breached the contracts. The Council was entitled to take modest steps to prevent that breach.

First-instance judicial review. The judgment records an earlier permission and interim-relief hearing before His Honour Judge Jarman QC on 9 November 2010, but no separate citation for a prior judgment is stated.