Torbay Council v Torbay Quality Care Forum Ltd

When setting the usual cost of publicly funded residential care, a local authority may consider the total revenue available to care homes, including private fees, NHS payments and top-ups. The authority must nevertheless have due regard to the actual costs of providing care, other local factors and Best Value requirements under the Local Government Act 1999. The usual cost must be sufficient to secure accommodation and care meeting assessed needs. Top-ups must not become disguised payments for basic assessed care. Judicial review does not prescribe a particular economic model, and the weight given to relevant factors remains for the authority absent irrationality.

Torbay Quality Care Forum Ltd, representing independent care homes, successfully challenged Torbay Council’s decision of 5 February 2014 setting usual weekly fees for council-funded residential and nursing care. HHJ Lambert declared the decision unlawful and quashed it in [2014] EWHC 4321 (Admin), including because the Council had taken account of third-party top-ups, private residents’ fees and other income. The Council appealed. The issue before the Court of Appeal was whether, under the National Assistance Act 1948 regime and associated guidance, those revenue sources could be considered when setting the amount the Council would usually expect to pay. The post-2015 Care Act 2014 regime was not considered.

Appeal allowed by the majority. Sir Ian Burnett LCJ, with whom Lady Justice King agreed, held that the Council was entitled to take the disputed revenue streams into account. Lord Justice Beatson dissented.

1. The National Assistance Act 1948 (Choice of Accommodation) Directions 1992 and LAC (2004) 20 concern the amount the Council would usually expect to pay for purchasing accommodation and care for a person with assessed needs. In that context, cost means the Council’s purchasing cost, not simply the care home’s actual cost of providing the service. The actual costs of care are nevertheless a factor to which the Council must have due regard.
2. The guidance requires due regard to the actual costs of providing care, other local factors and Best Value requirements. It does not prescribe a particular methodology or require the usual cost to equal, or exceed, the provider’s actual cost. A functioning market, the proportion of privately funded places, vacancies, labour conditions, land values and the viability of providers may all be relevant.
3. The Council could therefore consider private residents’ fees and NHS payments, as well as top-ups, when making the evaluative judgment about what it would usually expect to pay. Paragraph 3.3 of the guidance does not prohibit consideration of total revenue. It requires the Council to demonstrate that the usual cost can purchase accommodation and services meeting assessed needs. Top-ups remain intended for enhanced accommodation or services and must not be used as disguised payments for basic assessed care.
4. Judicial review of a complex economic decision does not involve prescribing or micro-managing the authority’s model. Once legally relevant matters have been considered, their weight and the manner and intensity of the inquiry are for the decision-maker, subject to irrationality.
5. Beatson LJ would have dismissed the appeal. He considered that the guidance required the usual cost to cover assessed care needs without reliance on additional income streams, and that the Council’s model unlawfully embedded routine reliance on top-ups and other fees. He also regarded the approach as double counting income relevant to return on capital.

• Court of Appeal (Civil Division): Appeal allowed. The majority rejected the construction of LAC (2004) 20 adopted below.
• High Court of Justice, Queen’s Bench Division, Administrative Court: HHJ Lambert declared Torbay Council’s fee-setting decision unlawful and quashed it in [2014] EWHC 4321 (Admin). The Council’s unappealed finding concerning staff-hour calculations was outside the issue before the Court of Appeal.