Feature

posted 23 Mar 2001 in Volume 6 Issue 3

Duty of a local authority to provide suitable accommodation despite its limited resources.

This subject has been gone over repeatedly in the courts as the years have passed. Each case adds a new layer of intricacy.

a. Background: The current crisis in the private/independent care home sector.

The time is ripe to look at local authority duties to provide suitable accommodation despite limited resources particularly in the context of the current national crisis in long term care provision largely brought about by the discriminatory payment policies of local authorities and their apparent inability to set economically sustainable 'standard rates.'

1. Discriminatory payment policies. Local authorities tend to pay their own homes or their former homes more than they agree to pay as the 'standard rate for care in the private sector'. Sometimes the differential is hundreds of pounds a week.
Economically sustainable 'standard rates.' A local authority has to fix a standard rate for accommodation which represents the amount equivalent to the full cost to the authority of providing the accommodation or the gross cost to the local authority of buying in that care. This is not necessarily so reasonable in practice as it may sound in theory. In practice local authority buying power means that the price is set by the lowest common denominator. That defies the economic principles required to ensure long term private sector involvement in the sector. Homes close through bankruptcy frustration or the grass being greener in other industries. At the very least improvements in care standards are hindered. The resident/carer may feel that the lower the rate so much the better to help preserve assets. If they only have to pay the 'standard rate' whilst they are a fee payer then that must be a good thing and once they are down to the threshold of funds they can keep without a contribution from capital then 'so what?' The author would suggest that there is a balance to be struck.

The crisis means that private sector residential and nursing accommodation beds are being lost each day. The current situation is unsustainable.

b. Results of the current crisis.

For the resident. The result of the current crisis for the would be resident of today is delay lack of choice and frustration. Lack of choice must by its nature create a serious possibility of 'unsuitability'. There is also the risk of a need to move established residents against their will to a new care home.
For the NHS. The result for the NHS is bed-blocking and the side-lining of urgent work.
For local authority. The result for local authorities is a breakdown of social services ability to fulfill its statutory duties with the attendant risks to its citizens stressed out employees and ultimately even its political masters.
For the adviser. It is for the adviser to ensure his client gets the best deal possible and as a matter of both justice and fairness to help others get it as well. The cases of 'Batantu' and the 'Complaint against Merton ' which are both examined below are very useful in the context of advising individuals and may have wider implications. The adviser may also consider getting more involved in the 'politics' of the local situation. This is an extra unwanted hassle but advisers may feel that they cannot just sit back as their clients are hurt by the situation.

c. Some action: The Sheffield objection: A local crisis case study with national implications.

Objection to Sheffield City Council accounts: On 2^nd November 2000 a formal objection was lodged by the author to the 1999-2000 accounts of Sheffield City Council. Sheffield is one of the worst payers for care fees. The residential 'standard rate' being a mere £231 per week in 2000-2001.

In the light of the crisis it may well be that readers feel that they should consider making their own local objections under the Audit Commission Act 1998. Take care to follow the prescribed rules and time limits. Time is probably out for most objections to the 1999-2000 accounts. There is always next year.

1. The details of the Sheffield objection. The Sheffield objection was amongst other things upon the basis of:-

Breach of the Competition Act. The Council's own vehicle for its former care homes appears to be in receipt of illegal 'forward subsidies'.
Ultra vires. Local authorities appear to have no powers to set up bodies themselves into whose hands they can transfer 'Council homes'. That appears to be in breach of 'Technical Release 25/91' published by the Audit Commission. Many like Sheffield have done just that.
Differential fee structure and 'best value'. Differential fee structures cause the problems related above but from a specific legal perspective it creates a situation where the principles of 'best value' for Council Tax payers are undermined. If the private sector can provide three beds for the price of one 'Council' one as they appear to be able to do in Sheffield then the District Auditor is interested to know how a local authority can justify it.
Breach of mandatory National Assistance Act 1948 Directions. The loss of a third of private beds in Sheffield over 12 months with rapid acceleration since Christmas 2000 is in the author's opinion a mark of Sheffield's disregard for the National Assistance Act 1948 (Choice of Accommodation) Directions 1992 issued by the Secretary of State for Health under Section 7A of the Local Authority Social Services Act 1970 as circular LAC (92)27. This disregard is also apparent in the actions of other local authorities.

