Scrap metal dealers should be banned from trading in cash and be subject to tough licensing arrangements, MP Graham Jones said today.

The Hyndburn MP said dealers should also face tougher sentences if they are caught handling stolen metal, while the police should have the power to shut down those caught flouting the law.

He told MPs the theft of metal, particularly from war memorials and signalling cable from the railways, had reached "crisis point", having risen on the electricity networks by 700% in the past two years alone.

The national cost of metal theft had been put at £770 million, while there were 2,712 cable thefts on the railways in the last financial year, which had led to 240,000 minutes of delays for passengers.

But weak regulation of the industry had allowed unscrupulous dealers to take full advantage of the rising price of metal, buying up signalling cable and war memorial plaques from thieves and then selling the metal on, Mr Jones said.

It was impossible for the authorities to keep track of transactions as some £1 billion of the £5 billion-a-year industry was handled in cash, while there was no licensing scheme, MPs heard.

Proposing his Metal Theft (Prevention) Bill in the Commons under the Ten Minute Rule, Mr Jones said there was "widespread support" for the Government to introduce tougher measures, from companies such as BT, as well as Lancashire Police.

Under the Bill, magistrates would also be able to place tough additional measures on scrap dealers, while those caught would be sentenced not on the basis on the value of metal they had stolen, but on the cost of the damage and disruption they had caused.

Stolen metal would also be classed as stolen assets.

Mr Jones said: "War memorials are being stolen, sold and scrapped because the regulatory framework around metal recycling is so ineffective. In combination with the soaring international price of metal, it effectively creates incentives to steal.

"Metal recycling is a valuable industry, it is a sustainable means of reusing an increasingly important commodity.

"However, this soft regulatory framework undermines this logic by encouraging thieves to take materials which are still in use.

"The problem lies precisely in the fact that it is stolen metal that is being recycled.

"This Bill will go some way to removing the incentives to steal created by weak regulation in the industry.

"This isn't red tape, its intention is to reduce costs to businesses and reduce costs to the public purse incurred through damage to the nation's infrastructure.

"This legislation would allow legitimate, law-abiding and socially responsible scrap metal dealers to flourish.

"Indeed, a few scrap metal dealers meet much of the requirements of this Bill in best practice."

Although the Bill, which has cross-party support, is unlikely to make further progress due to lack of parliamentary time, Transport Minister Norman Baker said last week that he would be prepared to look at introducing legislation.

Speaking during Transport Questions in the Commons on Thursday, he said: "Obviously we don't want to resort to the statute book as the first option but there is a very serious problem here and if we are convinced as ministers that this is the way to deal with metal theft then that is an option we will look at very seriously."

Electricity North West, which owns and operates the North West’s local power grid, says that metal theft costs its customers up to £2m a year.

It says it has seen a 40-fold increase in thefts over the past 10 years.

Electricity North West asset manager, Eddie Hamilton, said: “Metal theft is a huge issue for our region and the rest of the country.

"We invest hundreds of thousands of pounds protecting our network from crime but more needs to be done to tackle the supply chain, ensuring that these thieves have nowhere to sell stolen metal."