Public authority decisions are, of course, open to judicial review. However, such decisions are fundamentally the domain of the relevant decision-maker and not the court. The court’s sole function (in appropriate cases) is to review the substantive and procedural lawfulness of the decision in question but not its intrinsic merits.

Those are for the decision-maker.

On 23 December 2014, His Honour Judge Lambert (albeit with some reluctance) found it necessary to hand Torbay Council (pictured) a judicial ‘red card’ for its decision concerning the ‘usual cost’ of fees to be paid to care service providers.

The case in question was R (Torbay Quality Care Forum Limited) v Torbay Council [2014] EWHC 4321 where the court upheld the two following grounds of challenge by the claimant independent care home operator association:

  • the ‘usual cost’ model on which the council’s decision was based, specifically with regard to a staffing ratio calculation (staff hours required per patient), was mathematically flawed and was, thus, unreasonable; and
  • the decision was unreasonable as the model considered top-up fees paid by privately paying residents which were not relevant. This took into account costs in an unlawful manner and was contrary to government guidance.

As the judge explained, the ‘usual cost’ is the amount which the local authority assesses as the normal cost of providing care services for care home residents. It therefore becomes the figure the council is prepared to pay to providers where it is responsible for the costs of care.

Relevant statutory guidance in Department of Health Local Authority Circular LAC (2004) 20 indicates that: ‘2.5.4 … [The usual cost] should be set by councils at the start of a financial or other planning period, or in response to significant changes in the cost of providing care, to be sufficient to meet the assessed care needs of supported residents in residential accommodation… In setting and reviewing their costs, councils should have due regard to the actual costs of providing care and other local factors. Councils should also have due regard to Best Value requirements under the Local Government Act 1999.’

‘3.3 When setting its usual cost(s) a council should be able to demonstrate that this cost is sufficient to allow it to meet assessed care needs and to provide residents with the level of care services that they could reasonably expect to receive if the possibility of resident and third party contributions did not exist.’

Sedley J (as he then was) indicated in R v London Borough of Islington ex parte Rixon [1997] ELR 66 (by reference to section 7(1) of the Local Authority Social Services Act 1970): ‘…Parliament by section 7(1) has required authorities to follow the path charted by the secretary of state’s guidance, with liberty to deviate from it where the local authority judges on admissible grounds that there is good reason to do so, but without freedom to take a substantially different course.’

Although the claimant had made detailed representations countering the council’s projected ‘usual cost’ model, the council had nevertheless decided to proceed with its proposal. The model had been produced with the help of a (now deceased) external accountancy consultant. This used an average of publicly advertised fee rates for residential care, weighted for the proportions of standard to standard-plus residents.

The council’s accountant indicated that, while ‘the overall aim was undoubtedly to arrive at a model which would achieve a composite weighted average of staff costs, bearing in mind the large number of variables between different staff homes’, in the absence of the external accountancy consultant, she was unable to say why the particular model of calculating staff ratios was chosen.

As indicated, the claimant argued that the model adopted was mathematically flawed and that taking account of private income streams was contrary to government guidance and/or Wednesbury unreasonable. In response, the council contended that:

  • there were no mathematical errors, the challenge to the staffing ratio calculation representing no more than a difference of opinion and approach; and
  • the council was entitled to take into account the fees paid by privately paying residents. The duty here was restricted to ensuring that those residents receiving state-funded care were not required, themselves, to top-up fees paid on their behalf.

Court decision

As indicated, the court was reluctant to trespass into the proper domain of the local authority decision-maker. For ‘in judicial review the court will be particularly circumspect in engaging with the conclusions of the primary decision-maker in relation to complex economic and technical questions’.

And, per Supperstone J in R (Care North East) v Northumberland County Council [2013] PTSR 1130: ‘The setting of normal fee rates for the provision of residential care is a matter involving economic and financial assessment, a degree of expertise in how the sector operates, and judgment about the proper allocation of scarce resources.’

But while in the course of assessing the material facts, Judge Lambert ‘tried very hard’ to reach a conclusion which would allow him to say that the intensity of the inquiry here being dealt with by the decision-maker was a matter for the council and that he should ‘leave well alone’: ‘With regret for the consequences, but with no real hesitation as to the principle, I must honour I consider that the claimant’s first ground is well made out.’

For if the ‘decision-maker treads the path of economic modelling, then it seems to me it cannot proceed with a model that is significantly flawed’. And, Lambert added, ‘here the merits of the decision are so fundamentally flawed by adopting the unnecessary weighting which no one can explain as being necessary that the decision to employ this falls fairly and squarely within the scope of judicial review as being a decision which no reasonable decision-taker properly directing themselves on the facts could take’.  

The court also upheld the second ground of claim (that the model wrongly took into account top-up fees paid by privately paying residents). The judge considered that the council had no justification ‘for departing from the plain wording of the circular’. For while guidance is guidance and can be departed from for specified good reason: ‘What the decision-maker, it seems to me, cannot do is to say “I shan’t comply with the guidance because I don’t agree with it.”’

In the circumstances, ‘the local authority’s approach… failed to take any proper account of the guidance concerned and therefore fails to take into account a highly relevant matter’.

Although local authorities find themselves under significant financial pressure, clearly their actions must at all times be lawful and reasonable. But while Torbay’s decision was struck down, the judge did acknowledge that the authority had been ‘honest and straightforward throughout the process, balancing the needs of those requiring care against its duty to ensure that public funds must be properly expended’.

Nicholas Dobson, Freeths