SETTLEMENT has been reached resolving a long-running dispute over the level of fees paid to private care home owners in County Durham.

But last week's agreement is expected to add more than £780,000 to the county council's spending needs for the rest of the year, possibly rising to £3.15m in 2004/5.

The deal was struck after mediation, without reference to an 'unseen' county court judgement which could have been triggered.

Conflict arose last year when private care home owners claimed they faced closure without an extra £40 per elderly resident, per week, from the county council.

Matters came to a head during the summer when two private care home owners took a county court action, in Newcastle, claiming 'unpaid' residential fees from the council.

County social services director Peter Kemp said the two sides reached agreement through mediation without reference to the ruling.

He said: "I'm pleased to say we've resolved our differences and, in doing so, developed a constructive way forward for improving the services that we pay for, that the home owners provide."

The deal ensures discontinuation of legal proceedings for recovery of 'unpaid' fees, while levels of payment will be reinstated and back-dated to April for those homes in dispute.

Fees to nursing and residential home owners will increase by a further £10 per resident, per week, between October 2002 and March 2003.

Weekly payment rates from next April will be increased by a further £10 per resident for nursing home care and £5 for those in residential care.

An additional £5 per resident, per week, will be paid for residential care from October 2003.

Both parties have pledged to work towards a 'true cost of care' from April 2004, guaranteeing weekly payments per resident of £400 for nursing care and £320 for residential care.

Christine Smith, county council cabinet member for social services, said she hoped the agreement will see relationships built between the authority, as 'care commissioners' and the owners as, 'care providers'.

Nye Thomas, secretary of the County Durham Care Home Association, said: "It provides us with the opportunity to plan together to ensure market stability in the medium to longer term, and improve service delivery for vulnerable adults across County Durham."