2. The District Auditor's reaction to the objection against Sheffield. The case against Sheffield was recognised by the District Auditor who declared a valid objection under Section 16 of the Audit Commission Act 1998. He then met quickly with the Audit Commission itself. That was upon the basis of:-

The potential local significance of the objections.
The potential national impact of their possible findings.
The complex nature of the proceedings required.

The Audit Commission has impressed upon the District Auditor the need to deal with the matter fully and as quickly as possible. The state of play as at the end of February is that the Council and the Auditors are gathering their evidence. A full legal team has been appointed by the District Auditors. The matter is apparently being taken very seriously at the highest level.

Office of Fair Trading:
Meanwhile a separate Office of Fair Trading application has been entered in respect of differential fee structures nationally again flagging up poor old Sheffield as the classic example.

Getting over the first hurdle to the application. Until an application was raised scrutinising Sheffield other similar applications to the OFT did not get past the first hurdle. Strangely the reason cited was that local authorities were not 'acting as an undertaking' when exercising their 'public interest type' function in the purchase of care services. A letter from the OFT on 18^th January 2001 (supplied in summary to the author by Harold Ross of Norwoods) stated that: 'We consider that the activities of a local authority acting as the purchaser of Social care of last resort in an area of zero or less than full economic value are not activities of an undertaking engaging in economic activity.' This statement was clearly nonsense. Local authorities must have capacity to meet care needs generally and are not strictly a supplier of last resort. A 'purchase' must also by its very nature have an economic value!
Basis of challenge. A local authority has to act in accordance with its statutory powers in making purchases. That is it is suggested in both charging for the 'actual cost' of its own or 'proxy' care home provision and paying the 'actual' cost in its buying in of care from the private sector. The same principle of payment of the full economic value applies in each case. Commercial reality must dictate the price paid for care provided either 'in-house' or bought in from the private sector. It must therefore be unlawful for local authorities to try to act outside their statutory powers by seeking to depress the price it pays below commercial reality.
The current interest of the OFT. The above points having been made with others the OFT have invited further comments. This means the door is now open where once it was closed. The 'undertaking' argument appears to have been dropped. The OFT appear to be particularly interested in the differential fee structures operating. They appear most concerned that local authorities may be 'profiting' at the expense of provision of social care for the elderly. That is as a result of price manipulation. The 'profit' is arguably being 'channeled' from one budget area care for the elderly into other areas. That would in itself be illegal.

Direct action by the local Sheffield Care Homes Association. The local Care Homes Association has also proposed to reject new residents from 5^th April at other than the 'Council' rate of fees. As to existing residents 're-negotiation' is demanded. Note: no 'notices to quit'.

A suggestion by Sheffield City Council (and others): A Special 'High dependency care rate'. Thus far the Council's response is to try and head off the local Association at the pass. They have suggested a new 'high dependency rate' which is above the 'standard rate'. This is not a new idea and the adviser will need to be aware of its possible implications. Anecdotal evidence suggests it is in operation or is being suggested in various places. It may at least at first seem like good news for both residents and hard pressed home owners. It would be paid for residents who have serious dementia and other related/similar difficulties. The problem with this solution is that in practice it may be no solution at all:-

'How on do you define 'high dependency?' Surely yet another cost sensitive definition re-ignites all the Coughlan style problems readers will be familiar with? That may be aggravated after the Health and Social Care Bill provisions come into force in respect of the demarcation of care cost funding between health and local authorities for nursing and non-nursing care.
'Who will make the assessments?' Apparently a 'dedicated team' of social services assessors. This begs the questions: 'How far will the assessment process be cost/ budget driven?'
'How long will it all take?' The author knows that a promised re-assessment of residents at the level of residential care in a dual registered home recently took 3 months. That was to deal with just 5 residents. How will the new team deal with say 2000 residents scattered over a wide Metropolitan area? The author would suggest that this suggested wholesale re-assessment is unrealistic. It just will not happen.
'Will the care offered by residential homes at a high dependency level be adequate?' The author would suggest that a 'needs assessment' of effectively nursing care needs should not be met by a 'halfway house' approach. Indeed he would suggest that this would be legally improper. The cases cited below would appear to provide support for this.
'Can the residential homes actually provide the level of care even with the extra payment?' The extra payment suggested is only in the order of £26 per resident per week. Given the extra staffing levels and cost of extra facilities for those with higher dependency needs the indications are that the residential homes will not be able to offer significantly enhanced levels of care. That is despite the increased responsibilities placed upon them. Basic economics is against the solution proposed by the Council.
Conclusion. In essence it appears to the author that this suggestion smacks of 'nursing home level care on the cheap.' If the fundamental problem of a low 'standard rate' is not addressed then a slightly greater higher dependency rate cannot add to the quality of services offered and cannot stop the hemorrhage of private homes which deprives older people of their right to choose a home or to remain where they are.

