England and Wales High Court (Administrative Court) Decisions

[1] The defendant ('the Council') is the social services authority for Leicestershire and, as such, has a statutory duty to meet the assessed needs of sick, elderly and disabled persons. That duty is in part performed by paying fees to independent care homes in which these persons are accommodated. The claimant ('EMCARE') is an organisation which represents the owners of 104 care homes in Leicestershire, the City of Leicester, and Rutland. Those homes contain 3,171 beds, of which 2,215 are in Leicestershire.

[2] The claim (for which I gave permission to proceed on 30 June 2011) is for judicial review of a decision of the Council which was made on 7 March 2011 relating to the fees to be paid to care homes for the year starting on 1 April 2011. The decision was that these fees should not be increased from those which were being paid in the then current year, 2010/2011. The challenge to the decision is made on four grounds:
(1) failure properly to consult with care home providers; (2) failure properly to assess or take into account the actual cost of care; (3) failure properly to assess the risks consequent upon a freeze in fees; (4) failure to comply with the general equality duty under section 49A of the Disability Discrimination Act 1995. Of these grounds, (2) is of overriding importance, and most of the submissions made to the court were focused upon it. (1) is also of significance. In the particular circumstances of this case, (3) and (4) can fairly be described as bolted on to ground (1) and do not add a great deal to the debate.

[4] The starting-point is section 21(1) of the National Assistance Act 1948, as amended, under which

a local authority may with the approval of the Secretary of State, and to such extent as he may direct shall, make arrangements for providing –

(a) residential accommodation for persons aged eighteen or over who by reason of age, illness, disability or any other circumstances are in need of care and attention which is not otherwise available to them….

By section 26(1) arrangements under section 21(1)

may include arrangements made with a voluntary organisation or with any other person who is not a local authority where –

(a) that organisation or person manages premises which provide for reward accommodation falling within subsection (1)(a)… of that section, and

(b) the arrangements are for the provision of such accommodation in those premises.

In these simple provisions one has the statutory origin of the system under which local authorities fund the care in privately-run establishments of persons who cannot themselves meet the fees charged there.

[5] By section 47(1) of the National Health Service and Community Care Act 1990

[7] The relevant directions are contained in the National Assistance Act 1948 (Choice of Accommodation) Directions 1992, issued on 23 December 1992. The core obligation of a local authority arises where it has assessed a person under section 47 of the 1990 Act (paragraph [5] above) and has decided that accommodation should be provided pursuant to section 21 of the 1948 Act (paragraph [4] above). By paragraph 2 of the Directions the local authority shall, in those circumstances,

subject to paragraph 3 of these Directions, make arrangements for accommodation pursuant to section 21 for that person at the place of his choice within the United Kingdom (in these directions called 'preferred accommodation') if he has indicated that he wishes to be accommodated in preferred accommodation.

Paragraph 3 of the Directions limits the core obligation. The local authority

shall only be required to make or continue to make arrangements for a person to be accommodated in his preferred accommodation if

(a) the preferred accommodation appears to the authority to be suitable in relation to his needs as assessed by them;

(b) the cost of making arrangements for him at his preferred accommodation would not require the authority to pay more than they would usually expect to pay having regard to his assessed needs;

(c) the preferred accommodation is available;

(d) the persons in charge of the accommodation provide it subject to the authority's usual terms and conditions.

The cost which the authority usually expects to pay, referred to in (b), is commonly referred to as 'the usual cost.'

[8] Statutory guidance was given by the Department of Health in local authority circular, LAC (2004) 20, issued on 14 October 2004. The object of the guidance is set out in a summary at the beginning of the circular:

This guidance sets out what individuals should be able to expect from the council that is responsible for funding their care, subject to the individual's means, when arranging a care home place for them. This guidance is intended to describe the minimum of choice that councils should offer individuals. Even when not required to act in a certain way by the Directions councils should make all reasonable efforts to maximise choice as far as possible within available resources.

[9] Paragraph 2 of LAC (2004) 20 deals with preferred accommodation. The cost referred to in the 1992 Directions is dealt with in paragraph 2.5.4 of the circular.

