Select Committee on Public Administration Memoranda


MEMORANDUM 21

Submitted by Clifford Chance

1.  INTRODUCTION

  1.1  As a leading international law firm, Clifford Chance has an ongoing and substantial need to access information held by government departments and public authorities.

  1.2  Our clients expect us to be well-informed and expert, not only in relation to existing law relating to their business affairs, but also to current developments and issues arising with the public sector, eg policy initiatives and developments, legislative reforms, regulatory activities, Public/Private Partnerships and other government contracting activities. Our Library and nine information offices in the UK are major users of official information. Our Public Policy Group helps the firm and its clients to anticipate, understand and respond to a wide range of public sector developments. For example, we have developed a unique database (the Public Consultation Database) which contains fully searchable details of all the main government consultation exercises.

  1.3  We have taken an active interest in the Freedom of Information (FOI) debate and the related developments. This has included:

    —  advising the firm and clients on the Code of Practice on Access to Government Information and related Guidance;

    —  seeking official information on behalf of clients;

    —  advising the firm and clients on Tradeable Information and Crown Copyright issues;

    —  a major presentation on Freedom of Information at the first University of Cambridge Conference on Constitutional Reform (January 1998);

    —  a detailed Briefing on Freedom of Information: The Implications for Business based on the White Paper "Our Right to Know" (February 1998);

    —  participation in the CBI and Constitution Unit's Freedom of Information Working Parties;

    —  advice to clients on the practical implications of existing and prospective FOI legislation, both UK and foreign; and

    —  presentations to various business groups and others on FOI issues.

  1.4  Our February 1998 Briefing Paper included detailed comments on the White Paper. This was submitted to the Cabinet Office and circulated to a wide range of clients and contacts. It has also been used for media coverage of FOI from a business perspective.

  1.5.  Our comments on the White Paper, and this Submission, review and comment on successive proposals from a business perspective. In particular, this involves making specific recommendations which Clifford Chance believes the business community would like to see incorporated into these proposals.

  1.6.  These can be brought under two main headings:

    (1)  improving access to governmental information; and

    (2)  inhibiting disclosure of business information.

  Our submission is structured by reference to these two objectives. Our main conclusions are:

Improving Access to Governmental Information

    —  The Bill should open with a "purpose clause, making it quite clear that the underlying objective is to facilitate public access to information held by public authorities. (Such a clause would be "appropriate" within principles articulated by the Government in 1998).

    —  The institutional coverage from the outset is too narrow. At the least, all the main regulatory bodies should be included within Schedule 1.

    —  The request procedures give rise to a risk of negative effects, or even reduced access to information. Informal requests which currently are fulfilled without problem may in future be treated as falling within clause 8-generating a fees notice, detailed scrutiny, delay or even a refusal if the £500 threshold is exceeded. The legislation should therefore only apply to a "request for information" explicitly made in accordance with the Act.

    —  In most cases, the prejudice test should be recast so that the exemption would apply if "disclosure would substantially prejudice, or would be likely to prejudice substantially, ...(the relevant interest)"

    —  We have anxieties about the width of some of the specific exemptions, notably:

—  Clause 16 (accessible by other means)

—  Clause 22 (international relations)

—  Clause 24 (the economy)

—  Clause 25 (investigations and proceedings)

—  Clause 28 (decision-making and policy formulation)

—  Clause 36 (additional exemptions)

    —  Of these, we attach particular weight to the disclosure of factual background to policy proposals and decisions.

    —  We propose that a New Clause be included to give all companies the right to access any factual information held by a public authority about that company, and the right to correct inaccurate information. These rights would be broadly modelled on the same rights enjoyed by individuals under the Data Protection Act and subject to the same safeguards and exemptions.

Inhibiting Disclosure of Business Information

    —  Freedom of Information is concerned with the openness, transparency and accountability of the machinery of government and with improving the quality of governmental decision-making. It is not about disclosure of information which could damage the commercial prospects and/or standing of individual businesses.

    —  We therefore welcome clause 34, which is needed to protect trade secrets and commercial interests.

    —  However, it is also essential that there should be a "Reverse FOI procedure" so that businesses or other third parties are notified before information about them is disclosed and are given the opportunity to make appropriate representations or challenges.

    —  We also propose that the Bill should be amended to make clear that the discretionary disclosure provisions (clause 14) do not apply to trade secrets or to disclosures which would prejudice commercial interest.

