Two weeks ago, the former Libyan rebel Sami al-Saadi announced that he would sue the British government in the high court for its alleged complicity in his rendition from Hong Kong to Tripoli. The news followed the discovery of documents in Tripoli that appeared to show MI6 secretly aiding the very regime that the UK just helped to overthrow. This revelation would be embarrassing enough but, according to the government's green paper launched this week, this is precisely the kind of case that gives rise to real unfairness in our justice system: unfairness, that is, to the government itself.

According to the green paper, a major injustice is being done to the intelligence services, the government and – by extension – the British taxpayer. Apparently, the government is at constant risk of having to pay out large, undisclosed sums of money in order to settle damages claims involving national security because it is unable to use secret evidence in court. The obvious implication here is that, if only it were allowed to use this evidence, it would surely win all its cases and we the taxpayer would be saved large sums of money that could then be used to fund things like schools, hospitals and libraries in Brent.

The rather unlikely culprit in this alleged miscarriage of justice is the decades-old principle of common law known as "public interest immunity", a principle that was designed – ironically enough – to balance the interests of national security with the interests of basic fairness. Essentially, it allows the government to withhold certain material if a judge is satisfied that the risk to national security would be greater than the interests of justice.

The trade-off is this: the government gets to keep its secrets secret and the case goes ahead on an equal footing, with both parties able to see the evidence that is before the court. If, on the other hand, the judge doesn't agree that disclosure would be as damaging as the government claims, the government is required to disclose it to the other side. If it doesn't want to do that, it always has the option of settling out of court.

What the green paper proposes is a way for the government to have its cake and eat it. Instead of the courts having to exclude potentially relevant material that is too sensitive to be made public or even disclosed to the other party, it would be better for all concerned if the government were allowed to produce its evidence in secret before the judge. The other party would not be allowed to hear the evidence against them. Neither would their lawyers or the public at large. At best, there would be a security-cleared lawyer or two appointed on behalf of the other party to gamely try and challenge the government's evidence, but who would have no communication with them and no effective instructions in any event: undertaking what Lord Bingham once described as "taking blind shots at a moving target". The whole thing might seem like a mockery of the very concept of a fair procedure but at least the government would feel more confident of victory. After all, if you can't win in a fair fight, the next best thing is surely to stage an unfair one.

In a marvellous bit of spin, the justice secretary Ken Clarke yesterday described the green paper's proposals as being "based around the principles of rigorous, impartial and independent justice, fairness and proportionality". In truth, the green paper is based around the principles of justice and fairness in roughly the same way that an anaconda might be said to be based around its prey. The use of secret evidence in UK courts has already metastasised – spreading from deportation proceedings before the Special Immigration Appeals Commission (Siac) to parole board hearings, control order cases and even employment tribunals – but fortunately the damage has so far been restricted to statutory proceedings only. For, as the UK supreme court made clear in July, the right to know the case against you remains a fundamental common law principle – as Lord Kerr described it, "an elementary and essential prerequisite of fairness". If implemented, the green paper's proposals would mark an end to this centuries-old principle in our common law courts. But at least the government might have better a shot at winning its cases.