One of the conditions associated with the provision of preferred accommodation is that such accommodation should not require the council to pay more than they would usually expect to pay, having regard to assessed needs (the 'usual cost'). This cost should be set by councils at the start of a financial or other planning period, or in respect to significant changes in the cost of providing care, to be sufficient to meet the assessed care needs of supported residents in residential accommodation. A council should set more than one usual cost where the cost of providing residential accommodation to specific groups is different. In setting and reviewing their usual 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.

[10] Reference was also made to paragraph 3.3 of the circular, but that paragraph is found in a section which is headed "More expensive accommodation" and which applies only where a resident "explicitly chooses to enter accommodation other than that which the council offers them, and where that preferred accommodation is more expensive than the council would usually expect to pay": paragraph 3.1. Paragraph 3.3 is in these terms:

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.

[14] The relevant background is helpfully set out in the witness statement of Alison Cowley, who is the chairperson of EMCARE and is also a director of a company which operates a residential care home.

[15] Ms Cowley explains that EMCARE was formed in 1984 and was incorporated in 2009. The membership is made up of providers of care homes, both those which are not registered to provide nursing care, commonly referred to as 'residential homes', and those which are registered as nursing homes. EMCARE has a long standing working relationship with the Council, and the two bodies have worked over the years to introduce several innovative projects.

[16] The fees charged by care homes are paid in a number of ways. If a resident's primary need is nursing care, the health service meets the whole of the fees (this method of funding is referred to as Continuing Health Care or CHC). If nursing is not the primary care need, and the resident's capital is over £23,250, he or she must meet the full cost of care. With capital of between £23,250 and £14,250, the residents make a contribution from both capital and income resources. With capital of under £14,250, the contribution is limited to the amount of their pension. These figures are, of course, set nationally rather than locally.

[17] Where the resident's capital is below £23,250, the local authority makes a contribution up to the amount of the 'usual cost.' If there is a shortfall between the fees actually charged by the care home and the usual cost, it has to be met by what is known as a 'third party top-up' which is normally paid by a relative.

[18] If a local authority is responsible to meet some or all of the fees because the resident's capital is below £23,250, the authority enters into a contract with the care home (typically through a framework agreement) by which it commissions the whole of the care services.

[19] As a resident's capital diminishes over time, it is quite common for funding to move from the resident's private resources to the local authority. This will often cause a reduction in the overall level of fees received for the resident, if no third party top-up is available to bridge the gap between the fees which were being charged on a private basis and the usual cost. Ms Cowley said that the bond which grows up between carers and their residents, and the fact that a change of environment can be highly detrimental, in practice prevent homes from terminating their services when a resident moves out of private funding.

[20] If a resident requires nursing care, but not as the primary care need (so that CHC funding is not available), a flat rate benefit called the Registered Nursing Care Contribution (the 'RNCC') is paid by the health service either direct to the home or through the local authority. The current RNCC is £108.70 a week.

[21] The Council has in place a framework agreement into which it enters with care home providers. The agreement has been in operation since 2002/2003. EMCARE and the Council are currently discussing the terms of a new framework agreement. Clause 7 of the existing agreement provides that the Specifications (which are essentially the requirements as to the care to be supplied) and Schedule of Prices "will be reviewed annually by the Council and in any event during April of every year."

[22] For at least the last ten years, representatives of EMCARE (always including Ms Cowley) have met elected members of the Council on an annual basis to discuss pressures that have a bearing on the cost of delivering residential care services. This annual meeting has been in addition to discussions held during routine meetings with officers of the Council. Since 2007, the persons attending the annual meeting on behalf of the Council have been Councillor David Sprason, who is the Lead for Adult Social Care Services, and Mick Connell, who is the Director for Adults and Communities.

[23] In June 2007, after requests from EMCARE, the Council agreed to work with providers in establishing a 'Fair Price for Care.' A consultant, Peter Lacey of the Whole System Partnership, was engaged by the Council. Providers of care, and also representatives from EMCARE, attended a series of workshops and consultative meetings with the Council. Slides from a power point presentation given by the Whole System Partnership at one of these workshops contain statements which (putting matters neutrally) raise concerns about the adequacy of the Council's fee rates: but, as it correctly observed on behalf of the Council, these statements in no way constituted acceptance of particular view by the Council.

