Agenda Item No


The Vale of Glamorgan Council


Social Care and Health Scrutiny Committee: 16th July 2012.


Report of the Director of Social Services


Setting a standard contracting rate for places in independent residential care homes for older people in 2012/2013


Purpose of the Report

1.             To update Elected Members about the process being used to determine the fees that the Council will pay in 2012/2013 when contracting for places in residential care homes for older people run by the independent sector.


1.             THAT Scrutiny Committee notes the work being undertaken to set the care home fees for 2012/2013.

2.             THAT Scrutiny Committee recommends that Cabinet agrees the final fee by September 2012.

Reasons for the Recommendations

1.             That Scrutiny Committee is able to exercise effective oversight of the process.

2.             To agree a timescale for finalising determination of care home fees for 2012/2013.


2.             During 2007/2008, the Council undertook an extensive piece of work to produce a robust and evidenced methodology for establishing a fair fee level.  All independent sector homes in the Vale of Glamorgan providing residential care for older people were asked to provide information about their running costs, to ensure that the methodology reflected the cost of providing care home services locally.  The outcome of this exercise was the report, A Fair Price for Residential Care 2007/8, approved by Cabinet in October 2008.

3.             Since that time, the methodology set out in the report has been used to determine care home fees in the Vale of Glamorgan.  The information regarding costs used in applying the methodology has been updated each year by applying the appropriate indices for the different areas of expenditure.

4.             During 2011/2012, a considerable amount of work was undertaken on the methodology to ensure that it met a number of external requirements.  This included the Welsh Government statutory guidance on commissioning social services, Fulfilled Lives, Supportive Communities: Commissioning Framework Guidance and Good Practice 2010, which sets out the responsibilities of local authorities in this area of work.

5.             In addition to the legislation and statutory guidance surrounding residential placements and commissioning of placements, there has been a successful public law challenge to Pembrokeshire County Council’s policy for setting care home fees (known locally as the ‘Forest Care Home’ case).  Although the judicial review covered the fee setting process and methodology adopted by Pembrokeshrie County Council, the judgement has implications for all local authorities when negotiating fees with independent providers of residential care homes.

6.             Likewise, care home providers sought a judicial review of the decision by Neath Port Talbot to increase fees by 5.7%.  In contrast to the previous Pembrokeshire case, the Court found that the process used in reaching the decision was correct on public law grounds and that Neath Port Talbot had properly considered all relevant factors, including the future viability of the care home providers.  Attention was drawn to the need for councils to ensure that there is consultation with providers before the rate is determined.  .

7.             The work undertaken during 2011/2012 was done with a small number of representatives from the care home sector, nominated to engage with the Council on behalf of the sector.  The fees for that year were agreed in November 2011, awarding a 13% increase in the feel level which was backdated to April 2011.  This placed the Vale of Glamorgan Council in the top quartile in Wales with regard to care home fees.

8.             While the agreed fees represented a considerable uplift, the independent sector continued to express concern that all the issues raised by them had not been addressed.  As a result, Cabinet agreed the following additional minute: “That Cabinet values the dialogue between officers of this Council and the independent providers of residential and nursing care, and authorises officers to pursue further discussions in respect of the few areas where agreement had not been reached in this financial year, in order to negotiate the fees for next year”.

Relevant Issues and Options

9.             Scrutiny Committee should be aware that this is a complex area of work requiring not only the use of evidence but also the making of informed judgements about a wide range of variables (such as assumptions regarding economy, efficiency and the prevailing resilience of the independent sector).

10.        In setting fees, the Council takes very seriously its responsibilities for complying with legislation, guidance and case law precedent.  It agreed, therefore, to ensure that the process adopted in the Vale of Glamorgan in setting a standard contracting rate takes proper account of the new statutory guidance on commissioning social services and the relevant judicial review judgements. 

11.        Since November 2011, dialogue has continued with the care home providers to develop as far as possible a shared understanding of factors such as market risks, the needs of current residents within nursing and care homes in the Vale, the needs of the care and nursing home providers, the needs of other residents in the local authority area and finally the needs of other service sectors within the Council’s area of responsibility.

12.        As part of the ongoing work, the nominated providers have received a copy of the detailed workings within the methodology together with the information on costs provided by care homes within the Vale of Glamorgan.  This enabled the sector to raise issues which they requested that the Council consider further.  Those matters were discussed at a meeting which was also attended by the forensic expert who has worked with the Council with regard to the methodology or ‘toolkit’ since 2007/2008.

