Lifting the lid

The introduction of the Freedom of Information Act is still months away, but it is already worrying those involved in public sector projects. Jon Robins reports

A storm is brewing north of the border. The Scottish Prison Service recently revealed edited highlights of a multimillion-pound contract for privatised prison escort duties. Ministers had agreed to publish the contract with Reliance Secure Task Management, a provider of secure outsourced services, in the spirit of the soon-to-be-enacted Freedom of Information legislation, after a series of blunders led to prisoners making some unplanned bids for freedom. The 152-page contract was published on the Prison Service website. Sadly, all the good bits – that is, any reference to cash – were neatly excised from the document. So much for freedom of information then.

As of 5 January 2005, the public’s right of access to information from public authorities will come into effect. Under the Freedom of Information Act (FOIA), such bodies will have 20 days in which to respond to such a request. As a result, the private sector’s role in providing services for hospitals, schools, construction projects, government IT programmes and other projects will be held to account.

The Scottish Information Commissioner is now investigating whether the Prison Service was entitled to withhold the facts. “I believe that the Scottish people have a right to as much information as possible about the Reliance contract. After all, it’s the Scottish taxpayer that will pay £126m to Reliance over the lifetime of the contract,” complained Scottish National Party (SNP) Shadow Justice Minister Nicola Sturgeon. “So why shouldn’t they get to know how much Reliance has to pay back for letting prisoners escape?”

No doubt the degree to which this new right to know will open the private sector to unwelcome public scrutiny will soon be tested in England. “At the moment the public sector has operated under a political and cultural system where they haven’t provided any information unless they’ve had to,” comments Marcus Turle, a solicitor specialising in privacy and information at Field Fisher Waterhouse. “This is now shifting from a ‘need-to-know’ to a ‘right-to-know’ culture. It’s a big change, and there’s a clear impact on the private sector as an indirect result.” However, Turle reckons it is a cultural shift to which many chief executives remain happily oblivious.

On the face if it, the FOIA appears to deal only with those public authorities listed in the act, such as government departments, the NHS, the police and so on. However, the legislation provides that information is deemed to be held by a public authority if it is “held by another person on behalf of the authority”. This will provide a back door for investigative journalists, pressure groups, business rivals and all manner of busybodies to find out more about companies with government contracts.

The Information Commissioner’s Office (ICO) has been busy over the last four years making sure that the public sector is up to speed on its FOIA commitments. But the watchdog is clear that the business world also needs to wake up. “The private sector, when it’s doing business for the public sector, is always going to be fairly controversial if, for example, it’s involved in private finance initiatives or PPPs [public-private partnerships], as in the case of the Tube,” reckons Phil Boyd, assistant commissioner at the ICO. “Also, the experience in the US is that the private sector is itself a big user of the FOIA. Businesses are trying to find information about how the state operates and they’re also trying to see what exactly they can find out about a competitor.”

In fact, there are as many as 24 exemptions on which public authorities can rely to avoid disclosure. However, these mainly concern the kind of information that might compromise national security or jeopardise international relations. As far as public contractors are concerned, there are likely to be two main exemptions: first, an ‘absolute’ exemption if disclosure could lead to a breach of confidence, and second a ‘qualified’ exemption, for when the information requested is commercially sensitive and would disclose a trade secret. Generally speaking, a qualified exemption must be overruled by the public authority if it is in the public interest. If the person seeking the information takes issue with that assessment, they can complain to Richard Thomas, the Information Commissioner.

Boyd says the ICO anticipates around 2,500 complaints from the public concerning requests having been resisted by public authorities. Life is going to be hectic at the ICO, as there will be only 75 staff dealing with the FOIA caseload in January (presently there are 40). If either party is not happy with the decision of the ICO, they can appeal to the Information Tribunal and then possibly to the High Court on a point of law.

“One of the things that makes the operation of the regime so uncertain is in relation to the element of subjectivity in so many of the exemptions,” reckons Keith Mathieson, a partner in the media department at Reynolds Porter Chamberlain. “It’s meant to be objective, but obviously people are going to make an assessment as to where that public interest lies. It’s clearly likely that those judgements which are made by the public authorities themselves are more likely to be in favour of retaining the info than publishing it.” It is also, he says, a cumbersome piece of legislation and challenging a refusal for information is “no easy task for a lawyer, let alone a journalist”.

Another potential problem could be the fee regime, which has yet to be worked out. A public authority can charge an appropriate fee for dealing with a request, and while ministers have made assurances that this expense would largely be borne by the public sector so as not to deter requests, there remain concerns. As a consequence, Mathieson reckons that the national media so far has not got too excited about the prospect of the FOIA delivering too many scoops.

