Birmingham City Council v Birmingham Care Consortium and Others 17 October 2002 (High Court)

A group of care homes and some service users had challenged the lawfulness of refusal by Birmingham to place clients in homes of their choice where the fees requested were said to be based on the true cost of care to the provider. However, the majority of providers locally had accepted the increase which had been on offer, and this fact made the authority’s stance on placements lawful, and its stance on price not unreasonable.

The previous contracts between the homes and the authority were due to expire in the summer, and protracted negotiations took place mainly about the rates to be paid to the homes. The authority formerly offered an extension of the contracts on the basis of a 2% increase in fees, saying that if the contract was not extended, the authority would be willing to let current residents remain at the home at the current contract rate but no new placements would be made, effectively giving notice that clients would not be given their choice of accommodation, in the absence of agreement to the price, or of course, the availability of a top-up. 

The claimants said that this refusal was unlawful, because the Choice Directions required a placement so long as the cost of making the desired placement would not require the authority to pay more than they would ‘usually expect to pay’ having regard to his assessed needs. They argued that the words ‘more than the local authority would usually expect to pay’ in para 3 must be taken to be equivalent to the true cost of providing care to a resident in a care home; and that by refusing to place persons in homes that were asking for the true cost of care, the authority was refusing to provide preferred accommodation on a ground other than one of those specified in that paragraph. But the authority argued that since the majority of care homes had accepted the offer, it had established that a rate higher than its offer would be ‘more than they would usually expect to pay’.

The judge held that the wording of the Direction did not require an authority to determine whether the cost of available arrangements for accommodating a person was fair or reasonable. It simply entitled it to refuse to comply with an indication of preferred accommodation if the cost of it was more than the authority would usually expect to pay, having regard to assessed needs. Victory for the homes in this case would have required the claimants to prove that the authority’s offer of a 2% increase was less than a fair rate.

The court as a whole sounded this warning blast in relation to fees disputes: questions of affordability and of the allocation of resources are for the democratically elected executive and legislature, not for the courts. But the judge emphasised that the relevance of affordability in relation to rates is of course subject to the local authorities being able to meet their duties at the rates offered – and since most local authorities have made the political choice to rely on the private sector, this means that without forming any kind of cartel, the private and voluntary care sectors must stick to their guns as a whole, if they have had enough of market management by authorities long used to over-supply. 

It should be noted that this case is not damaging to care homes thinking either of using the County Court to recover a fair price from authorities who have left clients in the beds despite termination of the contracts previously governing the price for the services – or the Competition Commission, in reliance on the recent Bettercare judgment. Properly understood the case emphasises that providers in any given area have only themselves to blame if the majority is prepared for whatever reason to take less than a fair price for care.

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