Pictured above: Lisa Botterill

The High Court has quashed a care home fee-setting decision made by a local authority after it was found to be unlawful and forced the council to review the decision.

The very detailed judgment made against Pembrokeshire County Council by Mr Justice Hickinbottom has not yet been published - but it will now give clear legal guidance for all councils in England and Wales when it comes to setting care home fees.

The judgment outlines the latest position on fair pricing, a precise definition of 'return on capital', the relevance of local authority resources against providers' costs for contracted service delivery. It will also provide critical weighting for regional circumstances including spare bed capacity, socio-geographic factors, and the particular vulnerability of existing residents.

The ruling does not oblige local authorities to pay certain levels of fees or maintain a particular number of homes in the residential care sector. 

But it does mean that even if local authorities consider their own budgetary constraints to be relevant to fees, they must clearly document the factors taken into account in reaching the decision and show how they adequately planned for the consequences of their decision. The ruling also provides a legal toolkit for the presentation of evidence by providers to local authorities in advance of forthcoming fee-setting decisions. 

Harvey Ingram associate Lisa Botterill is a specialist in the sector and has been following developments closely.

She says: "Care home owners need to be equipped with the tools to find out how their local authorities are making decisions on fees and the type of evidence that needs to be provided to ensure they take full account of this ruling when setting fees. 

"With the new financial year pending, the time to act is now. If local authorities set final fees for 2011/2012 without taking account of this ruling, there is a clear precedent for providers to take legal action."

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