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The government has entered a High Court battle over Havering Council’s plans to transfer two care homes to the private sector because it could affect the sale of public services to private operators.

Residents’ representatives told the High Court last week that the transfer would violate their human rights.

Jessica Simor, counsel representing three residents, said Havering had acted on “wrong and misleading” legal advice that private operators would be bound by the terms of the Human Rights Act 1998 and would be subject to legal challenges through judicial reviews.

But counsel for constitutional affairs secretary Lord Falconer said private companies providing public services at the behest of local authorities were “exercising public functions” and would be  subject to the terms of the act.

Mr Justice Forbes reserved judgement until later.