The requirement for commercial confidentiality in the light of legal duties to consult and the Code of Practice on Access to Government Information

Jonathan Beckitt looks at the requirement for commercial confidentiality in the light of legal duties to consult and the Code of Practice on Access to Government Information.

Background

It has been one of the stated objectives of the Private Finance Initiative to encourage an innovative approach from the private sector in order to achieve the best possible value for money in each case.

To encourage innovation, it is necessary to provide a framework for the protection of ideas. In relation to architectural drawings, this protection can be afforded by existing copyright laws. However, in relation to ideas, the intellectual property issues are more complex and, in a commercial process it is only by enforcement of strict confidentiality that the necessary protection can be guaranteed. It is also necessary to provide certainty for bidders that their ideas will not be shared with others, nor will other bidders be allowed access to them. Were that to happen, it might undermine the competitive nature of the bidding process.

The public sector, on the other hand has a legal duty to consult with certain interested parties. Typically, these are the employees whose contracts of employment may be taken over by the private sector but they could also include, for example the parents of pupils at a school or residents in a residential care home.

In addition, the "Code of Practice on Access to Government Information" produced by the Cabinet Office (Second Edition 1997) states that "the approach to release of information should in all cases be based on the assumption that information should be released ....... except where disclosure would not be in the public interest or would breach personal privacy of the confidences of a third party".

How can this duty and the Code be reconciled with a requirement for commercial confidentiality?

Duty to Consult

At the outset, it is important to identify who is to be consulted and about what. In practice, it is often easier to establish the former than the latter.

Under TUPE, a public sector employer has a duty to inform and consult with "appropriate representatives" of employees employed in the business which is to be transferred to the private sector. "Appropriate representatives" are elected employee representatives and/or recognised trade union representatives. The information which should be provided to employee representatives includes, in particular, the legal, economic and social implications of the transaction in headline terms.

In other types of consultation, however, it is less clear exactly what information should be provided by the public sector. Parents are entitled to be consulted in relation to proposals which affect the educational needs of their children. This could cover anything from classroom sizes to sports facilities and school dinners. Residents of a residential care home should certainly be consulted in relation to any proposals for closure of a home but much depends on how far residents are able to understand the significance of the proposals and the extent to which responsibility of their care is shared with relatives or friends.

This is very much a summary of the relevant duties and specific legal advice should be sought in each case, as the scope of consultation could easily conflict with a requirement for commercial confidentiality. By identifying the different interests of those who are to be consulted and, accordingly, the information they are entitled to receive, it ought to be possible to minimise this potential.

Code of Practice

The Treasury Taskforce have issued guidelines for PFI projects on disclosure of information in the light of the "Code of Practice on Access to Government Information" referred to above. As a general principle, the Taskforce state that to satisfy public accountability and to assist in the development of PFI, public sector clients should not misuse the term "commercial confidentiality" as an excuse to withhold information. It is acknowledged, however, that the application of this principle is a matter of judgement for the public sector in conjunction with bidders and there is a recommended benchmark for disclosure that the public sector should disclose the particular outputs which are being purchased and the general terms on which the public sector proposes to contract.

The guidelines contain recommendations as to the nature and extent of disclosure at each stage of the PFI procurement process and their purpose is to demonstrate that Open Government is not necessarily incompatible with PFI objectives from the public sector’s point of view. In this way the guidelines steer a course which ought not to compromise commercial confidentiality. It is nevertheless important to note the difference between the guidelines and matters which are the subject of a legal duty to consult.

Conclusion

There is a clear need for the public sector to formulate a disclosure strategy in relation to particular PFI transaction which it should follow throughout. Commercial confidentiality is not an issue which can be considered on an ad hoc basis as there is a need for consistency in the approach taken. In particular, care must be taken to identify potential areas of conflict and to provide a means of reconciliation. The strategy will be shaped very much by the circumstances of the particular PFI transaction but the trend is to greater openness and this should be recognised by all concerned.