As for the ability of the private sector to withstand scrutiny, lawyers point out that the ‘absolute’ exemption for confidential material is not quite as ‘absolute’ as it would appear. “As a matter of the general law of confidence, if there’s an overwhelming public interest in disclosure then the courts will not enforce a confidential agreement,” explains Matthew Harris, an IP partner at Norton Rose.

“In the case of commercially sensitive information, then the public authority has to conduct a balancing exercise as to what’s more important – the right to know or the interest in protecting the commercial position of the entity whose information it happens to be holding.”

Martin Soames, a media litigation partner at DLA, predicts “massive problems” with the confidence exemption, which he says is at odds with the courts’ view. An explicitly confidential agreement may not block a public interest claim, he points out. The Jockey Club discovered this last year when it tried to stop Panorama from broadcasting information contained in documents that it had obtained from the club’s former head of security. The court accepted that the information was confidential, but allowed publication because the exposure of the club’s failings was deemed in the public interest.

Soames believes that the legislation’s claws have “been trimmed” by the number and wide-ranging nature of exemptions. “The act was passed four years ago and there’s been this elephantine gestation period before it kicks in,” he says. “A cynic would say that it’s been passed by a government that thought it would be out of office by the time the wretched thing came in.”

Company concerns
So what do campaigners make of the FOIA’s powers to protect corporate interests? It is “perfectly reasonable” that companies are able to protect what is “genuinely commercially harmful to them”, says Maurice Frankel, the director of the Campaign for the Freedom of Information. “But the concern is that the law shouldn’t be abused to protect information that is actually important to the public and isn’t just embarrassing to the company,” he says.

“The real question is whether the legal law of confidence will be too easily invoked regardless of the significance of information and whether or not it’s harmful,” Frankel continues. “What we’ll be unhappy about is a blanket approach, whereby the information that business provides to the public authorities is exempt from disclosure.”

What about bid information submitted during a tendering process? According to Frankel, it is “accepted” that the kind of commercial secrets normally submitted during that process would be exempt. “But once a contract’s been awarded, the details of the contract, the performance of the contract and, in most cases, the contract itself should be published,” he says. “That is unless the body concerned can show it contains information which is confidential, or which would be harmful because it is in the public’s hands – not just because it reveals poor performance.”

Turle believes that in those Commonwealth countries in which freedom of information laws have existed for some time, such as Australia, Canada and New Zealand, the companies have been inundated by requests concerning projects where the private sector is delivering public services. “There’s clearly a significant public interest in disclosing information if it relates to public spending and obtaining value for money,” he says. “And so even if information may well be commercially sensitive, there’s a public interest to make that information available and a public authority can’t withhold it if the balance of interest lies in favour of disclosure.” The buck, he believes, stops with the public authority. “They have a statutory duty under the FOIA and that will override concerns about confidentiality and commercial sensitivity,” he adds.

The Freedom of Information Act – being prepared
In the run-up to January, lawyers are busy advising their clients about prospective government contracts. “When you submit your bid you need to go through it rigorously and say which information is absolutely confidential and what isn’t and then extract that and put it in a confidential schedule so that the rest of the document can be revealed,” advises Shelagh Gaskill, a partner at City firm Masons who specialises in data protection and freedom of information.

Phil Boyd of the Information Commissioner’s Office (ICO) warns in-house lawyers that succumbing to the temptation of simply rubber-stamping each and every page with the words ‘commercially confidential’ is guaranteed not to work. “Lawyers will have to apply their minds as to what is the information that is really confidential in these deals,” he says. At the same time, the ICO wants it to be known that it is happy with the courts’ view of the law of confidence. “We fully accept that there’s a public interest in maintaining confidences and that is what the courts have ruled,” Boyd adds. “It’s clearly in the public interest that private sector organisations are able to compete on a level playing field and anything that would undermine that must be counter to the public interest.”

Bids are always done at the last minute, notes Gaskill, and so companies will now have to build their processes for sorting out what information is commercially sensitive or confidential within the allotted time-frame. “It’s much better to face up to it and do the job properly because that way you will get the protection for that information it’s essential to protect,” she argues. She also points out that a blanket approach might mean losing protection for everything. Companies would be well advised, she says, to ensure that the public authority provides them with a right to be notified about any disclosures and make their case if they believe there is a need to object.

It is “probably reasonable” to place an obligation on public authorities to come back and consult with contractors in deciding whether or not to disclose, says Boyd. “In principle, the decision is for the public authority to make, but obviously it would be sensible to take into account the view of the contractor,” he adds.

There is no ‘reverse FOIA’. For example, in the situation where a request is made to the Greater London Council by an anti-privatisation campaigner who wants information about the Tube, then the contractor cannot appeal directly to the Information Commissioner to block it. The only way that the contractor can seek to protect its interests if it takes a different view is to seek an injunction preventing disclosure. However, its chances would be slim, reckons Gaskill. “The whole thrust of the legislation is to make the Government more open,” she adds.