13.        At the meeting, representatives from the homes raised several issues for further consideration, including whether:

  • the stance taken by the Council in dealing with the issues of quality of care and the physical standard of care homes is appropriate;
  • the Council should have adopted the use of registered beds or occupied beds in their calculations;
  • the Council has been selective with regards to the data used in calculating the non staffing costs incurred by the homes; and
  • the data used to calculate the management costs in the homes is appropriate.

14.        In response to these comments and further representations from the independent sector, additional work was undertaken with the external experts to ensure that their legitimate concerns were acknowledged and taken into account when calculating the proposed fees.  A written response was produced, detailing the way in which the issues had been addressed and the rationale for changes made in the calculations regarding the allocation of overheads.  These changes would increase the current fees by 2%.

15.        This outcome was shared with representatives from the sector at a meeting in June 2012.  A draft quality framework was also shared at the meeting; it had been developed to address concerns raised previously that there is not a mechanism to reward homes who provide an above average service.  There had been an agreement with the providers that the framework would be finalised by September 2012, with the required monitoring work to be undertaken in the second half of the financial year so that the findings could be reflected in the fee-setting process for 2013/2014.  At the meeting in June, the Council was again asked to review the same issues.  The representatives of the independent sector also stated their belief that the quality framework is too complicated and that they would rather a higher basic fee is paid to homes, negative the requirement for a quality payment.  These issues are still outstanding.

16.        At the start of the engagement process, it was intended that the final fee for 2012/2013 would be agreed by July 2012.  Given the number of outstanding issues, it has been decided that the dialogue will continue over the summer and that a proposed fee should be submitted to Cabinet in September.

Resource Implications (Financial and Employment)

17.        The standard contracting rate which the Council pays for places in independent residential care homes must be a fair one and comply with the Welsh Government guidance.  Because of the placement numbers involved, the level of payment has a considerable impact upon the budget of the Social Services Directorate.  Within the budget for 2012/2013, an inflationary increase of 2% was provided for care home fees.  While the negotiations with the independent sector continue, the fees being paid currently are those in place for 2011/2012.

18.        The increase fee payment in 2011/2012 was 13%; however, only 2% was made available within the budget for the Directorate.  The additional costs contributed to a significant overspend by Adult Services.  The ongoing impact of the increase in care home fees above the level of inflation is estimated at £506, 000 per year.  For 2012/2013, Social Services were given an additional £250, 000 to cover some of these costs.  Adult Services are expected to find the remainder through reducing dependence on residential and nursing home care.  .

19.        Scrutiny Committee will be aware of the exceptionally challenging financial situation that faces the Council.  A report to Cabinet on 16th November 2011 outlined the pressures on both the Children and Adult Services budgets within the Social Services Directorate.  An updated report was made to Cabinet on 11th June, outlining the measures being taken into balance the budget in 2012/2013 and beyond.  The savings profile is set out in Table 1.

Table 1 Savings Profile



Existing Corporate Savings Target (£000)

Overspend Recovery

























20.        All the people placed in residential care by the council are financially assessed to determine whether and to what extent they are required to contribute to the cost of the care provided.  These charges are calculated in accordance with the Charging for Residential Accommodation (CRAG) Guidelines produced by the Welsh Government.  The care home is paid net of the resultant assessed charge and the home must collect the balance.

21.        Nursing homes receive an additional payment from the Local Health Board to provide the nursing care required by individual residents.  This payment is currently £120 per resident per week and was not uplifted for inflation in the current financial year.

Legal Implications (to Include Human Rights Implications)

22.        The legislative context within which the Council sets fees for residential and nursing care placements requires that it must aim to ensure stability and sustainability in the provision of placements, so that obligations under community care legislation can be met.

23.        The National Assistance Act 1948 (Choice of Accommodation) Directions 1992 (as amended) places local authorities under an obligation to make arrangements for placing a person assessed as “in need” in accommodation of their preferred choice subject to certain conditions. 

24.        Relevant regulations include ‘The Care Homes (Wales) Regulations 2002’ and subsequent amendments.  These regulations state that “the registered provider shall carry on the care home in such a manner as is likely to ensure that the care home will be financially viable for the purpose of achieving the aims and objectives set out in the statement of purpose.”  Additionally, the National Minimum Standards for Care Homes for Older People (2004) sets out minimum standards relating to choice of home, planning, quality of life, quality of care, staffing, conduct and management of the home, concerns, complaints and protection and the physical environment.

25.        The adoption of the chosen methodology to determine care home fees ensures that the Council fulfils its legal obligations as set out in legislation, statutory guidance and case law.