The situation in Sheffield is but one example of a national problem. If you are aware of local situations of a similar ilk do let the author know. Otherwise 'watch this space'.

A useful summary of the general legal position: The duty of a local authority to provide suitable accommodation despite its limited resources as explained by Henriques J in the case of Mukoko Batantu v London Borough of Islington with additional notes and commentary.
Heard on 8^th November 2000 Notes taken from Smith Bernal: no case reference known yet.

a. Background.

This case in the High Court is practically instructive as to how the current law works. It did not relate to an older person. However the application of the rules as to provision of accommodation by a local authority when resources are limited by financial constraints are the same for older people and other disadvantaged groups. It provides considerable comfort and a useful English law precedent both as regards needs assessed having to be met within a reasonable time and also importantly as regards choice and cost.

b. The facts.

A Congolese family of 6 resided in a high rise Council flat. The property was severely overcrowded. The father was both seriously mentally ill and physically disabled. His wife was also suffering from depression. A Section 47 NHSCCA 1990 'needs assessment' was requested in January 2000. Three months later(!) it was concluded and social services noted that the situation was 'very desperate'. The council assessed the family as needing a large ground floor flat. Unfortunately the care plan just referred the matter to the Housing Department. Social Services appeared to lose interest. The Housing Department said that there was a waiting list of several years and did practically nothing about meeting the needs of the family.

c. Local authority responsibilities.

Section 21 of the NAA 1948 means that 'residential accommodation' must be made available by a local authority for those who are assessed as in need of it under Section 47 NHSCCA 1990 but for whom it is not 'otherwise available'. The 'need' to be met may be as a result of age illness disability or otherwise. The need may be residential care such as an older person might need but alternatively ordinary though more suitable housing in accord with assessed needs. That follows Ex Parte Penfold [1998] 1CCLR 315. In Batantu the Social Services department effectively tried to 'pass the buck' to the Housing Department but the judgment clearly reiterates the 'stand-alone' nature of the Section 21 duty. The provision provided must also be 'appropriate to the needs of that individual applicant...' following R v Avon County Council Ex Parte M [1999] 2CCLR 185. The Courts have enforced the Section 21 duty by mandamus (positive injunction) as in R v Wigan Metropolitan District Council Ex Parte Tammadge [1998] 1CCLR 581. In Tammadge a three month deadline was set for the assessed needs to be met. In short Section 21 creates a positive obligation which Islington in the case of the Batantu's fell woefully short of fulfilling.

d.Assessment and meeting needs with limited resources: The four stage analysis.

Henriques J noted that there were four stages when a lack of resources may fall to be considered by the local authority:-

When considering making a needs assessment. Following Ex Parte Penfold this must be effected irrespective of resource implications.
During assessment when there are limited resources. If a person passes the financial means test then the local authority cannot refuse to provide for the needs assessed.
When the local authority are asking themselves what they should do to provide accommodation in accordance with their duty. As the need has been assessed the local authority cannot say 'we do not have the resources we cannot comply with our duty.' (See also the Scottish MacGregor case. It is equally unsatisfactory just to place someone on a 'waiting list' at this stage.)
When effecting the Section 21 duty to provide accommodation the local authority must provide it so as meet the need but they may take into account their resources as regards 'how' they meet for the need. They cannot however take into account their resources as to 'whether' or not to meet it.

e. The outcome.

The Court took a dim view of Islington's failures. 'The respondents most certainly can do more. They can buy accommodation and let it to the applicant by way of long lease assuming all other efforts fail.' This is an extreme suggestion but it does emphasise the Court's robust support for the Section 21 duty. This is not surprising as it is such a fundamental bulwark of our welfare state. A true 'safety-net' provision. An unqualified duty imposed upon local authorities by Parliament.