[24] The Council has not provided EMCARE with a copy of the Whole System Partnership's report. The Council has, however, introduced a Quality Assessment Framework ('QAF'), which I will examine in more detail later. For the present, it is sufficient to say that the QAF is a scheme under which care homes which meet required standards are eligible for additional payments from the Council.

[25] The weekly rates of fee paid by the Council in the year 2009/2010 were:

[26] Moving on to 2010/2011, on 24 February 2010 the Council decided that there should be no increase over the rates for 2009/2010. EMCARE, understandably, did not like this decision, which became the subject of correspondence with the Council and of a meeting between representatives of both sides (including solicitors) on 21 June 2010. In short, the Council was unwilling to revise the rates for 2010/2011. As the decision was not challenged formally by way of judicial review, an examination of the controversy as to 2010/2011 would not be profitable. It is, however, material that in a letter of 1 July 2010, following the meeting of 21 June, one of the Council's solicitors stated:

The Council will include EMCARE at an early stage in the consultation process for the QAF, the proposed new revised Core Contract, discussions with health partners and the annual price review of the contracts.

The 2011/2012 review

[27] The recent history may be said to begin with the correspondence and meeting to which I have just referred. Plainly, if EMCARE was unhappy about a standstill in 2010/2011, it would be even less happy about a further freeze in 2011/2012. Ms Cowley says that the issue of fees was regularly discussed at the bi-monthly 'Provider Forum' meeting between representatives of care home owners and of the Council, so that the Council must have been well aware of the concerns that were felt.

[28] On 13 December 2010 Ms Cowley became aware that at a meeting on the following day the Cabinet of the Council would have on its agenda a report of the Director of Adults and Communities on the QAF. In her letter Ms Cowley recognised "that these are extremely difficult times" but, while welcoming the introduction of the QAF, adverted to the possibility that homes that could not immediately achieve the QAF criteria might not be able to afford to improve if fees were frozen for a second year running. She referred to a survey which Laing & Buisson, who are the recognised experts on cost of care, had recently conducted in the East Midlands. Ms Cowley said that Laing & Buisson

reported that the cost of providing accommodation and food only in a 50 bedded, highly efficient care home is £319 per week, or £45 per day. This includes bank repayments on the cost of purchasing/building the home, but does not include any staff whatsoever. I am sure that I do not need to illustrate how little is left over for staffing.

(EMCARE are hoping to offer an opportunity to commissioners for discussion and scrutiny of the Laing & Buisson report in the New Year.)

Ms Cowley went on:

Each April, the Basic State Pension is increased. This forms a part of the fee that is paid by the Council. Last year, Leicestershire County Council failed to pass this on and so in reality reduced its contribution to the care home fee.

On April 6 2011, the Basic State Pension will increase from £97.65 to £102.15. An increase of £4.50 a week. This needs to be passed on to care providers, just ot meet the cost of last year's increase in National Minimum Wage.

We have taken the unusual step of contacting you to request that in addition to the implementation of the QAF, the fees to all residential and nursing home providers be increased in line with the rise in the Basic State Pension from April 2011.

[29] On 14 December 2010, the Cabinet considered Mr Connell's report on QAF, and resolved that QAF should be implemented from January 2011. Applications would be dealt with on a first-come, first-served basis and

enhanced rates [would] be paid for County Council-funded residents on a tiered system with the highest quality providers receiving the highest level of payment.

[30] On 10 January 2011 Ms Cowley sent the Council a copy of the Laing & Buisson report. It is important to observe that it was prepared in relation to payments for CHC patients (not occupants of residential homes) in the East Midlands, with a view to determining a Fair Price for Care Model. It was not a report to which the Council contributed, nor was it directly concerned with patients for whom nursing care is not the primary needs. There is, however, one attached pricing matrix which is significant, because it contains no element of the cost of nursing. In a much abbreviated form, it runs:

[32] On 7 February 2011 the annual meeting prior to a review of fees was held. The persons present were: for EMCARE, Ms Cowley, and Jackie Riddett, who is the honorary secretary of EMCARE; for the Council, Councillor Sprason and Mr Connell.

