High Court deems Local Authority care fee increase unlawful

Challenges faced by care providers

The current economical climate presents a number of different challenges for care providers, such as an ageing population, increased running costs on reduced funding, and competition from other providers. The cost of care is now very significant and it is often the case that, where a local authority funded resident is placed in a care home, relatives (and in some cases care providers) are asked to pay top up fees where the local authority’s fees do not cover the necessary expenses of care providers.

The High Court Ruling: R (SARCP) v Stoke-on-Trent City Council [2025] EWHC 18 (Admin)

Care providers will no doubt welcome the recent High Court decision in R (SARCP) v Stoke-on-Trent City Council [2025] EWHC 18 (Admin), where a decision by the local authority to set an annual increase of care home fees below inflation was quashed. The Judgment has important implications for care providers and residents/relatives paying top up fees as above. Further, changes to care home fees set by local authorities have significant potential implications for care providers, in that they can impact the sustainability of a business and increase the financial burden on those having to make up for the shortfall.

Key arguments in the case

In the case, the claimant argued that an increase of 1.4% (being the minimum increase set out in a contract between care home providers and the local authority) to residential care placement fees for 2024/2025 was not sufficient and did not reflect the actual costs of providing care. They highlighted that there had been several homes closed recently in the area, leading to vulnerable residents being moved around, and there were understandably serious concerns about the quality of care that residents would receive if the necessary expenses of care providers were not being met.

Court findings and decision

The Court concluded that the local authority’s decision had been unlawful for various reasons, to include as follows:

1. The local authority hadn’t handled the consultation process properly before finalising its proposal;
2. They did not properly consider the actual cost of care or inflationary costs to care home providers and therefore failed to comply with its duty under Section 78 of the Care Act 2014, to act under the Care and Support Statutory Guidance issued by the Department of Health and Social Care;
3. They did not have due regard to the needs of and potential discriminatory impact on disabled or elderly residents of care homes;
4. The decision was irrational, because the local authority could not properly justify its decision and had adopted an objective of keeping people in their own home, rather than considering its duties to people who were already residents of care homes that were unlikely to return to their own homes.

As a result of the Court’s decision, the local authority was ordered to remake its decision within 28 days. It will need to do so with proper consideration to its duties and guidance on the matter, to ensure that its decision is fair and lawful.

How can Ellis Jones Help?

Our Healthcare Team understand the importance of maintaining a strong reputation within the highly scrutinised healthcare sector. As such, our aim is always to reach the best possible commercial resolution in an efficient manner and without recourse to court proceedings wherever possible. If you have found yourself in a similar situation with a Local Authority, we will work closely with you to provide specialist and tailored advice to suits your needs, in order to protect your position and your business.

If you wish to discuss a potential dispute, please contact Henrietta Frew by email at Henrietta.Frew@ellisjones.co.uk or phone 01202 057863.