The Sefton Care Association & Ors, R (on the application of) v Sefton Council

A local authority fixing the usual cost of publicly funded residential care must have due regard to the actual costs of providing care and relevant local factors. It need not itself conduct a costs assessment, but where providers assert substantial underfunding it should seek sufficiently detailed costs information before fixing fees. Statutory and non-statutory guidance must be followed unless there is a properly justified reason for departure.

A duty to consult may arise from guidance, legitimate expectation and common-law fairness. Consultation must occur while proposals remain formative, provide enough information for an intelligent response, allow adequate time, and involve conscientious consideration of the responses. A fee freeze adopted without meaningful consultation was unlawful.

The claimants, representing and including care-home proprietors, sought judicial review of Sefton Council’s decision of 16 December 2010 to make no inflationary increase in fees for placements in residential and nursing homes during 2011/12.

They alleged failures to consider actual care costs, risks to providers and residents, local factors, the statutory guidance, consultation duties, the public-sector equality duty under section 49A of the Disability Discrimination Act 1995, and the balance between those matters and budgetary constraints. The central issues were whether the fee-setting process complied with the applicable guidance and whether the Council had consulted lawfully.

1. The claim succeeded. The decision of 16 December 2010 was quashed and the Council was ordered to reconsider it in light of further submissions from the claimants on the actual cost of care.
2. Under section 7 of the Local Authority Social Services Act 1970, a local authority must act under the Secretary of State’s general guidance. Formal guidance is not necessarily mandatory in every detail, but departure requires justification. The same practical obligation applied to the Building Capacity and Partnership in Care Agreement, although it was not formal statutory guidance.
3. The usual cost under the National Assistance Act 1948 (Choice of Accommodation) Directions 1992 had to be set with due regard to actual care costs. The Council could demonstrate that its historical fees had met assessed needs, but it had not adequately investigated whether the position remained so after fees were frozen from April 2009 and inflation continued. Once underfunding was asserted, the Council should have invited a detailed assessment from providers.
4. If the fees were substantially below actual costs, the existing risk assessments would require reconsideration. Relevant risks included reduced standards, risks to vulnerable residents and possible home closures. Local factors, including local pay and property costs and the Council’s dominant market position, also required consideration, although their weight was for the Council.
5. A duty to consult arose from the Agreement, past practice, the importance of the decision and common-law fairness. Applying R v North and East Devon HA, ex p Coughlan [2001] QB 213, consultation had to be formative, adequately explained, timely and conscientiously considered. The Council’s failure to disclose its proposal, initiate meaningful dialogue or communicate providers’ concerns to decision-makers was unlawful.
6. Budgetary pressure did not itself invalidate the decision. The Council had proceeded on the basis that assessed care needs would still be met. The equality-duty challenge did not independently require quashing: if the usual cost were properly determined under the Directions and guidance, individual care assessments and plans could satisfy the statutory equality requirements in this context.