This was an appeal against the order of Supperstone J dismissing the Appellant’s claim for judicial review of the Respondent’s decision to offer care home rates in its area at a particular rate, for a three-year period.
The Appellants were members of the committee of Care North East-Northumberland (‘CNEN’) which represented the interests of its members who were proprietors of care homes in the north-east of England (particularly in Northumberland). The Respondent, as a local authority, had a duty under section 21 of the National Assistance Act 1948 to provide residential accommodation for certain persons who were in need of care and attention. Section 26 of the 1948 Act allows local authorities to discharge their section 21 duty by contracting with private care home providers, such as the Appellants. In discharging their duty to provide accommodation under the 1948 Act, local authorities were required to act in accordance with directions given by the Secretary of State under section 7A(1) of the Local Authority Social Services Act 1970.
The relevant guidance in the present case was contained in the Local Authority Circular, LAC, 2004(20) (‘the Circular’). This outlined that, in relation to the obligation of councils to arrange for accommodation at a person’s place of choice (Paragraph 2, National Assistance Act 1948 (Choice of Accommodation) Directions 1992 (the directions)), that they were not required to pay more than they would usually be expected to pay, having regard to the individual’s assessed needs (the council’s ‘usual cost’). The Circular further outlined that councils were required to have due regard to the actual costs of providing care and other local factors, as well as the Best Value requirements under the Local Government Act 1999, when setting and reviewing their usual costs. Additionally, the guidance stated that councils must demonstrate that any ‘usual costs’ set were sufficient to allow it to meet assessed care needs and to provide its residents with the level of care services that they were reasonably expected to receive, assuming that the possibility of resident and third-party contributions (top-ups) had not existed.
In their judicial review claim, the Appellants had challenged the Respondent’s decision on four grounds. The principal ground (‘ground 2’) was that the Respondent had failed to ‘have due regard to the actual costs of providing care’, contrary to the guidance in the Circular. The argument was that the Respondent was unable to demonstrate that its usual costs were sufficient to allow it to have provided assessed care needs and to have provided residents with the level of care services they were reasonably expected to receive if the possibility of resident and third party contributions had not existed. The judge had held that the Respondent did have due regard to the actual costs of care as required by the Circular, and rejected this ground (along with the other three grounds).
Before this Court, Ms Mountfield QC (for the Respondent) submitted in her first and principal ground of appeal that the judge had erred in rejecting ‘ground 2’ of the claim, and secondly had erred in finding that even if the Respondent had departed from the Circular, it would have been justified in doing so. The third ground of appeal was that the Respondents had simply plucked figures for inflation rates and efficiency savings out of the air when setting its ‘usual cost’. However this ground was not pursued in Ms Mountfield’s oral submissions as a freestanding ground, and was instead advanced in support of the principal submission.
In support of her submission that the Respondent did not fulfil its obligation to have ‘due regard’, Ms Mountfield referred to a number of authorities in which the nature of this obligation was considered in other statutory contexts. However, this Court held that whilst the conclusions as to what would constitute a sufficient inquiry for the purpose of having ‘due regard’ to the relevant considerations in those cases were entirely appropriate in those statutory contexts, it was not appropriate to stretch those conclusions in order to apply it to the circumstances of this case.
As the Circular contained guidance, it was not to be equated with a statutory duty imposed by an enactment. It therefore did not prescribe any particular methodology, whether structured or otherwise, which local authorities were obligated to adopt in order to have had ‘due regard’ to the actual costs of providing care. The Court held that the Appellant’s submission that a ‘structured’ approach was required was false because it treated a single sentence in the guidance in the Circular as though it was a duty imposed by primary legislation.
Ms Mountfield submitted that the Respondent had not focused on the question of actual cost and had failed to make a ‘sufficient inquiry’ contrary to the well-established principle that a decision-maker must have ‘ask[ed] himself the right question and take[en] reasonable steps to acquaint himself with the relevant information to enable him to answer it correctly’. Ms Mountfield therefore focused on the insufficiency of the Respondent’s inquiries. Whilst there was no dispute that the Respondent did take some steps to equip itself with the relevant information, the Appellant’s contention was that those steps were insufficient.
However, the Court held that, provided some inquiry was made into the relevant factor which needed to be considered, it was generally for the decision-maker to decide on the manner and intensity of that consideration (R (on the application of Bevan & Clarke LLP) v Neath Port Talbot County Borough Council  EWHC 236 (Admin)).
The submission that the inquiry had been insufficient was coupled with a submission that the underlying fault in the Respondent’s approach was that it did not focus on ascertaining the actual cost of providing care because it never asked the correct question of the Appellants: “What are your actual costs of providing care?” Instead, it asked them: “Why are you not able to provide care at the lower fee levels being paid by neighbouring local authorities in the North West?” The Court however rejected this argument. It did not accord with the judge’s factual conclusions as to what the Respondent actually did, against which there was no challenge in the grounds of appeal. Further, the Court held that the difference between the two questions was a matter of semantics rather than substance. This was because the obvious answer to both questions was to produce the management accounts, which would have shown the actual costs, and would also have enabled the Respondent to understand why those costs were higher in Northumberland than in the neighbouring areas. If that answer to the second question was not obvious to all of the members of CNEN, it was sufficiently obvious to Mr McArdle (a committee member of CNEN). It was plain that when he supplied information, the Respondent was prepared to consider that information very carefully indeed.
On the basis of Supperstone J’s factual findings, the Court held the judge’s conclusion that the Respondent did have ‘due regard’ to the actual costs of care as required by the Circular was plainly correct. The Respondent had considered the connection between the existing rates of payment and over-capacity in the market in the local area, compared its own rates with those of other local authorities in the region, accounted for the position of its providers and the evidence that they had provided regarding rates, sought information from the Appellant and carefully considered the management accounts provided by the CNEN, and explained why it did not accede to the Appellant’s request to use the PWC model (a costing model produced by the accountants, Price Waterhouse Coopers, that had been used for the 2005 Contract) before calculating its ‘usual cost’. In reaching that conclusion, the Court drew upon the approach of Singh J in R (on the application of South West Care Homes Ltd) v Devon County Council).
In reality, the Court found that the members of CNEN (except for Mr McArdle) were unwilling to disclose their management accounts because at that stage, and throughout the negotiations prior to the claim for judicial review, they were maintaining that the Respondent should have used the PWC model to ascertain the costs of care.
The Court rejected Ms Mountfield’s submission that the Respondent had simply looked at whether the market was making adequate provision for care rather than looking at the actual costs of providing that care. This was because it did not accord with the judge’s factual conclusions. Whether the Respondent’s existing fee levels were leading to an over-provision in the market was only one of the matters that was considered by the Respondent. While Ms Mountfield submitted that it could not be the complete answer on the judge’s findings, the Respondent did not treat it as such.
The Appellant’s submission that the Respondent’s inquiries were ‘insufficient’, despite the fact that all of the matters which it did consider were relevant to the question of ‘actual cost’, was most likely based on the underlying premise that a ‘structured analysis’ was required. The Court reaffirmed that the authorities relied upon by the Appellants from the different statutory contexts did not support the proposition that such an analysis, or any particular form of analysis, was required in the present context. The Court held that such an arithmetical calculation was only one way of having ‘due regard for the actual costs of providing care’.
The Court finally held that ground 3 of the appeal added nothing of substance to the principal challenge to the Respondent’s decision, and for these reasons this appeal was dismissed.