I'll resist the temptation to make a couple of the obvious cheap jokes at the expense of Demos because they are at least trying to address an issue that my experience as a teacher has led me to believe should be taken very seriously indeed.
Nevertheless, their report is unsuccessful because it does not address the central issue. Of course there is a relationship between the level of secrecy surrounding an organisation and conspiracy theories.
We've seen this since ancient times. For example, the early church celebrated the Eucharist with the 'love feast'; the bread and wine simply formed part of a larger meal to which all and sundry were invited.
But as Paul complained in his second letter to the Corinthian church, some were apt to drunken behaviour that was inappropriate for the solemnity required of the sacrament - so the custom developed for the Eucharist to be celebrated in private.
From here grew the wild stories where suspicion and hostility at exclusion eliminated any appreciation of symbolism or metaphor: they were literally eating flesh and blood.
Other examples illustrate the point while showing that the correlation is not always strictly proportional. Freemasonry is secretive and has been the subject of numerous conspiracy theories but not to the same extent as Jews - who for the most part are exclusive only in the sense that they, uniquely amongst the monotheistic salvation religions, decline to proselytize.
Conspiracy theories, then, cannot be considered purely a function of secrecy so reducing it or eliminating it altogether is not going to solve the problem. In any event, there is obviously by definition a limit to which a secret service can be 'transparent'.
I'm not claiming to provide a satisfactory alternative; I only mean to restrict myself to the observation that if Demos' diagnosis is faulty, its proposed cure is unlikely to be successful. For example, the report says:
"More broadly, conspiracy theories drive a wedge of distrust between governments and particular communities. Conspiracy theories - such as those that claim 7/7 or 9/11 were ‘inside jobs’ - demolish the mutuality and trust that people have in institutions of government, with social and political ramifications that we still don't fully understand."While conspiracy theories are bound to re-enforce this suspicion and division, I'd suggest that this is almost completely the wrong way round: the disposition to believe conspiracies is a symptom and not primarily a cause of the mistrust. How this should be addressed, I'm not competent to say but with regarding the belief in conspiracy theories as a phenomenon in their own right, I'd make the following observations drawn from my teaching experience and leave whatever relevance they might have outwith this narrow experience to others:
1) One should never ever engage with the details of an individual conspiracy theory because by doing so, one unavoidably surrenders part of what you claim - that while obviously conspiracies can and do occur, the conspiracy theory of society is intrinsically irrational. The problem with the Demos report is that it is a species of this mistake. It doesn't deal with each case but it does treat the problem of conspiracies as they relate to intelligence services, whereas the problem is deeper and wider than this.
2) The underlying hypothesis behind all conspiracy theories is essentially the same - and it is this that should be challenged. It is that a small clandestine group of malevolent and powerful people are manipulating global circumstances to their benefit. Apart from anything else, it is based on a fundamental misapprehension of how societies and economies work. Or to put it more plainly, the bigger the conspiracy, the more people have to be involved - which in turn increases the likelihood of said conspiracy being discovered. I dare say there may have been some conspiracy behind the assassination of JFK. On the other hand, why hasn't the gunman from the grassy knoll been on Oprah yet? Those who deny a large number of people would be required to conduct a large conspiracy have moved into the realm where they impute superhuman powers of malevolence to the subjects of their conspiracies. Here some historical context might not go amiss - which brings me to the next point...
3) Karl Popper said that the conspiracy theory of society came from not believing in God and then asking, "What is in His place?". This is part of it - the religious mindset; whenever something happens, there must be some intelligence behind it. But this needs to be qualified: whenever something bad happens, there must be some malevolent intelligence behind it. It comes from not believing in the devil, and then asking, "What is in his place?" It's this propensity to demonise that has to be addressed. The imputation might be to MI5, or the CIA, or to George W Bush, or the state of Israel - but they follow a pattern set by the prototype conspiracy theory found in the Protocols of the Elders of Zion. I don't know what to make of the fact that so many people don't seem to recognise this - although I'm sure there's a depressing lesson about the state of our historical education in there.
This is arguably the world's most resilient conspiracy theory. That it owes its origins to a Russian secret service plot is an irony which serves to demonstrate that the secrecy of secret services is an insufficient explanation for this ancient malady that seems to be increasingly afflicting the contemporary mind.