The court made a mandatory order:-

A three month consultation. A suitable property to be identified in that time.
The property to be made available for occupation within three months of being identified.

It also refused the Council a right to appeal. The case was simply too clear cut for that to be an option.

f. Observations on choice and cost in the context of 'Batantu type' cases: Accommodation offered as a result of a section 47 NHSCCA 1990 needs assessments.

1. Rejecting an offer by a local authority.
Islington suggested that the Batantu's might consider a short-let in the private sector. This was rejected by the Batantus in principle.

The reasons were:-

Lack of security of tenure and;
The cost of private sector rents.

Henriques J stated that the rejection of the housing offered by that means was 'a quite understandable and proper rejection of an offer in principle and properly declined by the applicant.' The reasons given were acceptable. The Court did not find the nature of the offer of accommodation by the local authority acceptable. What implications might this have?

The author would suggest that the implications may be as regards both choice and cost which are inextricably linked although dealt with separately below:-

2. Choice.

Apart from restating the general principle of choice of accommodation as for example contained within the mandatory National Assistance Act 1948 (Choice of Accommodation) Directions 1992 LAC (92)27 for people who have been assessed under Section 47 of the National Health Service and Community Care Act 1990 will need to be discharged into suitable care can anything else of a practical nature be extrapolated?

The rejection of a short-let in the private sector did not reduce the duty of the local authority to find other suitable accommodation. It appears that the duty to provide what is needed and what is wanted run hand in hand.

Following the case of Ex Parte Kujtim Henriques J suggested that 'the duty of the local authority is not absolute in the sense that it has a duty willy-nilly to provide such accommodation regardless of the applicants willingness to take advantage of it.' But in the case of Batantu '... the applicant has not begun to stretch the duty to the point of willy-nilly.' This suggests that unless the potential resident is irrationally rejecting the accommodation offered to meet his needs ie is rejecting sensible offers 'willy-nilly' then the local authority has a responsibility to try try try again. That is probably above and beyond the arguably more restricted right of choice given in the Choice of Accommodation Directions. It is more general and seems to set the standard of meeting the aspirations of the potential resident somewhat higher. Perhaps it may even become known as 'the willy-nilly test for choice of accommodation'(!)

3. Cost.

The author would suggest that apart from meeting the needs assessed as one might expect the accommodation offered must also be both secure for the period of need (or so far as one can reasonably foresee) and be provided at a fair cost in relation to the resident's resources.

In many cases where the resident does not have any relevant resources to assess the fair cost will primarily be in relation to the resources of the supporting local authority. That local authority support does not however cut the potential resident out of the decision making process. He is the person the local authority is paying for. His ability to choose in the financial context must logically be that of the reasonable Council Tax payer.

What about the situation where a person is faced with a choice of a home to meet their assessed needs? In principle potential residents and their carers have a choice but in practice local authorities do try to limit this. Money matters play a large part in limiting choice. The potential resident may be told that the local authority will fund home X but not home Y as its charges are more than the 'standard rate' which it sets as a result of its policies and decisions.

A local authority has to fix a standard rate for accommodation which represents the amount equivalent to the full cost to the authority of providing the accommodation or the gross cost to the local authority of buying in that care. As explained above this is not necessarily so reasonable in practice as it may sound in theory as the price set as the standard rate tends to bear more relation to the market power of a local authority than the economics of care provision in the private/independent sector.

Some (in fact most) local authorities within their own operations (or quasi operations through some notionally independent body) run residential and nursing homes. The cost of them is often higher than local private sector homes. That is as a result of various factors. The writer would also suggest that the cost of depreciation of the local authority care homes or bringing them up to full registration standard should also be included within the economic and accounting cost. The 'headline' differential may thus be rather misleading as many private sector home owners are keenly aware. It makes the gap look narrower than it really is.

The result is that local authorities operate price discrimination. This allows them to pay say £330 per week to their own homes and only £230 per week to private ones. The private ones may thus decline to take on local authority funded residents for obvious reasons unless a third party 'top up' is available. The 'real' cost of a bed in the private sector homes may be the same £330 per week or less. That may well include the full economic and accounting cost. Arguably therefore that private care is more economically efficient and importantly might represent 'best value' for local Council Tax payers. If a third party top up is not available then obviously the choice available to the potential resident will be limited to 'Council' homes.

