Britain’s blind spot in MPs’ financial disclosures

Good morning — Stephen is still away yo-ho-ho-ing. I hope you all got your traditional six geese-a-laying this morning. In his absence, I thought I would share one of my weird little hang-ups.

Sometimes, as a reporter, you get stuck on topics — often for years. And one of those curiosities that has a hook in my brain is the rule book on declaring investments in the Register of Members’ Interests.

The rules on what MPs need to declare are, bluntly, probably not trying to do what you think they are. More on that in today’s newsletter.

What we do in the shadows

To get us started, here is the way that a US representative is obliged to account for their financial investments:

The Financial Disclosure Statement must include a brief description, the date, and category of value of any purchase, sale, or exchange of real property, stocks, bonds, commodities, futures, or other forms of securities (including trust assets) that exceeds $1,000. The category of value to be reported is the total purchase or sale price (or the fair market value in the case of an exchange), regardless of any capital gain or loss on the transaction.”

That is why we know, for example, how Nancy Pelosi, the Speaker Emerita, is smashing it financially.

By contrast, the equivalent UK rules are limp:

Members must register . . . any holdings which:

i) amount to more than 15% of the issued share capital of that company, or more than 15% of a partnership;

ii) are valued at more than £70,000.”

So, it’s very different from the US position.

First, it’s a rule about holdings not transactions. Second, it’s just about shares — while the US version talks about lots of things. Third, check out that threshold. £70,000! MPs have to declare tickets to a football match, but can have up to £70,000 in stock in one company without needing to tell anyone.

The definitions in the rules are very strange, too. An explanatory footnote expands:

Holdings should be valued as at the previous 5 April. If this is not possible, the Member should make their best estimate of the value on that date and register the holding within 28 days of the 5 April valuation.”

Just imagine I bought £50,000 in shares in one company over the summer that since doubled in value. What are my obligations here? What if I sell them? In truth, this is just the start: there are bundles of omissions and exemptions.

But the big picture is: the rules do not attempt to let outsiders look into legislators’ personal financial relationships in the way the American rules do. And we do not attempt to scrutinise when MPs choose to invest or sell at all.

And that is because the House of Commons thinks the point of these rules is to stop MPs’ behaviour in the House being influenced secretly. As the rule book on disclosure for MPs puts it:

the overall purpose of the Register [of Members’ Interests] . . . is to provide information about any financial interest or other material benefit which a Member receives which might reasonably be thought by others to influence his or her actions, speeches or votes in Parliament, or actions taken in his or her capacity as a Member of Parliament.”

So, from the House’s position, they do not care if you have £69,000 in electric car stock — until you stand up and start advocating for them in the House of Commons.

And, if you do that, a new rule kicks in: the “test of relevance”. You then have to declare interests relevant to things you intervene on, even if the holdings fall under the thresholds.

But this creates a situation where it is easy to “forget” to register — or disagree about relevance. The rules require the MP to be an equities analyst.

And it creates secret insider-y opportunities: an MP might know the Home Affairs select committee is going to slam a big government supplier. Maybe their mate is a minister. Maybe they are bag carrying for a minister and sit in on meetings where a big procurement deal is being discussed.

The rules are designed to catch an MP whose vote or position may be intended to make money — but not one who trades on information they have gathered from their public office.

I’d venture most punters do not think this would be acceptable: indeed, discovering Tory politicians had allegedly placed bets on the timing of the UK election with inside political knowledge caused a massive storm during the campaign.

So what does this mean? On the one hand, I do not think every MP is trading madly every week. There is also a coherent rationale for why the rules are framed like this.

But our rules are leaving a corruption opportunity open that our friends in DC decided to close. That hook is still in my brain.

PS The FT editorial code of conduct, if you’re interested in our version, has a section on this.

Now try this

The most significant discussion of AI safety was published by the BBC earlier this month amid its otherwise somewhat trivial festive offerings. Much to think about on the perils of misalignment in Wallace and Gromit: Vengeance Most Fowl, a fun example of Wallace’s robotic inventions going awry.

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