[33] Ms Cowley's account of the meeting is given in her witness statement. She says that Mr Connell confirmed that he had received the Laing & Buisson report. He "informed us that there would be no increase in the banded rates again this year but that approval had been given for the QAF to be introduced." The EMCARE representatives said that "while the basic banding levels were so far below the actual cost of delivering the service, the [QAF] premium was insufficient." Ms Cowley and Ms Riddett referred to the cost pressures being faced by care homes, and Ms Cowley again raised the issue of the state pension increase being passed on to providers.

[34] Mr Connell does not accept that a firm decision had been made by 7 February 2011. On his account of the matter, the furthest he went in his discussions with EMCARE was to say that it was unlikely that there would be an increase in the forthcoming year.

[35] On 9 February 2011 there was a meeting of the Fee Review Panel (the 'FRP') of the Council's Adults and Communities Department. Two officers of the Council prepared a report for the FRP. Mr Connell was, while Ms Cowley was not, aware of the existence of the report when they met on 7 February. The report is quite a lengthy document, and I hope that the following summary omits nothing of significance.

[36] In the opening section entitled "Introduction and Purpose of Report", one of the objects of the report is stated to be to make recommendations to the FRP in respect of fees for 2011/2012.

[37] In the next section entitled "Context", reference is made to the representations made by EMCARE in December 2010 and to discussions between the department and EMCARE "which has informed the decision to present this report to the" FRP.

[38] There is then a section entitled "Background", from which I should quote several passages:

8. The existing fee review process is based on the budgetary position of the Council and fee changes are agreed by individual departments taking into account their own financial position when determining the levels - this may be seen as the only consideration that was taken into account.

9. Previously a percentage increase was agreed and given to all independent providers…

10. In 2010/11 it was agreed that no increase should be awarded which has been perceived by providers as a decrease in payments received.

11. In residential and nursing care the percentage increase applies to the banded rates paid by the department and additional needs allowance may be paid by the department to providers dependent on the needs of individual service users.

12. In addition third parties may be required to top up these payments. In Leicestershire there is a higher proportion of self-funders compared to our benchmark authorities. These make up 45% of the market and pay higher rates than those set by the department…

15. The position of public finances is currently extremely serious with local government having to cover a funding shortfall of around £6.5bn in the next financial year.... It is the toughest settlement in living memory.... The Council has to achieve £80m efficiencies and service reductions over the next four years including £28.9m in 11/12 – Adults and Communities contribution is £10.7m in 11/12.

[39] Then, in a section on residential care, there is this paragraph:

22. Of those admitted to residential care in April to September 2009, 94.9% of admissions were to homes rated in December 2009 as good or excellent. Compared with other similar authorities this is very high...… This is indicative of fee rates being sufficient to support placements of satisfactory quality.

[41] There is then an important section on "Cost and Inflation implication."

29. In respect of inflationary pressures the following is relevant:

° Approach being taken for in house services – no inflationary increase has been provided for other than for superannuation pension. ° Analysis of cost pressures in market.

° Costs - the interest base rate has remained static at 0.5%.

i. Nationally there are initial signs of pressures on interest for new borrowing. Each provider will have their own individual circumstances around borrowings but the overall perception is that it is unlikely that many will be taking on new borrowing and will remain static at their current rates.

ii. Food and utility costs - CPI currently at 3.3% - for our in-house elderly persons homes food and energy costs represent an average of 16.7% of the overall costs.

iii. Staffing costs e.g. increase in the minimum wage from £5.80 to £5.93/hr in October 2010 for those over 21 equates to 2.24%.

° The [QAF] will increase residential payments by between 4-7% for providers who meet the quality mark.

