East Midlands Care Ltd, R (on the application of) v Leicestershire County Council

A local authority fixing the usual cost of publicly funded care must properly ascertain and take into account the actual cost of providing care once providers raise a credible issue about underfunding. General consideration of inflationary pressures and budgetary constraints is insufficient. The authority must also consult care providers where statutory guidance, legitimate expectation, past practice and common-law fairness create that duty. Consultation must occur while proposals remain formative, provide sufficient reasons and information, allow adequate time for response, and be conscientiously considered. Affordability remains relevant, but cannot replace compliance with the authority’s duties. A failure to assess actual costs also undermines consideration of risks to residents. The decision was quashed on the first three grounds; the equality-duty challenge failed.

East Midlands Care Limited, representing independent care-home providers, sought judicial review of Leicestershire County Council’s decision of 7 March 2011 to freeze care-home fees for 2011/2012. The challenge alleged inadequate consultation, failure to assess or take into account the actual cost of care, failure to assess risks to residents, and breach of section 49A of the Disability Discrimination Act 1995.

The Council relied on budgetary pressures, existing fee levels, its Quality Assessment Framework and evidence that placements remained available in satisfactory homes. The central questions were whether the Council had to ascertain actual care costs and consult providers before fixing fees, and whether its process lawfully addressed the resulting risks and equality duty.

1. Actual cost of care. Once EMCARE had drawn attention to a material gap between the Council’s rates and the actual cost of care, the Council was required to ascertain that actual cost. Without knowing the cost, it could not pay due regard to it. General references to borrowing, food, utilities, staffing costs and providers’ concerns were no substitute for an analytical assessment of what it cost to keep a person in a residential care home in Leicestershire. The process was therefore fatally flawed.
2. Affordability and other factors. The Council could consider the Quality Assessment Framework, additional-needs payments, budgetary constraints and evidence that care quality had not declined. Affordability was highly relevant, subject to the authority being able to meet its statutory duties at the rates offered. Those considerations could not cure the missing assessment of actual cost.
3. Consultation. The Council was under a duty to consult care providers. The duty arose from the guidance in paragraph 5.9 of Building Capacity and Partnership in Care, legitimate expectation arising from past practice, the importance of the fees, common-law fairness and an assurance that EMCARE would be involved early in the review. The consultation was too late and inadequate. The Council failed to disclose the central Fee Review Panel report and never properly addressed actual costs.
4. Consultation standard. Applying Coughlan, consultation had to take place while proposals were formative, provide sufficient reasons for an intelligent response, allow adequate time, and be conscientiously considered.
5. Risks to residents. The risk ground stood or fell with the consultation and actual-cost ground. Failure to assess actual costs meant that potentially adverse consequences, such as relocation or reduced care, had not been properly considered.
6. Equality duty. The challenge under section 49A failed. The court endorsed the approach in Sefton: the public-sector equality duty principally attached to individual needs assessments and care plans, and, where those were not challenged, a properly determined usual cost would ordinarily permit the authority to proceed. The Council also provided affirmative evidence that due regard had been paid.
7. Remedy. The decision of 7 March 2011 was quashed on the first three grounds. Relief was not withheld for delay or because the decision had taken effect during the financial year.

First-instance judicial review. No prior appellate decision is stated in the judgment.