 2.  IMPROVING ACCESS TO GOVERNMENT INFORMATION

The Benefits of Access

  2.1  It is widely thought that Freedom of Information is supported by campaigners, the media and academics, and is opposed by business. This is completely mistaken. Provided that their own secrets remain secret, businesses—as corporate citizens, in the same way as individual citizens—have a very strong interest in ensuring maximum access to information held by the Government and public authorities. Very few businesses get far without encountering the activities—positive and negative—of government, regulators and other parts of the public sector. Proposals and decisions for the public sector present both opportunities and threats. Either way, businesses have a strong need to know about government activity.

  2.2  In fact, as sophisticated companies know, a treasure trove of reports, surveys, statistics, analysis, opinions and recommendations has been amassed by the various organs of government over the past decades. Information relating to such matters as market intelligence, customer needs, personnel issues, public procurement, registers, and existing government policy can all be useful. Government contractors have a particular interest in understanding government's needs. Published information—including that obtained through Parliamentary Questions—is only the tip of the iceberg. But many businesses are ignorant about just how much information is held by the Government which could help them commercially. They assume a culture of secrecy and are not aware of the extent to which a more open environment has developed over the past 10-15 years. A great deal of information can be obtained by a simple written or telephone request, which occasionally needs to be reinforced by reference to the Open Government Code.

  2.3  But there remains a great deal of information which is not freely available and frustrations can often develop when, for example:

    —  inefficiencies or delays occur when obtaining supposedly publicly available information;

    —  a department will neither confirm, nor deny, the existence of information which it may hold;

    —  a document is placed in the House of Commons Library, which severely restricts, but does not totally prevent, access;

    —  a company wants to know more about (and perhaps correct) information held about itself; and

    —  a department acknowledges that information exists, but refuses to disclose it.

  2.4  Examples where this firm or its clients have encountered problems in accessing information include:

    —  internal guidance used by regulatory authorities; —  rules dealing with corporate hospitality;

    —  decisions of tribunals associated with financial regulators;

    —  details of licences issued by a regulatory authority;

    —  reasons for decisions on mergers and other competition issues;

    —  factual responses to governmental criticism of private pension providers;

    —  details of prospective public sector contracts;

    —  current and historical guidance on the announcement of contract awards during election periods;

    —  formal Ministerial correspondence relating to the powers of a state-owned company;

    —  framework documents relating to future of Next Steps Agencies; and

    —  details of corporate criminal convictions.

The Right to Information

  2.5  Commenting on the 1997 White Paper on Freedom of Information, the Clifford Chance Briefing stated:

    "The Government hopes to bring about a sea-change in attitude, and alter the future conduct of government itself. A presumption of openness will come to replace the "tradition of secrecy", engendering a whole new relationship between business and government".

  2.6  It is difficult now to sustain that statement. The draft Bill marks a clear departure from the White Paper. There will be a right to information, and this is welcome insofar as it goes. But the rights and duties proposed by the draft Bill are cast in a sea of qualifications, restrictions and exemptions to such an extent that it is doubtful whether the legislation will by itself achieve any significant cultural change. Many of these qualifications, restrictions and exemptions are individually understandable and (perhaps with some refinement) justifiable. But there is no central theme of greater openness.

  2.7  The draft Bill's long title states simply that it is to "make provision about the disclosure of information." This is neutral in purpose and in effect. Given the inevitable attention in the Bill to the detail of the exemptions and other restrictions and their elasticity—there is a real risk that, as the legislation is implemented and enforced with legal advice based on the wording of the statute alone, emphasis is likely to be placed on finding reasons to block disclosure. This would run counter to the Government's declared intention that:

    "[The right of access to information]......will radically transform the relationship between Government and citizens......[and]......Legislation is an essential step towards greater openness in the public sector." (Consultation Paper, paras 2 and 4)

  Legislation is not sufficient to achieve the desired change of culture, but it does play an important symbolic and substantive role.

  2.8  Absent from the draft Bill (except in specific contexts) is any clear endorsement of the principles of greater openness and transparency. We would therefore like to see the Bill open with a firm "purpose clause" along the lines of:

    "The purpose of this Act is to facilitate public access to information held by public authorities."

  2.9  Although purpose clauses are not widely used, there are examples in such varied fields as child welfare, transport, arbitration, regulation of legal services and legal aid. A recent example is Section 37(1) of the Crime and Disorder Act 1998, a Home Office measure, which states that:

    "It shall be the principal aim of the youth justice system to prevent offending by children and young persons."

