R (KM) v Cambridgeshire CC [2012] UKSC 23: Supreme Court finds direct payment level rational and declines to reconsider Barry

June 6th, 2012

Barry survives

In KM, the Supreme Court was expected to reconsider the House of Lords’ decision in R v Gloucestershire CC, ex p Barry [1997] AC 584.  In Barry, the House of Lords found by a bare majority, bowing perhaps to pragmatism rather than a strict interpretation of the statutory language, that local authorities may have regard to their own resources when assessing the level of services which are to be provided to individuals under section 2(1) of the Chronically Sick and Disabled Persons Act 1970.

Last year, in R (McDonald) v Royal Borough of Kensington and Chelsea [2011] UKSC 33, [2011] PTSR 1266, Lady Hale cast doubt on Barry and encouraged litigants to argue that it should be overruled.  The Supreme Court in KM subsequently gave permission for a ground of appeal that Barry had been wrongly decided.  However, when the KM hearing commenced it became apparent that the Barry issue was irrelevant (Lord Wilson at [7], Lady Hale at [41]).  The Court was therefore careful to say nothing about whether Barry was right or wrong.

KM:  direct payment amount was rational

The challenge was to the local authority’s decision to make direct payments of £85,000 per annum to KM, who is profoundly disabled.  The local authority had calculated that sum by applying its “Resource Allocation System” (“RAS”), along with its “Upper Banding Calculator”, which it used to calculate additional amounts in severe cases.  Two grounds were raised, namely, irrationality and a failure to give reasons.

Lord Wilson, with whom all six of the other Justices agreed, gave the leading speech.  At [15], he broke down the analysis required of a local authority by section 2 of the 1970 Act into the following three questions:

(1)     what are the needs of the disabled person;

(2)     in order to meet these needs is it necessary for the authority to make arrangements for the provision of any of the listed services;

(3)     if so, what are the nature and extent of the services for which it is necessary for the local authority to make arrangements?

These stages reflect the Secretary of State’s guidance (“Prioritising need in the context of Putting People First”, February 2010), which splits needs into “presenting needs” (identified by question (1) above) and “eligible needs” (identified by question (2) above) [16-18].  Once a person’s needs are deemed eligible, the local authority is under an absolute duty to meet them, and cannot refuse to do so on account of limited resources [19].

Direct payments under the Community Care, Services for Carers and Children’s Services (Direct Payments) (England) Regulations 2009 (SI 2009/1887) give rise to a fourth question, namely [23]:

(4)     what is the reasonable cost of securing provision of the services for which it is necessary for the authority to make arrangements?

Lord Wilson accepted that, in answering that question, it would be unduly laborious for a local authority to start by costing each service for every disabled person [24].  He therefore approved the general use of RASs as a lawful tool to provide a “ball-park” figure, subject to adjustment [26].  He commented that, since RASs generally work by allocating points to eligible needs and then ascribing a cost to each point, there must be a “realistic nexus both between needs and points and between points and costs” [25].  He then said that, once the indicative sum has been identified, it “is crucial [that] the requisite services in the particular case should be costed in a reasonable degree of detail so that a judgement can be made whether the indicative sum is too high, too low or about right”, this exercise usually being labelled the “support plan” [28].  In this respect, Lord Wilson at [37] approved guidance from R (Savva) v Royal Borough of Kensington [2010] EWCA Civ 1209 that adequate reasons can be achieved with “reasonable brevity”, often by listing the required services, and the suggested timings and hourly costs.

On the particular facts of KM’s case, in which the local authority had found that all of his “presenting needs” were “eligible needs” which it was under a duty to meet (hence the irrelevance of the Barry issue), Lord Wilson found that the local authority’s use of its RAS was rational, and that any flaw in computation was likely to have been in KM’s favour [38].  He criticised the authority for failing to make a more detailed presentation of its assessment of the costs of KM’s necessary services.  However, in the light of the authority’s amplification of its reasoning during the subsequent litigation, he said that it would be a pointless exercise of discretion to quash the decision so that his entitlement might be considered again, perhaps even to his disadvantage [38].


Because Barry was not reconsidered, the impact of KM on the law is rather limited.  Nonetheless, it contains useful confirmation, following Savva, that RAS-calculated payments must be accompanied by some explanation of the services which the authority considers to be covered by the payments.

RASs are often criticised for being opaque:  they rely on algorithms which are not revealed to service users; and they translate an individual’s needs into a budget, without identifying the costs of the particular services required to meet those needs.  This shortcoming is compounded by the fact that, where an authority provides or commissions services, it is relatively clear whether or not it is meeting eligible needs; but where it is providing money to purchase services, it is much less clear whether eligible needs are being met.  Service-users sometimes complain that they are offered explanations for personal budgets which are no less illuminating than being told, “Computer says no”.  Indeed, Lord Wilson agreed that “a local authority’s failure to meet eligible needs may prove to be far less visible in circumstances in which it has provided the service-user with a global sum of money than in those in which it has provided him with services in kind” [36].  This is why it is important that RAS-calculated budgets are accompanied by an explanation of the services which should be covered by the budget.

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