Select Committee on Public Administration Memoranda


Submitted by Jim Amos, The Constitution Unit, University College London


  The focus of this submission is upon the impact of the draft Bill on business. The following questions are addressed:

    —  Why is the proposed Freedom of Information Act (FOIA) important to business?

    —  What evidence do we have from other countries to help us form a judgement about the likely impact upon business?

    —  What is the current position in the UK in relation to the availability of government information that is relevant to business?

    —  What are the key questions that business will have when considering the draft UK FOIA and how does the draft Bill answer these questions?

    —  What are the overall issues from the perspective of business?

    —  What do we expect the impact to be?


  The prime purpose of FOIAs, and as it is expressed in the UK White Paper, is to enable citizens to know more about the work of government that is carried out on their behalf. More open government should lead to better government. It is not directly about business at all.

  However, government, as a consequence of its role in licensing, regulating, purchasing and supporting business activities, holds a very great deal of information about business and individual companies. Some of it is very sensitive and could cause harm if it became known and available to competitors. For example, research, product and market plans. Much of it could be of value to companies to assist them in competing more effectively for government contracts and in the market more widely. For example; information about the market, including specific market studies; information about contracts and future requirements; information about policies likely to affect business.

  A FOIA therefore provides business with new risks and new opportunities. This is illustrated by the fact that certainly in Canada and the USA, there is evidence that the largest users of their FOIAs to request general government information are business requesters.


  The experience of business in Australia, Canada and the USA seems most relevant, with the most detailed information available about the USA. There is some evidence from within the EU, where several countries have had access to information laws for some time, but the evidence is very mixed and more limited.


  The USA, in 1966, was the first country in recent times to introduce an FOIA. Business became very concerned about its effects, in particular the apparent risks that sensitive information would be disclosed. There were some very high profile mistakes, eg the release of details of the Monsanto herbicide, Roundup. There was also some misinformation with a report that the design of the space shuttle nose cone had been given to the Japanese. This was untrue.

  The lack of any provision in the 1966 Act for business to be consulted before release of its information was recognised as a serious problem. This led to the creation of what became known as "reverse FOI" law suits. This is where a submitter of information sues to prevent disclosure of his information. This whole area was the subject of many cases and much controversy. In the USA this matter was settled by an executive order in 1987 which required government departments to give notice to submitters before disclosing their information.

  The release of the unit prices of government contracts was also for a long time an area of controversy. This was settled in 1998 with an update of the Federal Acquisition Regulations which required the items, quantities and any stated prices of each award to be released, with no prior notice necessary.

  From the legal perspective most focus has been upon the issue of the protection of sensitive information. However the other side of the story in the USA has been the growth of specialist FOIA law firms, consultancies and marketing companies who have developed businesses from the acquisition and marketing of government information.

  The position today is that there are no current serious issues with FOIA so far as business is concerned. Departments are considered to manage release competently, and increasing amounts are published on the Web. There is a clear body of case law. Companies know how to protect their sensitive information and the value of looking for the information they need to assist their marketing. Overall the view is that the effect upon business is at worst neutral and probably positive.

Australia and Canada

  Australia and Canada introduced their FOIAs in 1982. They had both looked at the early experience of the USA and wanted to avoid the problems they had seen. They both included provisions for companies to be consulted before their information was released. There was some initial business concern, but the policy framework within which the Acts were implemented was protective of commercial information. There was little business use in Australia and initially in Canada. Information was protected effectively and in both countries the view was that businesses that were well established had much better access to the government information they needed than the FOIA would provide.

  In Canada recently there has been a growth in business use. In 1994 43 per cent of all requests were known to come from business, many in the area of drug licensing and other licensing and trade mark areas together with information relating to contracts. In Canada, contract details are increasingly being published on the Web.


  There is a contrast between the attitudes of the Nordic countries towards freedom of information and most of the others where traditions of state secrecy have been strongly established. In Sweden, where the original access to information law dates from 1766, the Government normally makes available details of public contracts and these are routinely requested and used by business. In The Netherlands and Germany the policy is to apply the levels of openness required by EU procurement regulations. An analysis of award notices published in the Official Journal of the EC in 1998 showed that the UK provided information about value for 33 per cent of the awards that were published. The EU average was 60 per cent.


  After a long history of blanket confidentiality being applied to information about companies that was held by government, there have recently been a number of changes towards greater openness. This however has happened in a patchy and not always predictable way.

