Care North East Northumberland, Members of the Committee of, R (on the application of) v Northumberland County Council

Statutory guidance requiring a local authority to have due regard to the actual costs of care does not require the authority to calculate those costs by a particular model, survey or other exercise of precise quantification. The authority may use judgment and experience, informed by market conditions, comparable fees, occupancy levels, provider information and other local factors.

A local authority may depart from non-statutory guidance after taking it into account and giving clear, rational reasons. In setting usual care-home costs, the authority is entitled to make economic judgments about efficiency savings and the allocation of scarce resources, subject to rationality. Consultation is lawful if undertaken genuinely while proposals remain formative.

Members of an association representing care-home operators challenged Northumberland County Council’s decisions to set usual care-home rates and contract terms for 2012 to 2015.

The claim alleged failure to consult, failure to have regard to actual care costs under statutory guidance, irrationality and failure to consider relevant matters, and abuse of a dominant position by refusing normally to make placements with providers that did not accept the Council’s usual terms.

The central issues were whether the Council had to quantify actual costs before setting rates, whether it lawfully departed from non-statutory guidance, whether its economic judgments were irrational, and whether the consultation and placement policy complied with the statutory framework.

1. The claim was dismissed. The Council had lawfully set its usual care-home rates and terms.
2. The statutory guidance required due regard to actual care costs and other local factors. Read in context, that obligation required consideration of whether care was viable at the proposed rates. It did not require the Council to calculate or ascertain the actual cost of care, or to use the PWC model or any other specified methodology. The Council’s assessment of market operation, comparable fees, occupancy, provider accounts and the experience of its officers was sufficient.
3. Under section 7(1) of the Local Authority Social Services Act 1970, statutory guidance was not simply optional. The Council had to follow the path set by the guidance, subject to lawful deviation on good grounds. The Council had in any event complied with the relevant requirement. Its departure from Building Capacity and Partnership in Care, treated as non-statutory guidance, was lawful because it had considered the guidance and given rational reasons relating to changed policy, public finances and excess capacity.
4. The proposed efficiency savings involved economic and financial assessment and judgment about scarce resources. The Council was entitled to rely on experienced officers’ assessment of the PWC model, market capacity, provider evidence and the adequacy of the proposed rates. The conclusion fell within its legitimate judgment and was not irrational.
5. There had been substantial, genuine consultation while the proposals remained formative. The Council was not required to consult on a cost-quantification exercise which it was not legally obliged to undertake. The final decision was evidenced, at the latest, by the letter of 27 March 2012.
6. The usual rates and terms policy was contemplated by paragraph 3 of the Choice of Accommodation Directions. The Council could normally refuse placements with providers that did not accept its usual terms, but it could not impose a blanket prohibition where an unusual case required different terms. No unlawful individual placement decision was established.