  A House of Lords debate on purposes clauses (21 January 1998) indicated strong back-bench support for their use and concluded with a statement from Lord McIntosh on behalf of the government:

    ". . . we believe . . . that there are circumstances where they are appropriate. They are used from time to time where they are required and are intended to have legal effect." (col 1601)

  2.10  We believe that a purpose clause for the Freedom of Information Bill would have both legal and symbolic effect. It would fall squarely within the category of purpose clauses which, in the Lords debate, the Minister identified as appropriate:

    ". . . guiding principles according to which the rules set out in the legislation are to be interpreted and understood. In this case a legal effect is intended: the statements are there to condition how the courts construe the legislation . . .

    . . . This sort of clause might also convey something about the wider policy context of the legislation—the behaviour or consequences that Parliament wishes to encourage or promote by means of the legislation." (cols 1596-97)

  This sums up precisely why a purpose clause would be appropriate, and would have legal effect, in the Freedom of Information Bill. It would make clear the Government's underlying objectives for the legislation and would provide guidance for the interpretation of the various rights, duties and exemptions which, inevitably, have to be cast in general terms. A purpose clause would also serve a symbolic purpose with a clear legislative signal to all public authorities that cultural change, and a new relationship with individual and corporate citizens, is expected.

  2.11  If a purpose clause does not find favour, we suggest that a second-best approach would be to set out a series of objectives for the Information Commissioner, elaborating the balance between the public interest in disclosure and the public interest in withholding information. An analogy here is provided in the draft Financial Services and Markets Bill which opens with objectives for the Financial Services Authority.

Public Authorities

  2.12  It is disappointing that the initial scope of the legislation is narrow, with a risk that (whatever the intentions) some public authorities may never be brought within the legislation.

  2.13  It is appreciated that it may not be realistic to include all Non-Departmental Public Bodies (NDPBs) from the outset. There also needs to be consultation with them and with private organisations carrying out public functions.

  2.14  The business community has a particular interest in bringing regulatory bodies with the scope of the legislation from the outset, whether they are NDPBs, Non-Ministerial Government Departments or otherwise constituted. Bearing in mind that exemptions will exist for their proper investigatory and enforcement activities, we propose that all the main regulatory bodies should be included in Schedule 1. Of particular importance are:

    Financial Services Authority

    Office of Fair Trading

    Competition Commission

    Utility regulators (Oftel etc)

    Environment Agency

    Health and Safety Commission and Executive

    Independent Television Commission

    Medicines Control Agency

    Local authority enforcement functions.

Reduced Access to Information?

  2.15  We have some anxieties that the Bill as drafted could have negative effects. There is a real fear that the process of getting information could become subject to bureaucratic procedures, and legalistic analysis, obstruction, and/or challenge. In some cases, the effect of the Bill could in fact lead to reduced access to information. Given that clause 8 does not prescribe any form or procedure, it can be foreseen that many—perhaps all—public authorities will treat all requests for information as falling within clause 8.

  2.16  This would mean that requests which are now routinely and quickly fulfilled, would in future:

    —  generate a "fees notice" demanding a payment;

    —  be subject to detailed analysis and internal procedures to ensure that no exemption or other qualification applies;

    —  possibly take up to 40 days to process; or

    —  be refused altogether if the clause 12 (£500) limit would be exceeded.

  2.17  This would be a very undesirable result for businesses. Any risk of such a result should be eliminated from the outset. This could be achieved by amending clause 8 to make it clear that the legislation only applies to a "request for information" explicitly made in accordance with the Act. In other words, any other request for information would be treated informally, and on its merits, without reference to the procedures and the substantive criteria introduced by the legislation.

Exemptions from the Right to Information

  2.18  We do not dissent from the conclusion that a single omnibus substantial harm test would be inappropriate for the full range of exemptions. We also had criticisms of the White Paper's vagueness as to whether the harm "will", "would", "could" or "might" be caused. We pointed out the precise wording would be very important. We proposed that the harm would be caused, or that there is a reasonable expectation of harm.

  2.19  We note that the Home Secretary, in his statement to the House of Commons on 24 May, explained that one of the reasons for the use in the draft Bill of the word "prejudice", rather than the word "harm" as was used in the White Paper, is that the former is in greater use. He referred to the use of the term "prejudice" in the Local Government Act 1972 and the Contempt of Court Act 1981, although the term is not actually defined in either statute. The Home Secretary added that "prejudice" has been subject to much judicial interpretation by the European Court of Human Rights. Our research to date has not found a case in which the term is actually defined. The Concise Oxford Dictionary defines "prejudice" as a noun as "harm or injury" and as a very as "impair the validity or force of". English legal dictionaries do not cast useful light on judicial interpretation of the word, but we note that the Dictionary of Modern Legal Usage (an Anglo-American publication) states that:

    "prejudice is a legalism for harm".