  It should be noted that a FOIA is being proposed in the context where there are a number of separate current initiatives that relate to government information. These may also have some impact upon business. For example, the UK White Paper on Modernising Government, the EU Green Paper on Public Sector Information in the Information Society, the UK Green Paper Crown Copyright in the Information Age, and the Treasury Paper, Selling Services into Wider Markets. All these taken together, promote the better use of public information to:

    —  improve the quality of government.

    —  make it easier for citizens and business to relate to government.

    —  generate growth and employment from the value-added resale of public information.

    —  generate more revenue for government from the exploitation of its information assets.

  Information is currently made available under a framework of regulations and policy, some of which are initiated by the EU and some by the UK government.

EU-initiated regulations

  Examples of those that are of concern to business are the regulations that cover procurement by public authorities, the environment and health and safety.

  EU procurement directives are implemented into UK law by Treasury Regulations. In addition to specifying a framework for public procurement, they require the publication of information about public contracts including the price, and for losing tenderers to be told the characteristics and relative advantages of the tender selected as well as the name of the successful tenderer. These regulations are not in practice very fully implemented and confidentiality can be claimed relatively easily. This applies across the EU as a whole.

  EU Environmental and Health and Safety Directives and Regulations have a broad scope and overlap to some degree. Information to which any commercial or industrial confidentiality attaches is protected. There is some use by business and some revenue is earned by the Environment Agency from value-added use, for example provision of information about environmental issues within defined distances of proposed property developments. Enforcement notices are made available and 54 registers of environmental information are published.

  The Health and Safety Executive receives a number of requests each year that are clearly for business purposes. An example is requests for the enforcement profiles of specific companies. These come from law firms, legal departments and purchasing departments. The assumption is that these requests relate to the assessment of potential suppliers, finding information about competitors and potential candidates for acquisition.

Code of Practice on Access to Government Information

  This was first introduced in 1994 and revised in 1997. It encouraged departments to make available a wide range of information subject to a number of exemptions. The Ombudsman's reports show clearly that in the early period it was mostly operated in a restricted way. There have been some recent changes of policy towards greater openness in some departments.

  A good example is the press notice issued by DETR in July 1998, which announced that in future all DETR contracts would as far as possible be publicly available documents. Where there were good reasons why, exceptionally, certain parts of contracts should remain confidential, these would need to be negotiated during the tendering process. We are not aware of any problems or complaints about this change.

  We understand that the Health and Safety Executive now provide more information than previously as a result of the impact of the Code of Practice. In the area of enforcement they now provide a 200 word summary of the incident where previously they would just have reported action under a particular clause. The decision by MAFF from January 1998, to publish the Hygiene Assessment System scores of individual slaughterhouses by name was a very clear change of policy.

  The Code of Practice has in effect provided a framework within which a relatively open or restrictive regime can be operated according to the policy the department adopts. This has led to significantly greater openness in some areas and far less change in others. We have seen that this applies with FOIAs also. The administration of the FOI legislation in Australia and Canada still varies across departments. There is very little business use in Australia, but a growing use now in Canada where most government contracts are channelled through a single purchasing department.

  The UK, with the Code of Practice and some slow pressure from EU Directives has in some areas become more open than previously. In general the previous blanket confidentiality applied to information about companies has broken down, but without being replaced by a predictable and generally applied level of openness. Business is operating in a gradually more open environment. FOI could herald a step change that would force the subject onto the agenda and cause more positive management of information given to government and the fuller exploitation of information that is available.


 (1)   What classes of information will departments and public authorities publish routinely as part of their publication schemes?

  For example, will they regularly publish details of public contracts and if so in how much detail? Will they follow the same policy as expressed in the revised Federal Acquisition Regulations in the USA?

  Clause 6 places a duty on every public authority to adopt a publication scheme which has to be approved by the Commissioner. We will have to wait and see how open or restrictive these schemes are. The Home Secretary's code of practice must also cover "the inclusion in contracts . . . of terms relating to the disclosure of information."(clause 38(2)(d)).

 (2)   What commercial information will departments disclose upon request?

  How will they interpret the test that information is exempt if its disclosure "would or would be likely to, prejudice the commercial interests of any person?" Will departments generally be willing to accept assertions from companies that disclosure would prejudice their interests or will they require evidence to support the claim?

