Care home owners are taking councils to court, demanding increases in the fees they are paid to look after the elderly.

Owners say they cannot afford to run nursing and residential homes on the fees they currently receive - but councils say they cannot pay any more.

Around 70% of care home residents are funded by the state, but no level is set for how much councils have to pay, and amounts vary significantly between areas.

This signifies the absolute frustration felt in many areas by home owners

Sheila Scott, National Care Homes Association

Many homes have closed in recent years - one report estimated around 13,000 care home beds were in 2001 alone, partly due to rising costs, putting pressure on the remaining homes.

Care home leaders are warning that in some areas, there are not enough beds to cope with demand.

Residents' fears

In North Somerset, care homes are calling for a 20% in the fees they are paid by the council.

Thirty of the 34 care homes are together demanding that the council pays up within six weeks. If it fails to do so, they are warning the contracts they have will no longer stand.

If agreement cannot be reached, elderly people could have to leave their homes.

At the moment, homes in North Somerset are paid �355 per week, per person. They want �450 and the council has offered �400.

Other areas have also been affected. In the Isle of Wight, the matter was settled out of court. In Bath and Gloucestershire, accountants Price Waterhouse are to be asked to set a rate, and in Durham, a court ruling is expected.

Elderly residents are concerned about having to move from their homes.

Resident, 94-year-old John Knowles told BBC Radio 5 Live: "It would be a terrible hardship for me, because I feel absolutely at home here.

"They have to realise that if they want to solve the problem of blocked hosp beds and things like that, they have to have a lot of nursing homes."

North Somerset Council is warning council tax would have to rise by 12% next year to fund an increase to �450 per week.

Leader of the council John Rowe told the BBC: "That is why we need to take the approach of making central government understand the problem that exists in all councils across the country."

'Saying no'

The National Care Homes Association does not represent the North Somerset homes, but chief executive Sheila Scott, said councils had been forcing fees down since 1993.

"Now the inevitable has happened. They have forced the fees down so low that private sector homes and voluntary sector homes can no longer afford to care, so they are saying no.

"Some are saying no, we're going to take you to court for more money, some are just saying no, because with so many home closures we've moved to a situation in many parts of the country where there's actually an under-supply of beds.

Ms Scott said she would have hoped that national and local government and care home providers would be able to sort out the funding wrangle without going to court - and that elderly residents would not suffer.

But she said: "I think this signifies the absolute frustration felt in many areas by home owners who have struggled on since 1993, trying to provide but have now come to the end of their financial tether and are not able to do it anymore.

"And it appears to them that court action is the only route to take."

She called for the extra money promised by the government for long-term care to be ring-fenced so councils could not spend it other services.