A LONG-running dispute over fees paid to private care home owners was settled yesterday.

But the agreement, announced last night, is expected to cost Durham County Council £780,000 for the rest of the year, possibly rising to £3.15m over the next two to three years.

Conflict arose last year when private care home owners claimed they faced closure unless they had 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 coun- cil.

County social services director Peter Kemp said the two sides reached agreement through mediation.

"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 the end of legal proceedings for the recovery of "unpaid" fees from the council, while 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 last month and March next year.

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

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 would see relationships built between the authority, as "care commissioners" and the owners as, "care providers".