° Income - providers have identified that the authority is receiving additional income as a result of changes in benefits and that these are not being passed on to providers - as such they view this as an 'actual reduction' on banded rates.

° Domiciliary care fees are comparable with other local authorities this has been bench marked using market testing.

° New rates of pay have been agreed as part of tender processes for 2011/12.

° Financial resources available to the council - within the 11/12 [Medium Term Financial Strategy] a central contingency has been established for exceptional or unexpected financial pressures. The only one we are aware of at this time is £250 annual pay increases for those earning less than £21k.

There followed a table showing the budgetary implications of each 1% increase or decrease in payments to providers. The 2010/11 annual budget for residential care was £57,904,463, so that a 1% change would cost (or save) £579,045.

[42] In a section headed "Quality v Price of Care", it is observed in paragraph 32 that

There is no evidence that higher placement costs are a guarantee of quality, without an appropriate framework such as the QAF referred to earlier in this report.

[43] Finally, there are the following recommendations in paragraph 37 at the end of the report:

A 0% percentage uplift be applied to existing fees for 2011/12 based on the following rationale, as detailed more fully in the report:

° The introduction of the [QAF] from January 2011.

° The new Domiciliary Care contracts which go live from April 2011.

° The fact that voluntary sector providers have had their current contracts extended, rather than terminated, pending consultation on decommissioning and re-commissioning associated with the Strategic Review of Commissioned Services.

° The CRILL evidence demonstrating satisfactory quality levels.

° The department is able to make placements at our banded rates in most residential homes.

° Some providers have already written to indicate that they accept 0% uplift.

° Due regard has been taken to both financial pressures and the welfare of residents.

That the Fee Review Panel's rationale for determining the percentage for 2011/12 be made available to providers.

That the department have discretion to present a further report to the Fee Review Panel during 11/12 should exceptional or additional inflationary pressures arise.

[44] The FRP met on 9 February 2011. The panel consisted of Mr McMillan and two other officers of the Council, Fiona Holbourn, Head of Procurement – Corporate Resources, and Chris Tambini, Head of Strategic Finance – Corporate Resources. A full note of the meeting is in the evidence.

[45] In the introductory part of the meeting, Ms Holbourn asked whether part of the FRP's role was "to ensure that proper process had been followed and that due regard to this was given to relevant factors." Mr McMillan confirmed that this was so.

[46] The first subject for discussion was "Context." Mr McMillan dealt with a number of matters, including

° Outcome of recent judicial challenges, e.g. Pembrokeshire.

° Fee review to be applied to all voluntary and independent sector contracts not to specific sectors, while taking into account service specific pressures e.g. fuel duty and domiciliary care providers, residential care providers and the cost of utilities.

° Comments made by EMCARE in respect of fees for residential care.

Mr McMillan mentioned EMCARE's particular concern about the Council's failure to reflect increases in the state pension by an increase in fees.

[Ms Holbourn] asked how difficult it would be to reflect benefit changes within the fee review.[Mr McMillan] noted that if a resident is a 100% self funder then the department does not get any income. Additionally, each individual receives different benefits so that an 'across the board' uplift could not be applied and [there] was no straightforward formula available. For these reasons the panel decided not to pass the uplift on to providers.

[47] The FRP then went through the report. Among the matters specifically referred to at the panel meetings were the Laing & Buisson survey; the costs and inflation implications discussed in paragraph 29 of the report (paragraph [41] above); the QAF, which was designed "to improve quality rather than subsidise poor providers"; and the impact which an increase in fees would have on the budgetary position of the Council.

[48] The FRP concluded that the recommendations of the report should be presented to the Director of Adults and Communities and Director of Resources,

including reference to:

° the £1.5m growth the Council has included in its budget for application of the… QAF

° that the QAF has been introduced to enhance the welfare of residents and that benchmark data shows a trend of improvement in quality

° domiciliary contracts have just been through a procurement exercise and, therefore, fee rates have been market tested and new contracts will be in place from 4 April 2011

° voluntary sector providers have had their contracts extended rather than terminated pending consultation…

° 55% of providers business is commissioned by self-funders, Health etc.

