Westminster's standards watchdog called today for "radical" reform of the regulation of Britain's democratic system, to prevent a repeat of the controversy over loans to political parties and crack down on electoral fraud.
The Committee on Standards in Public Life called for a thorough overhaul of the Electoral Commission, accusing it of a "passive" approach to the issue of party funding.
And it was heavily critical of moves to make postal voting easier, recommending the introduction of individual voter registration as part of a package of measures to stop fraud.
Releasing a report on the work of the Electoral Commission, Committee chairman Sir Alistair Graham also called on political parties to abide by the spirit, as well as the letter, of rules designed to make their funding arrangements more transparent.
"Political parties have a responsibility, not just to try to comply with the letter of the regulatory framework that governs their funding and expenditure, but also with the spirit of transparency that underpins it," he said.
"Public scepticism is justified if parties are seen to avoid or circumvent the principle of transparency.
"Confidence and consent in our democratic processes is the bedrock on which all public office is built.
"We need a system that ensures free, fair and secure elections, and healthy competitive political parties free from suspicion about how they are funded.
"The Committee's recommendations - if adopted - will help deliver this and greatly enhance the health of our democratic system."
Today's report comes in the wake of controversy over secret loans running into millions of pounds which bankrolled the General Election campaigns of both the Conservatives and Labour in 2005.
Under legislation then in place, there was no requirement on the parties to declare these loans to the Electoral Commission, as they would with donations.
But Sir Alistair was critical of the commission's failure to act more quickly when the loans issue was first raised.
He said: "On party funding, the evidence shows that uncertainty over the commission's statutory role as a regulator, combined with its passive approach, led to a regulatory failure on the issue of loans to political parties.
"Guidance was not provided, even when the issue was raised during the 2005 General Election, and no subsequent investigation or review as part of their statutory report on the election, was undertaken."
Sir Alistair also said that the commission should have "shown greater focus and courage in alerting the risk to the integrity of the electoral process from legislative changes, principally the lack of safeguards against electoral fraud with the introduction of postal voting on demand".
In a damning judgment on the commission's performance, he added: "It is clear that both the Electoral Commission's remit and operation need to radically change if we are to restore public confidence in the electoral process and in the regulation of party political funding.
"Through a combination of deficiencies in its current mandate, that is too weak in some areas and too broad in others, combined with a lack of courage, competence, and leadership in its regulatory and advisory approach, the commission has not successfully performed these core duties.
"This has contributed to a loss of confidence by the public and political parties in the integrity of both the electoral process and in political party funding."
Downing Street said it would consider the contents of the report, but declined to comment at this stage.
The Prime Minister's official spokesman said: "I think the important thing is that we give time to study the report and that we will look and see what it says."Reuse content