COUNCIL bosses in South Tyneside are facing a care home cash wrangle after a top judge criticised the way it pays for looking after the elderly in the borough.
Judge Penelope Belcher says South Tyneside Council must go back to the drawing board over the way it set the fees paid to private care home owners.
The South Tyneside Care Home Owners Association went to court after the cash-strapped council – which last week was told it had to make £48m in savings due to Government cuts – announced a new fees structure and contract arrangements in May last year.
Judge Penelope Belcher ruled it had made a series of fundamental errors and failed to properly consult care home operators on a decision of critical importance to the future of their businesses, and must negotiate with them again.
The association, which represents 12 care home operators in the area who look after hundreds of disabled and elderly residents for the council, said the new fees are simply too low for its members to make a living, let alone a reasonable profit.
With the backing of other care home operators – Helen McArdle Care Ltd and the Executive Care Group – the association argued that the new fees structure did not take enough account of the “actual costs of care” – particularly for the elderly and mentally infirm.
Upholding their judicial challenge, Judge Belcher agreed that the council had failed to “pay due regard” to the real costs of providing care, and that care home owners needed to make a reasonable return on capital they had invested in their businesses.
She also ruled that, in refusing to disclose documents revealing the basis of its financial analysis and methodology, the council had failed in its duty to fully, fairly and properly consult the care home operators.
South Tyneside Council’s lead member for adult social care and support services, Coun Allan West, said: “We are aware of the judgement and will be meeting as a matter of urgency, to discuss the matter.”
The judge said there had been “a very significant error of approach” on the council’s part in that it had ignored the effects of inflation when calculating the care homes’ projected profits so that inevitable cost increases were not reflected in the fees to be paid.
The care home owners also claimed there were mistakes in the council’s mathematical calculation of bed occupancy rates and that it had failed to recognise “obvious errors” in spreadsheets that formed the basis of its calculations.
Judge Belcher also found that the “flawed” way in which the council set the new fee structure failed to take adequate account of its duties under the Equality Act 2010.
The judge concluded: “I recognise the inconvenience to the council in having to go through this process again and the disruption to, and indeed, impact on the council’s budget.
“I fully recognise the financial constraints under which local authorities are carrying out their duties.
“However, the extent of the errors in the process in this case, going as they do to the very heart of the decision-making process, are such that it would be quite wrong to refuse substantive relief.”
Judge Belcher quashed the council’s decision to issue a new contract to care home owners and the fees bands contained within it.
The ruling means that the council must now consider the whole fees issue afresh.