° the fact that the Panel took into account the legitimate current and future costs faced by providers and factors that affect those costs, in particular the issues raised [in the letter of] 13 December 2010.

° the fact that in-house services are not receiving an uplift in their budgets other than for superannuation and the requirement on them to achieve efficiencies - therefore the authority is being consistent with external providers as per previous practice

° a contingency for the whole council has been established for exceptional inflationary pressures. If required, some of this could be made available for these providers.

The recommendations of the report were then agreed by the FRP.

[49] The decision not to increase fees for 2011/2012 was taken at a meeting held on 7 March 2011. The decision-makers were Mr Connell and Brian Roberts, the Council's Director of Resources. Mr McMillan was among other persons who were present. There is a fairly brief note of the meeting which does at several points show that there was anxiety about the possibility of a challenge to a decision not to increase fees. To take just one example from the note:

[Mr McMillan] set the context - challenge, Pembrokeshire judicial review, transparent process.

Among other points noted were:

[Mr Connell] noted that there was continuing discussions with EMCARE who are concerned with what other authorities are doing, including dropping fees.

Also:

There was a discussion about whether a process was needed for inflation, whether we wait for challenge or be proactive and review inflation ourselves.

[Mr Roberts] commented that we do not want to raise hopes but need to review half way through year.

[50] After quite extensive pre-action correspondence, the claim form was issued on 3 June 2011.

Ground 2: actual cost of care

[51] The principal ground of challenge was reformulated in this way by Ms McColgan in her written submissions:

The defendant failed or failed properly, contrary to guidance, to assess or take into account the actual cost of care. In particular, the defendant:

a. failed or failed properly to assess or take into account local factors relevant to the provision and cost of care, and

b. failed or failed properly to balance the factors set out above against budgetary considerations but, rather, was driven purely or to an improper degree by budgetary considerations, as a result of which it is

c. unable to demonstrate that the fees are sufficient to allow t to meet assessed care needs and to provide residents with the necessary level of care services.

At the beginning of her oral submissions, and again in reply, Ms McColgan emphasised that the challenge in this case was not made on the ground of irrationality. It therefore resembles the narrow challenge made before Judge Raynor in the Sefton case rather than the broad challenge which Hickinbottom J had to consider in the Forest Care case.

[52] It is, I think, useful to have before one the following extract from the judgment of Judge Raynor:

70. In my view, taken as a whole, the statutory Guidance and the Agreement [i.e. Building Capacity] do not contemplate that there will be any significant imbalance between the usual cost of care and the actual cost. If a local authority consciously fixes the usual cost in a sum significantly less that actual costs, then I do not see how it could be said to be having 'due regard to the actual costs of providing care' as required by paragraph 2.5.4 of the Guidance. Furthermore, such action by a local authority would in my judgment amount to a breach of the guidance contained in paragraphs 6.2 and 6.7 of the Agreement, namely to take into account in fee setting of the legitimate, current and future costs faced by providers, as well as the factors that affect those costs, and to ensure that appropriate fees are paid. If fee levels are set significantly below actual cost, then, in the words of paragraph 6.2 of the Agreement, there will be 'inevitable reduction in the quality of service provision' which 'may put individuals at risk.'

71. It is true that the Agreement was premised upon adequate funding being provided by central government, but the defendant does not claim to have consciously departed from the requirements of the Guidance and Agreement which I have cited, nor to have had any lawful justification to do so…

72. Whilst I agree that there is nothing in the guidance that requires a local authority itself to undertake an assessment of actual costs, it seems to me that once the claimants asserted (as was done at the meetings in August and September 2010) that there was an underfunding of placements and the Basic Fee did not reflect the actual cost of providing the services commissioned, and was set at a level below what was required to ensure a viable sector, then at the very least the defendant, pursuant to its obligation to have due regard to the actual costs of care and the provisions of the Agreement referred to above, should, before re-fixing the fees at the 2009 levels, have asked the claimants to submit a detailed assessment of what they contended were the actual costs of care so as to substantiate (insofar as they were able) their contention that placements were substantially under-funded in relation to the actual cost of care.