  We conclude that in fact the terms "prejudice" and "harm" have similar meanings.

  2.20  We welcome the policy set out in the Consultation Document that:

    "The prejudice must be real, actual or `of substance'." (para 36)

  We have some reservations, however, as to whether the draft Bill achieves this intended result. In particular the terms of the draft Bill make no reference to a need for the "prejudice" to be substantial. The concept of "substantial prejudice" is to be found in other statutes such as the Town and Country Planning Act 1990. Under such legislation, non-compliance with procedural requirements, which accompany the exercise of a statutory power, and which directly affect individual rights, will be disregarded unless the aggrieved person is substantially prejudiced by such non-compliance. The fact that the term "substantial prejudice" is used in other legislation, runs the risk that simple "prejudice" would make it easier to establish an exemption than suggested by the policy articulated in the Consultation Document.

  2.21  We therefore suggest that the wording in the relevant exemption clauses should be recast to make clear that the exemption applies if:

    ". . . disclosure would substantially prejudice, or would be likely to prejudice substantially . . . [the relevant interest]".

  2.22  Turning to specific exemptions:

    —  Clause 16 (Accessible by other means)—

    There are anxieties that information may only be available "by other means" on payment of a very substantial fee, where the public authority is able to exploit its monopolistic control over the information without any safeguard or regulatory intervention. In response to consultations on Tradeable Information and Crown Copyright, we argued the case for price controls in this area.

    —  Clause 22 (International Relations)—

    Businesses often find it very difficult to get access to information from the European Commission or other EU institutions. It is sometimes the case that the UK Government has access to a paper which is in practice freely available to citizens and companies in another Member State (sometimes to US corporations), but denied to UK companies. This is an example where a stronger test than the simple likelihood of prejudice is required.

    —  Clause 24 (Economy)—

    We have anxieties about the width of this exemption. Almost any disclosure could be said to prejudice the economic interests of the UK or the financial interests of the Government. As well as a stronger prejudice test, a more precise formulation is needed. Alternatively, it may be appropriate for a certificate of a Treasury Minister to be required.

    —  Clause 25 (Investigations and Proceedings)—

    This exemption is too wide. No company under investigation would want that fact to be publicly disclosed if no criminal or other proceedings resulted from the investigation. Premature disclosure can also undermine regulatory effectiveness. But all companies benefit from knowledge about the policies, activities or decisions of prosecuting and regulatory authorities. Businesses themselves also need to be protected against dishonesty, malpractice or impropriety, with maximum knowledge about the activities of wrongdoers. Here, there is a need to draw the right balance between legitimate needs for confidentiality and the public interest in disclosure. The clause effectively prescribes blanket confidentiality, even after proceedings have been successfully concluded.

    The wording of this clause needs modification to draw a better balance. The reference to "at any time" should be dropped. Non-disclosure should be justified by clear rationales and a prejudice test should be introduced. Alternatively, clause 26 (law enforcement) may by itself offer a sufficient exemption in this area.

    —  Clause 28 (Decision Making and Policy Formulation)—

    It is fully appreciated that governmental decision-making requires space and time for private debate and reflection. But the class exemption of clause 28 is too wide. This is probably the exemption of greatest concern to businesses. In his Parliamentary Statement on 24 May 1999, the Home Secretary stated that:

"It is important that, so far as possible, background papers that inform policy considerations, but do not determine them, and whose publication would not prejudice the good workings of government, should be published." (col 27)

    A test on these lines would be more acceptable than a wholesale exemption. At the very least, factual information should be made available after decisions have been taken. These is also a case for making it available earlier, except in those cases where there is good reason for keep confidential the fact or nature of a prospective decision.

    —  Clause 36 (Additional Exemptions)—

    As a matter of constitutional principle, we are uneasy about the potentially retrospective effect of this clause which can create an exemption to block a valid request which has already been made. If the clause is to remain, we believe the Secretary of State should be obliged to give reasons for his conclusion that the public interest in creating the exemption outweighs the public interest in allowing public access.

