A NORTH-EAST council has warned that an Appeal Court judgement over who should pay for residential care for people with mental health problems raises serious problems for authorities across the country.

Yesterday, the Appeal Court ruled that a resident from the Redcar and Cleveland Borough Council area should not be charged for his accommodation. The man had been detained in hospital under the Mental Health Act, but is now living in a residential care home.

The three Appeal Court judges ruled that under the 1983 Mental Health Act, local authorities did not have the power to make charges for people living in residential care homes - even though that might "result in unfairness".

They added that if there were faults in the system, it could only be remedied by further legislation.

John Farries, director of social services at Redcar and Cleveland council, said the financial implications for the cash-strapped authority may be as much as £200,000 a year, with a backdated bill of more than £1m.

He warned that many other authorities which had been charging would also be affected by the ruling.

Mr Farries said: "Apart from the serious financial implications of this case for ourselves and many other local authorities, we are very concerned that it will create a situation where someone who has been compulsorily detained under the Mental Health Act is entitled to free residential care, while someone who has sought treatment voluntarily will have to pay."

Councillor David Walsh, leader of the council, said: "Obviously, we shall have to study the legal implications of the ruling, but at the same time I am sure that, in common with many other local authorities, we shall be pressing through the Local Government Association for the Government to review the legislation and clarify the issue of how accommodation charges in this kind of situation should be met."