[53] Mr Cragg, who represented the Council, submitted that the approach of Judge Raynor in paragraph 70 of the Sefton judgment was wrong. At the heart of Mr Cragg's criticism is a complaint that, in two ways, Judge Raynor attached excessive importance to the notion of 'due regard to the actual costs': first, by effectively giving it overriding importance among the many considerations to which a local authority (consistently with Building Capacity) has to have regard; second, by seeing it as inevitable that conscious departure from actual costs would constitute a failure to pay due regard to those costs. I accept that there may be something in the second point: but it does focus on a single sentence in paragraph 70 and on a sentence that was not crucial to the decision. What was crucial was the finding in paragraph 72 that, in the circumstances of the case, it was incumbent on the local authority "at the very least" to seek from the providers a detailed assessment of the actual costs of care.

[54] In my judgment, this case comes down to quite a short point. EMCARE drew to the attention of the Council the gap between the actual cost of providing care and the Council's banded rates. The point was made explicitly by Ms Cowley at the meeting of 7 February 2011. If it was not made explicitly before that day (and it would be strange if it were not), it was implicit in the observations in Ms Cowley's letter of 13 December 2010 and in her sending the Laing & Buisson report to the Council on 10 January 2011. The gap, if it existed, was clearly of importance, given the freeze imposed in 2010, the complaints made by EMCARE about that freeze, and inflation occurring since the 2009 increase. Once the matter had been raised, it was, in my judgment, incumbent on the Council to ascertain what the actual cost of care was. So long as it remained in ignorance on that cost, it could not possibly pay due regard to it.

[55] This leads to an examination of the process which led to the decision of 7 March 2011. The steps along the way were set out at what may have seemed tedious length earlier in this judgment. There are two places along that way at which one should pause. First, there is in the report to the FRP a consideration of certain costs: the cost of borrowing, inflation in food and utility bills, and increase in staffing costs with particular reference to the minimum wage (paragraph [41] above). In the notes of the meeting of the FRP, it is said that the panel has taken into account the current and future costs of providers, and in particular the concerns raised in the letter of 13 December 2010 (paragraph [48] above). This was, in my judgment, an imprecise and unfocused approach. These rather general observations were not a proper substitute for asking, and answering, the question – what does it now cost to keep someone in a residential care home in Leicestershire? A much more analytical, indeed arithmetical, approach was called for once EMCARE had raised the issue of the gap. If the vital question was not asked, the process was fatally flawed. The case seems to me to be, at its root, as simple as that.

[57] It follows that the challenge on Ground 2 succeeds.

Ground 1: failure to consult

[61] In my judgment, such consultation as there was in the present case failed to meet the Coughlan requirements. What EMCARE got was too little, too late. It was too late because, notwithstanding the assurance that EMCARE would be involved at an early stage, no attempt was made to draw Ms Cowley into the process prior to her finding out on 13 December 2010 about the Cabinet meeting which was to be held on the following day. The consultation, once it got under way, was inadequate. The report to the FRP was a document of central importance. It was in existence at the time of the annual price review meeting between EMCARE and the Council on 7 February, Mr Connell accepts that he then knew of the report, but neither its existence nor the terms of the document were disclosed to Ms Cowley. Given that the report was the platform from which the two vital meetings within the Council (9 February and 7 March 2010) proceeded, the non-disclosure rendered the discussions of 7 February practically valueless. Further, the consultation was a whole was defective in that the Council never properly addressed the question of actual costs which has been discussed above.

[62] Accordingly, EMCARE is entitled to succeed on Ground 2 also.

Ground 3: failure to take into account risks to residents

[65] It follows that the decision of 7 March 2011 will be quashed on the first three grounds relied upon. Mr Cragg contended that the remedy should be withheld as a matter of discretion as (a) the proceedings had been issued on the edge of the three-month time limit and (b) it was too late in the financial year to unpick a decision which took effect on 1 April. (a) has given me some anxiety, but I do not think that the delay in issuing proceedings was such as should incline the court to refuse relief. (b) seems to me to be no more than assertion.