Editorial: 'Gagging clauses' are unjustifiable

It's reasonable for contracts to protect sensitive commercial information, but blanket prohibitions ultimately work against the public interest, writes Stephen Cook

Stephen Cook says gagging clauses could have an intimidatory effect upon smaller charities
Stephen Cook says gagging clauses could have an intimidatory effect upon smaller charities

The Work Programme contract between the (big) employment services company A4e and its (small) former subcontractor Community Enterprise Derby runs to 125 densely written pages, with 13 appendices. Even to a non-specialist eye, it seems to be stacked heavily in favour of A4e.

It stipulates that the subcontractor will not make any press announcements or publicise the contract without approval, and that it "shall pay the utmost regard to the standing and reputation of the prime contractor". It also says the subcontractor will not do anything to damage the prime's reputation, bring it into disrepute, attract adverse publicity to it or harm the confidence of the public in it.

A4e terminated the contract at the end of last year because Community Enterprise Derby did not meet its targets for getting hard-to-place clients into work. And when our columnist Kevin Curley wrote about contracts between the sector and large primes, the former director of CED, Kim Harper, wrote to Third Sector arguing that such contracts were unsuitable for small voluntary organisations.

The response from A4e was a letter to Harper reminding her of the confidentiality requirements. It was couched in fairly mild terms and did not threaten legal action, but it is easy to see that it could have an intimidatory effect on a small organisation with few resources. As described in our analysis on page 8, Harper released both the letter and the contract, arguing that it is difficult to secure the best outcome for unemployed people if the issues raised by her experience cannot be debated in public. These include the contract's financial model, the balance of financial risk and "creaming and parking" - the alleged sending of a growing proportion of hard-to-place clients to voluntary sector subcontractors.

Surely Harper is right, and her point applies across all public services. It's reasonable for contracts to protect sensitive commercial information and to require that official figures conform to proper standards. But the blanket prohibitions listed above, rightly known as "gagging clauses", are not justifiable and ultimately work against the public interest.

- Read our analysis on gagging clauses in public sector contracts

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