Blind Trusts: integrity silver bullet or transparency blackhole?

2 May, 2023 | 3 minute read

The latest version of the list of ministers’ interests reveals a total of 10 ministers, including the Prime Minister, have in place (or are in the process of setting up) a ‘blind trust’ to manage their financial interests while serving in government. This an increase on the number declared under May and Johnson administrations (eight and five respectively) but short of the 16 declared in David Cameron’s time.

But do blind trusts effectively mitigate the risks of conflicts of interest? 

Blind trusts are touted as an effective tool to help politicians ensure their public duties aren’t influenced by their private financial interests.

Under the arrangement, MPs hand over control of their financial interests to a trustee who makes investment decisions on their behalf. Over time, a trustee may engage in dozens of transactions – in effect ‘shuffling’ the investment portfolio and creating a barrier between the trust’s contents and the MPs’ knowledge. In this sense, the politician is ‘blind’ to the potential impact that any decision they take will have on their financial interests.

Our latest briefing shows, however, that blind trusts are no silver bullet to prevent conflicts of interest, and in the absence of any substantial rules across parliament, can function as a transparency blackhole:

There are big discrepancies between what ministers declare on the ministerial list and on the House of Commons and House of Lords registers:

  • The Chancellor Jeremy Hunt, for example, declares a controlling interest in a property company on both the House of Commons and ministerial lists, but additionally declares a blind trust arrangement on the ministerial list. It is unclear from these disclosures which financial interests escaped disclosure in the House of Commons but were declared as part of a blind trust at ministerial level.
  • Grant Shapps, the Secretary of State for Energy Security and Net Zero, declares a shareholding in a design and printing company in the House of Commons, but on the ministerial list no such shareholding is declared, only a blind trust. It is not clear whether this interest has been transferred into a blind trust, or why it is declared differently on the two lists.

Beyond these specific problems there are more fundamental, structural problems with the blind trust arrangement in its current form:

It’s not clear that blind trusts are always truly blind especially where there is minimal turnover of the portfolio
When MPs establish blind trusts they are fully aware of the assets placed under the trustee’s control. If the MP instructs a trustee to maintain the portfolio more or less in its current form, then they will retain knowledge of the contents of the blind trust. In practice, where once this interest was declared on a public register, it is now hidden from public scrutiny in the blind trust.

There is no oversight mechanism to police the barrier between the beneficiaries and trustees making investment decisions
MPs may still receive general updates on the trust’s performance, but there is no monitoring mechanism in place to ensure that information-sharing does not extend to providing updates on specific financial interests.

How could the blind trust arrangement be improved?

Blind trust arrangements can help to reduce the risk of conflicts of interest, but the current system is heavily reliant on self-disclosure and operates without meaningful monitoring or enforcement mechanisms. We recommend the following upgrades to make sure blind trusts work as intended:

  1. The rules on blind trusts must be harmonised across the House of Lords, House of Commons and at Ministerial level to ensure that discrepancies in disclosures do not make conflicts of interest more difficult to monitor.
  2. Disposal of financial interests such as divestment from shares should be more routinely considered where there is a risk of a conflict – or a perception of conflict – between ministers’ public duties and private financial interests. Guidance to that effect should be provided to ministers by the Independent Adviser.
  3. The Independent Adviser on Ministers’ Interests should publish detailed guidance on the use of blind trusts, monitor compliance with the rules, investigate potential breaches and recommend sanctions to the Prime Minister where breaches are identified. 4. The Independent Adviser on Ministers’ Interests should be accountable to the Public Administration and Constitutional Affairs Committee (PACAC) for his management of all ministerial interests, as well as of blind trusts to ensure the arrangement is working effectively to address potential conflicts of interest.

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