    —  Clause 37 (Effects of Disclosure)—

    It would be helpful to have some examples of situations covered by this exemption.

Access to a Company's Own File

  2.23  Businesses have a strong and legitimate interest in accessing and checking the accuracy of, information held about them by a government department or other public authority. The White Paper proposals may have gone a long way in that direction, but the draft Bill falls short of ensuring such access. This will not matter to individuals who have rights to access and correct their "personal data" under Data Protection legislation. But the Data Protection Act gives an incorporated business no such rights at all.

  2.24  This Bill provides an excellent opportunity to give equivalent rights for all companies to access information about them held by a public authority. We therefore propose that the Bill should contain a new clause, modelled broadly on the Data Protection Act, to give a company the right to access any factual information held by a public authority about that company and a corresponding right to secure the correction or deletion of inaccurate information. There would, of course, need to be safeguards and exemptions (again broadly modelled on data protection legislation) covering such matters as national security, the prevention or detection of crime, the apprehension or prosecution of offenders, and the assessment or collection of taxes.

 3.  INHIBITING DISCLOSURE OF BUSINESS INFORMATION

  3.1  Freedom of Information is concerned with the openness, transparency and accountability of the machinery of government and with improving the quality of governmental decision-making. It is not about disclosure of information which could damage the commercial prospects and/or standing of individual businesses.

  3.2  Businesses should therefore have no difficulty in calling for greater openness from government at the same time as ensuring that commercially confidential information is safeguarded. It is important to avoid damage to legitimate commercial concerns or to competitiveness.

  3.3  We had reservations about the White Paper proposal for a substantial harm test in relation to commercially confidential information. In principle, we therefore welcome the substance of clause 34 and—in this quite separate context—do not believe that a stronger prejudice test is required.

  3.4  We do, however, propose the following improvements:

    —  a "Reverse FOI procedure" is absolutely essential; and

    —  the exemption should also apply to discretionary disclosures.

Reverse FOI Procedure

  3.5  The main problem with clause 34 is that civil servants or others making decisions about disclosure may not be aware of the confidential status of the information, or the nature or scale of the prejudice which disclosure would cause.

  3.6  A mechanism is needed to allow businesses and other third parties to appeal against decisions to release information which they believe would cause substantial harm to their interests. (In the USA, these "Reverse FOI applications" have played a prominent role in ensuring that businesses can prevent disclosure of genuinely commercial confidences.) We are not satisfied that provisions in the proposed Code of Practice (clause 38(2)(b)) about consultation with those affected by disclosure would be sufficient. These provisions are not mandatory and they cannot confer adequate safeguards for businesses or others who fear improper disclosure about themselves.

  3.7  There is therefore a strong case for arguing that the Bill should be modified so that:

    —  when a request for information is received and the public authority is minded to disclose (whether under the mandatory or discretionary provisions), it should be under a duty to notify any reasonably identifiable third party that information about them (or reasonably relevant to their activities) might be disclosed;

    —  a third party (whether or not so notified) should have the right to make representations against disclosure;

    —  if the public authority remains minded to disclose (notwithstanding such representations), the third party should have the right to appeal directly to the Information Commissioner or the Tribunal, who will review all the issues afresh. The information should not be disclosed until the end of the appeal period or (if an appeal is made) until the Commissioner or (if relevant) the Tribunal have ruled;

    —  the public authority and the Commissioner should have the power to decide in favour of partial disclosure (eg ordering disclosure, subject to deleting material of particular sensitivity);

    —  the third party should have the right to apply for Judicial Review if the Commissioner or Tribunal have acted improperly;

    —  the above considerations should apply to the existence, as well as the substance, of particular information; and

    —  compensation should be available where commercially sensitive information has been improperly disclosed in breach of the statutory requirements.

Discretionary Disclosures

  3.8  The structure of the draft Bill means that, although status as a trade secret or commercial prejudice means that information cannot be disclosed under the mandatory regime, there could still be discretionary disclosure. Many businesses may feel that this is unacceptable. The legislation should be concerned with disclosure of public information, not private commercial information.

  3.9  We therefore propose that the Bill should be amended so that (as with clauses 18 and 27) clause 14 (discretionary disclosure) does not apply in relation to the commercial information covered by clause 34. If this is thought to lean too far in favour of commercial interests, there still needs to be a strong public interest argument in favour of disclosure which outweighs the commercial interest in confidentiality.


 
previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries

© Parliamentary copyright 1999
Prepared 16 August 1999