What is a blind trust, and why is the prime minister using one?

Blind trusts are designed to give the public confidence that a minister cannot benefit personally from decisions over which he or she has influence. Some politicians will sell anything that could be construed as a conflict of interest – Barack Obama sold all his stocks shortly after becoming a senator. But if a minister wants to hold on to any assets that could be in conflict with their ministerial brief, then they are put in a blind trust run by independent trustees, where the minister has no control or knowledge of how the assets are managed. President Lyndon Johnson was an early adopter of a blind trust, as he did not want to sell the Texas television station he owned before entering the White House.

This week it was disclosed that Theresa May, according to the Cabinet Office list of ministerial interests, has a “blind trust/blind management arrangement” for her financial interests.

So what’s controversial about her blind trust? Aren’t they a good thing?

Critics raise two concerns. Firstly, May chose not to use a blind trust when home secretary, but has opted for one as PM, and it’s not clear why. Secondly, the use of a blind trust means that while she knows what has gone into the trust at the point of its creation, we – the public – do not.

What does May say about her trust?

Almost nothing. Downing Street refuses to reveal what shareholdings or other investments are involved, and will not say who is responsible for independently managing the trust. “Blind trusts are a well-established mechanism for protecting ministers in the handling of their interests, as they are not involved in any decisions on the management, acquisition or disposal of items in the trust,” a No 10 spokeswoman said.

Isn’t May always banging on about how crucial transparency is in public life?

Yes. Opposition MPs are now using that to pile pressure on the PM. Tim Farron, the Lib Dem leader, said: “Theresa May promised the most transparent government in the world. This is an early test to see if her deeds match her words.”

So what do we think is in her trust?

During the Tory leadership race, May followed in Michael Gove’s footsteps by publishing a summary of her tax return. It revealed that she earned £112,426 in employment income in 2014-15, with an additional £617 in interest and £5,419 in dividends. She gave £685 to charity.

That figure of £5,419 in dividends is key to what’s probably in her blind trust. To earn that sort of income from shares in the biggest company in the FTSE, Shell, May would have to own a portfolio worth around £85,000. If the prime minister is holding shares in Lloyds Bank, then the dividends would suggest her holding is closer to £175,000. Interestingly, one of the last tax giveaways when George Osborne was chancellor was to cut tax on the first £5,000 worth of dividends to zero from this year, which will benefit May’s trust.

Isn’t this a bit small-time compared with what Donald Trump is doing?

Yes. Trump, the first business billionaire to become president, faces an extraordinary set of conflicts arising from the 500 companies he continues to control and refuses to give up, plus the elaborate network of suppliers and banks that have lent his firms hundreds of millions of dollars. He has not released his tax returns, and because his companies are privately held, they can’t be scrutinised in the way stockmarket-listed firms can.

Trump announced in November that he will step away from his business interests “in total” to avoid any appearance of a conflict of interest. This week, during a jaw-dropping press conference, and while pointing at a desk piled with seven stacks of papers, he said: “These papers are just some of the documents that I’ve signed turning over complete and total control to my sons.”

Trump will shift his assets into a trust managed by his sons and other Trump executives, give up management of his private company and resign from all official positions within it. But critics argue that it’s hardly blind if you know what’s in there and have a sense of how it’s run. Trump’s sons being managers also goes against the idea that a blind trust should be independently run.

Do all prime ministers use blind trusts?

No. David Cameron did not use a blind trust. Tony Blair set up a blind trust after becoming prime minister, but it later emerged that his wife, Cherie, had directed the trustees to buy two flats in Bristol – the start of what grew into a £27m property empire. Peter Mandelson also provoked controversy after it emerged that he had set up a blind trust while business secretary, with critics using the same arguments as those deployed against May – that blind trusts allow a politician to keep their financial affairs away from public scrutiny.