26.        The Fulfilled Lives, Supportive Communities Commissioning Framework Guidance and Good Practice is issued under section 7(1) of the Local Authority Social Services Act 1970 and, therefore, it is statutory guidance.  Section 10 of the guidance indicates the factors which a Council should take into account when considering the issue of fee-setting.

·               Commissioners will have to take into account the full range of demands on them and their strategic priorities, as well as the resources they have at their disposal in developing their commissioning strategies.

·               Fee setting must take into account the legitimate and future costs faced by providers as well as the factors that affect those costs and the potential for improved performance and most cost effective ways of operating.

Crime and Disorder Implications

27.        There are no crime and disorder implications as a direct result of this report.

Equal Opportunities Implications (to include Welsh Language issues)

28.        Section 149 of the Equalities Act 2010 has replaced and incorporated the Race Relations Act 1976, the Sex Discrimination Act 1975 and the Disability Discrimination Act 1995 Public Sector Duties.  Section 149 states:

A public authority must in the exercise of its functions give due regard to the need to:

a) eliminate discrimination, harassment, victimisation and any other conduct that is prohibited by or under this Act;

b) advance equality of opportunity between persons who share a relevant protected characteristic and persons who do not share it;

c) foster good relations between persons who share a relevant protected characteristic and persons who do not share it.

29.        A person who is not a public authority but who exercises public functions must, in the exercise of those functions, have due regard to the matters mentioned in subsection (1).

30.        Having due regard to the need to advance equality of opportunity between persons who share a relevant protected characteristic and persons who do not share it involves having due regard, in particular, to the need to:

a) remove or minimise disadvantages suffered by persons who share a relevant protected characteristic that are connected to that characteristic;

b) take steps to meet the needs of persons who share a relevant protected characteristic that are different from the needs of persons who do not share it;

c) encourage persons who share a relevant protected characteristic to participate in public life or in any other activity in which participation by such persons is disproportionately low.

31.        The steps involved in meeting the needs of disabled persons that are different from the needs of persons who are not disabled include, in particular, steps to take account of disabled persons' disabilities.

32.        Having due regard to the need to foster good relations between persons who share a relevant protected characteristic and persons who do not share it involves having due regard, in particular, to the need to:

a) tackle prejudice, and

b) promote understanding.

33.        Compliance with the duties in this section may involve treating some persons more favourably than others but this is not to be taken as permitting conduct that would otherwise be prohibited by or under this Act.  The relevant protected characteristics are - age; disability; gender reassignment; pregnancy and maternity; rate; religion or belief; sex, sexual orientation.

34.        Any changes to social care services should demonstrate compliance with the Act and Equalities Impact Assessments will be undertaken where appropriate.

35.        The agreement of a standard fee is intended to ensure that service users can gain access to homes in the independent sector providing good quality care at a reasonable cost. 

Corporate/Service Objectives

36.        The determination of a fair price for care home fees will contribute to the corporate priority of “working with partners to meet the diverse needs of our residents in ways that will safeguard and support those who are most vulnerable and in great need; help people to keep fit and healthy; and increase social cohesion and equality of opportunity for all.”

Policy Framework and Budget

37.        The setting of Care Home Fees 2012/2013 is a matter for executive decision by Cabinet.

Consultation (including Ward Member Consultation)

38.        Care home owners and managers have been engaged during the review of the methodology used to determine a fair price for residential care, collectively via the Vale of Glamorgan Care Homes Association and also individually via written communications.  Three meetings have taken place with the independent care home sector to date regarding the fees for 2012/2013.

39.        There are no implications for individual Wards as a direct result of this report.

40.        The Cabinet Member of Adult Services has been consulted.

Background Papers

Cabinet meeting report and minutes of 15th October 2008 – A Fair Price for Residential Care 2007/2008.

Cabinet meeting report and minutes of 19th January 2011 – the Statutory Guidance on Commissioning (Fulfilled Lives, Supporting Communities).

Cabinet meeting report and minutes of 13th April 2011 – Social Services Change Plan 2011-2014.

Cabinet meeting report and minutes of 16th November 2011 – Social Services Commissioning Framework 2011 and the Social Services Commissioning Strategy for Older People’s Services 2011 to 2018.

Cabinet meeting report and minutes of 16th November 2011 – Pressure on the Social Services Revenue Budget 2011/2012 and Budget Recovery Action Plans.

Cabinet meeting report and minutes of 29th November 2011 – Setting a standard contracting rate for places in independent residential care homes for older people in 2011/2012.

Contact Officer

Carys Lord, Head of Business Management and Innovation.

Officers Consulted

Officers from the Resources Directorate have been involved in the work done to engage with representatives from independent sector providers.

Responsible Officer:

Philip Evans, Director of Social Services.