In practice the situation may not be quite so stark at least in the short term as the private care homes make a choice between accepting some payment and slow bankruptcy and immediate bankruptcy through non-occupancy. In the long term as the situation is now turning out the result is bankruptcy or closure and a reduction in choice for the resident.

The extra cost of local authority homes is often cited as being due to the cost of higher staff wages and extra training. Nothing one notes to do with 'quality of service.' It is therefore possible for a local authority to actually pay itself more for a lower standard of accommodation and care than could be obtained in a lower cost or same cost private home which it refuses to fund on the basis of cost. That the author would suggest is both illogical and economically stupid.

In the authors opinion it would seem to be possible following Batantu for the potential resident to 'in principle' reject the local authority's kind offer of 'its own' home and demand to be placed in the private home. That is at least so long as the potential resident can show that in reality it is no more expensive and is possibly cheaper to the supporting local authority than its making provision in 'its own' care homes. If it is legitimate for a person to reject a more costly option as the Batantus did it must follow that a local authority can be made to accept a situation where the same or better care can be obtained for less from a private source upon the basis of the exercise of the potential resident's legitimate choice. It may be that the principle of choice may in some cases as referred to in the Merton case below skip over the issue of cost more or less altogether.

Further on the point of 'security of tenure' what about a local authority which suggests that 'its own' care homes will obviously offer better security of tenure? The first point is that the choice is that of the potential resident. If they accept the possibility of problems in the private sector so be it. The second point is that 'Council' homes are as prone to closure as others particularly where there has been chronic under-investment. That is a common problem. In some areas whole swathes of the stock of 'Council' care homes need to be rebuilt or demolished with attendant possibilities for disruption. Any reverse argument by a local authority against private care homes upon this basis is a non-starter.

Obviously the author's arguments may be music to the ears of hard pressed private sector home owners. But real choice still relies on individual tenacity and good advice. That is to ensure that a would be resident is not steamrollered into the choice of home as determined by the local authority and not the individual.

Ombudsman's Report on an investigation into Complaint 97/A/3218 (25^th October 1999) against the London Borough of Merton: Choice and differential funding.

a. The Facts.

A declaration of 'maladministration' which 'caused injustice' and a fine of £2 000 against the London Borough of Merton were the result of the dogged persistence of the carer (Ms B) of a 99 year old lady (Mrs A). Mrs A was assessed as needing full time residential care in March 1995. In August a place in the private residential care home of choice came available. Merton refused to fund it without a third party top up as the cost was over their standard rate. Although Ms B was willing Mrs A would not allow her to act as third party. Mrs A entered hospital. Ms B looked for other homes at the standard rate. There were none. The Council relented and offered to pay more. Mrs A then decided to enter a home in the November at a level just above the standard rate. She died 7 weeks later.

b. The Ombudsman's Comments.

Role of the Ombudsman. The role of the Ombudsman is essentially to comment after the local authority in question has failed to satisfy the complainant. They can recommend what a local authority should do to put right an injustice. They are taken seriously by local authorities. They ignore them at their peril certainly so far as their Auditors and public opinion are concerned. 'Maladministration causing injustice' is a serious charge for an independent body to make against a local authority even if the Ombudsman has few 'teeth' which would facilitate direct enforcement of its recommendation.
'Maladministration'. Richard Crossman who steered the Parliamentary Commissioner Act through in 1967 referred to 'maladministarion' as 'bias neglect inattention delay incompetence ineptitude perversity turpitude arbitrariness and so on.' In practice the question is whether the authority has acted reasonably in accordance with the law its policies and accepted standards of local administration.
'Injustice'. Another elephant test. There is no real definition. Financial loss. Missed opportunity. Distress. Being put to time and trouble are all relevant.
Status of the Ombudsman's decision. An Ombudsman's decision is not strictly a legal precedent but they are at least persuasive. They can be relied upon to provide a view on the law which may otherwise have to be the object of full legal proceedings. Ombudsman's decisions should at the very least sound warning bells in the minds of local authority officials. By listening they can help avoid the local authority acting unlawfully in the future to mend its ways. If a local authority refuses to take on board an Ombudsman's decision in its own or another case it must be on notice that it is likely to be challenged in judicial review or otherwise. The wise local authority must abide by the statements made by the Ombudsman even if it is not the particular authority under scrutiny.
The Ombudsman's conclusions. The Ombudsman at the instance of Ms B examined the case and concluded:-

