From a public sector response...
Presumably the Council has kept the clipping in relation to one or more of the parties rather than just a general interest in this sort of dispute. My intial view is that the information within the clipping is likely to be personal data. I think that it would fall within category (c) if it is recorded on a relevant filing systems. However, knowing the files here, it is more likely to fall within the definition of category (e).
However category (e) information is still subject to section 7 and the sixth dp principle (section 33A(1)(b). So unless an exemption applies the clipping should be given out as part of a SAR. Only unstructured employment records are not covered by section 7 rights (section 33A(2))
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