Councils will face more pressure to increase fees for care providers after a landmark legal ruling forced an authority to raise its rates.
Yesterday, Pembrokeshire Council increased its weekly fees to three care homes from £390 to £448 for each resident after a judicial review, at a cost of £1.5m to the authority.
In December, Mr Justice Hickinbottom concluded that the council had failed to give proper weight to the needs of residents and providers when deciding to freeze fees for 2010-11 at 2009-10 levels.
The judge ruled that its decision relied too heavily on the need to contain spending on care, without considering sufficiently the impact on the quality of care or the effects of the rising costs facing providers.
He ordered the council to remake the decision lawfully.
The council has said it would make a backpayment for the fees at the higher rate and a one-off payment to compensate the care homes for lost interest.
Mario Kreft, chief executive of Care Forum Wales, expected many providers to seek to recover their full costs from councils.
"It's inevitable that there will be greater pressure on local government to pay a fair fee so that providers can show they are financially viable and that will inevitably result in higher costs on local government," he said.
In advice to the Registered Nursing Home Association, delivered at the time of the judgement, specialist care lawyer David Collins said the ruling offered providers a strong basis for challenging decisions on fees by councils.
"If a local authority has refused to increase or has indeed reduced its price, it's more likely than not that its decision is unlawful," he said. "The Pembrokeshire decision should undoubtedly prove very effective in the care home sector's armament."
Pembrokeshire Council leader John Davies said: "This new fee means an additional cost to the council of almost £1.5m. This will result in a significant challenge to the council in ensuring that it continues to meet its statutory obligations to vulnerable individuals who have been assessed as requiring support."
Kreft said fee rises were necessary if the care sector was to invest in better care through training and improving facilities. However, he added providers were keen to work with councils to adopt innovative and cost-effective forms of care.
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