The local authority had a duty to and did not explain the Choice of Accommodation Directions to Mrs A and also Ms B. There is emphasis upon explaining matters of choice to both carers and the potential resident.
The Council did not consider Mrs A's individual circumstances (ie that she did not like the Council homes and was not willing to have a third party take financial responsibility for her) when refusing to fund above their standard rate. '...Councils have a discretion to exceed the normal amount that they are willing to contribute to the costs of residential care and ..... they should not fetter their discretion.' The would be resident is 'king' and individual's needs and wants perhaps so far as they do not amount to a 'willy-nilly' rejection of appropriate care under the case of Batantu rule. They override the standard rate which only has the status of policy and not of law. Obviously this is very good news for the would be resident. Further the decision stated that 'where the charge for a place in one of their own homes is higher than the standard rate for a place in a private home councils should be willing to explain reasons.' The implication is that if there is no adequate reason for the discrepancy presumably linked with the needs and wants of the resident there can be no objection to a private placement being funded by the local authority at a rate equivalent to or less than the cost of its own homes although that is at a rate which is higher than the standard rate. As to even higher cost care that must be more questionable but the door is open to it. 'Know your rights' is the name of the game. Perseverance pays off. It should be noted that Merton only appeared to relent in the face of adverse Press reports.
The National Assistance Act 1948 (Choice of Accommodation) Directions 1992 and 'the standard rate.' From the point of view of private care home owners the Ombudsman's decision reiterated that: 'The Directions [on choice] 1992 provide guidance to local authorities about enabling people who need residential accommodation to exercise a genuine choice over where they live. The Directions say that people have the right to enter more expensive accommodation than they would otherwise have been offered if there is a third party willing and able to pay the difference in cost between what the authority would normally expect to pay and the actual cost of the accommodation. The directions say however that this does not mean that authorities should set an arbitrary ceiling on the amount they are willing to contribute towards residential care and routinely require third parties to make up the difference. If challenged a local authority would need to be able to demonstrate that its usual payment would be sufficient to allow it to provide people with the level of service they could reasonably expect if the possibility of third party contributions did not exist.' In some areas home owners have been their own worst enemies. Rather like Solicitors and conveyancing a willingness to undercut the price of ones neighbour simply cuts ones own throat. The Council can point to many homes in their area that although reluctantly accept the standard rate however low and however uneconomic in the long term. It behoves upon the private homes as the mainstay of a 'genuine choice ' to residents to stay in business and refuse to accept silly low rates. That would prove that the real cost of care in the area is above any silly low level which is set by a local authority. That would make that low rate evidently an arbitrary one. That is hard but going bust is harder still. Currently local authorities are quite simply getting away with it. They will do so until bed shortages force a serious re-think upon the standard rate.
The Council had not helped Ms B enough in finding a suitable home. '... Councils should ensure that they do not place the onus of finding a suitable place at an acceptable cost on the client or the carers.'
The Council was too slow to act when it was clear discharge from hospital was possible and desirable. '... the Council should have dealt with the situation with greater urgency'.
The Council's case records were inaccurate.
The Council had failed to consider the complaint under the statutory procedures.
Further practical implications for full-payers whose resources run out. Whilst not forming part of the Ombudsman's decision Peter Grose Solicitor pointed out in Caring Times: May 2000 that the Ombudsman's decision has a parallel. If a privately paying resident needs to apply for local authority assistance after they fall below the financial eligibility threshold what is the position? If one applies the 'standard rate' as many local authorities try to either the resident must move out of that care home if it costs more than the standard rate or the home must reduce its fee. Either can occur in reality. Ignoring the Human Rights Act issues which lurk behind the scenes the point is that the individual's assessed needs must rule. A generalised policy is not sufficient to deal with the situation. As Peter Grose noted (ibid) 'If the client has been in a particular home for a considerable period then any move could cause considerable harm. If the individual's needs can only be adequately met in a home which is more expensive than the authority is willing to pay then social services should meet the full cost of that home.' That is the author agrees 'the law.'