Accounting for the cost of care

The past few decades have seen an explosion in the registered care homes industry as people live longer. However, the sector's boom has also brought with it a need for safety measures to ensure those who set up homes are not only suitable to do so but have the resources to back the venture.

Although it received little attention at the time, a recent High Court ruling has clarified the position over proof of financial viability for those planning care homes. The ruling, from Mr Justice Tuckey in the Queen's Bench Division on 9 February, reinforced what many involved in the regulation of registered homes already believed.

However, Stephen Battersby, senior partner of Hertford firm Jameson & Hill, said he has no doubt that the ruling strengthens the hand of local authorities in their policing of registered care homes.

The action began after Hertfordshire County Council turned down a request to set up a care home in Welwyn, a decision the applicants appealed before the Registered Homes Tribunal under the provisions of the Registered Homes Act 1984. The council's decision was based on doubts over financial viability.

Under section 9 (c) of the Act, the tribunal ruled that the council was not entitled to take into account the financial viability of those behind the venture when reaching its decision.

However, Mr Justice Tuckey granted judicial review of that decision and held that financial viability was relevant. He said there was overlap between different provisions of the Act, but said he could imagine nothing more damaging than a home being set up and then foundering for financial reasons.

The case has recently been back to the tribunal for further consideration. After taking into account the financial position of those planning to set up the home, the tribunal has still given the go-ahead for the project. It claimed those behind the scheme had the financial resources to back the venture.

Nevertheless, Battersby, who acted for Hertfordshire County Council and instructed counsel Philip Engleman to argue the case in court, maintained that the High Court ruling was an important one. He said it represents a definitive judicial view of an area of law which is important in governing who is allowed to set up registered homes.

Battersby welcomed the judge's comment about the dangers of care homes being set up and then foundering for want of funding and said the ruling was in line with the view many in local authority circles have taken of the 1984 Act.

"I believe it is the interpretation invariably put on the Act and which up to now has not been challenged," he said.

However, he added that practitioners in local authority regulation or developers planning to set up registered care homes can now have no doubt that financial viability is a factor which must be taken into consideration.