NHS trust fails in High Court bid to secure £1m developer contribution

The University Hospitals of Leicester NHS Trust has lost on all four grounds in a High Court case over whether Harborough District Council should have required a developer to contribute nearly £1m towards the provision of healthcare to residents of a new estate.

The trust argued that although its funding was agreed annually based on population estimates this did not take account of the first year of residence of anyone who moved to the estate, since they would not have been ‘counted’ for the year in which they arrived.

Harborough gave planning consent to Leicestershire County Council for 225 ha of land near Lutterworth for up to 2,750 dwellings, commercial spaces, schools and associated infrastructure.

Mr Justice Holgate said the trust did not object to the development but argued Harborough erred in law by not requiring a contribution under s.106 of the Town and Country Planning Act 1990 of about £914,000 towards the delivery of health care.

The trust said this would mitigate the additional demands on its services from the new homes, which could accommodate 7,520 people, of whom 38.5% would be new in the area.

It told the court that treatment provided for such residents was not reflected in its funding until calculations were made for their second year of residence.

The trust said it operated at full capacity but could not turn away new residents, leading to a consequential delay in treatment for all patients.

Harborough said the trust failed to satisfy it that population growth could not be taken into account in its annual negotiations with clinical commissioning groups.

The council also said the trust failed to demonstrate the funding gap which would justify the s.106 contribution sought.

In The University Hospitals of Leicester NHS Trust, R (On the Application Of) v Harborough District Council [2023] EWHC 263 (Admin) Holgate J said: “This was despite the considerable efforts made by Harborough District Council to understand the trust's position, which included obtaining advice from two leading counsel, including one with expertise in the NHS and its funding arrangements.”

The trust’s first ground was that Harborough ignored, or failed to understand, the impact of the development on its ability to provide healthcare services.

It also argued that Harborough “proceeded on the fallacious basis that the claimant's funding system meant that a mitigating contribution did not meet the requirements of the Community Infrastructure Levy Regulations 2010”.

Two further grounds concerned whether Harborough misunderstood the trust’s funding system, and whether the council refused to consider evidence and representations after 28 July 2020, so failing to take into account material considerations.

Rejecting the first ground, Holgate J said: “The trust's contention that [Harborough] misinterpreted policy and excluded, or failed to have regard to, impacts upon treatment services is impossible.”

The trust said a Harborough officers' report resulted in the council excluding the health impacts of the development.

Holgate J said:”The claimant's reading of the officers' report is untenable.” He added: “It did not purport to exclude health treatment as a material consideration.”

Harborough had been asked to contribute to the trust’s services rather than its infrastructure.

The officers’ report said it was more difficult to relate the use of a financial contribution for the provision of services to the effects of a development, as compared with a need for infrastructure.

“That was a judgment on a matter of fact and degree,” Holgate J said. “The officers' report did not proceed on the basis that contributions to the provision of services should not be considered.”

The judge said a second aspect of this ground “shows why this complaint is hopeless”.

He explained: “If [Harborough] had adopted the interpretation alleged by the trust and regarded treatment of ill health as excluded, then it would not have gone on to consider at such length the trust's case on the merits. Harborough took a great deal of trouble to seek further information and explanations from the trust and, in due course, to obtain specialist legal advice.”

Turning to the trust’s ground that Harborough took into account an irrelevant consideration - the trust's funding arrangements - Holgate J said the trust’s entire claim turned on the idea of a funding gap during the first year of a person’s residence in the area.

“If there were to be no funding gap resulting in that harm there would be no relevant impacts to justify a s.106 contribution.” he said. "It is the very nature of the harm claimed by the trust which makes the alleged funding gap an integral part of its case. The trust's argument that the funding arrangements of the NHS or of the trust are irrelevant is unsustainable.”

Holgate J said there was “no merit” in the argument that the council misunderstood the trust’s funding system.

“What the trust repeatedly failed to explain in its representations to [Harborough] was why the annual negotiations for a block contract for the next financial year do not, or could not, take into account population growth during that year, given that clinical commissioning group’s funding has an element for future population growth.”

The judge also dismissed the argument that Harborough officers were under a duty to refer the planning application back to the committee so that it could consider further representations.

“By now [Harborough] would have been entitled to regard this protracted, unhelpful process as exasperating,” Holgate J said.

Mark Smulian