  Companies should plan on the basis that reasonable evidence will be required to support a claim for exemption. What level of evidence will become clearer as the decisions of the Commissioner start to form a body of case law.

 (3)   Will public authorities consult the business suppliers of information before they disclose it?

  They will not be under a legal obligation to do so but the code of practice to be drawn up by the Home Secretary must include provision about this (clause 38(2)(c)). It would be preferable if the Bill contained a statutory requirement of advance notice and consultation, as in Australia and Canada.

 (4)   If a public authority intends to disclose information which has been supplied by a company, does the company have a right of appeal?

  The answer is no. Requesters of information have a right of appeal to the Information Commissioner but not suppliers. As the draft Bill is written the only protection for a company which disagrees with the decision of a public authority to release its information is to apply for an injunction at common law for breach of confidence. An injunction will only be granted if disclosure would constitute an actionable breach of confidence. It would be much cheaper and simpler if companies could appeal to the Information Commissioner within a coherent legal framework, based simply on the exemptions in the Bill.

 (5)   Could this Bill apply to information that a company is providing to government now?

  Yes, there is no cut off time. Clause 8 simply refers to information "held" by the public authority at the time of the request. The Bill is fully retrospective.

 (6)   What recourse would a company have if its information is released by mistake and commercial harm is caused as a result?

  Clause 48 states that the Act "does not confer any right of action in civil proceedings in respect of any failure to comply with any duty imposed by . . . this Act." However if disclosure would constitute an actionable breach of confidence, the company may seek damages at common law.

  Overall this draft Bill leaves many questions unanswered in terms of its potential impact upon business. Many of the key practical questions relating to the protection of sensitive information are to be left to a code of practice which we have not yet seen. There is no statutory right of advance notice to business before disclosure of its information, and no right of appeal against a decision to release information. Business would feel a lot more comfortable with a FOIA if it had these statutory safeguards.


  The most compelling issue from the business perspective when a FOIA is proposed in any country is concern that secret and confidential information may be disclosed and damage caused. All FOIAs address this concern and have provisions to protect confidential information. However experience has shown that whatever is stated in an Act a great deal will depend upon interpretation, the consistency with which it is applied and the scope for mistakes.

  It is difficult at this stage to predict with confidence what will and what will not become available as a result of a FOIA. Business is as likely to be concerned about the predictability of the new policy as it is about openness. What is predictable in advance and applies equally to all players can be managed.

  The process by which genuinely confidential information can be protected as a legal right with a clear appeal process is a priority. In the draft Bill the lack of a right to advance notice and an appeal process creates a risk of a replay of the problems and controversy that occurred in the USA which led to development and extensive use of "reverse FOI" suits. It would be preferable to business to provide for "reverse FOI" procedures in the Bill rather than to rely upon the chances of the law of confidence and High Court injunctions.

  The risk of mistakes being made that cause damage is a related concern. The emphasis given to the training of staff and the quality and clarity of the FOI processes within government are a way to allay this concern.

  Once business is reasonably satisfied that the risks are acceptable and controlled, then the opportunities to exploit the information made available by FOIA will come higher up the agenda. The scope for business to exploit public information is considerable and well developed in the USA. A more open regime offers more opportunities to business. These opportunities are broadly in the field of marketing. They include finding out more about the market both within and outside government, about specific public sector needs, about relevant government policies and about other players in the market.


  At present we do not know. There are some variables that, if addressed, are likely to cause the impact to be positive. Some of these relate to government and some to business.

  Factors within the control of government:

    —  a right to notice and an appeal process.

    —  quality and clarity of FOI processes within government as expressed in the code of practice and implemented with consistency and predictability.

    —  the publication schemes that are implemented.

  Factors within the control of business:

    —  the review and positive management of information provided to government. The USA experience has shown that with careful management, sensitive information can be protected, even in an environment where there is some unpredictability and risk of mistakes.

    —  exploitation of the opportunities to make use of the new information resources.

  The position today is that the impact could be problematic or positive depending upon how effectively these factors are addressed.

  The writer, after a career in the computing and telecommunications industries, which included periods marketing to the public sector, has been carrying out research on the subject of freedom of information and business as a Visiting Fellow at The Constitution Unit, School of Public Policy, University College London.

  More detail of some of this work has just been published by The Constitution Unit, with the title, Freedom of Information and Business: The impact of a Freedom of Information Act upon Business as suppliers of products and services to the UK Government.

June 1999

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