Nobody should underestimate the seriousness of the political crisis we face. I have been knocking on doors for the Labour party for 27 years and have never known such widespread public anger on any one issue – even Iraq. Belatedly, parliament has agreed reforms to the expenses system – this is necessary but by no means sufficient. The entire saga has laid bare all that is bad about the British political system: a longstanding culture of secrecy, a lack of accountability to the people and a chasm between the electorate and politicians. This crisis, however, provides an opportunity for long-overdue and far-reaching reform. It is an opportunity we must grasp.

I suggest three principles of reform. First, openness – people have the fundamental right to know what is being done by their elected representatives and by public servants. Second, pluralism – lasting democratic change is best achieved by bringing people together from all political parties and none. Third, decentralisation – power should lie as close to people’s lives as possible.

Since 1997, Labour has implemented some important democratic reforms, including devolution to Scotland and Wales, restoring elected city government in London, the Freedom of Information Act and the Human Rights Act. The first stage of Lords reform removed most of the hereditary peers from parliament and the House of Commons modernisation committee has made some progressive changes. All of this is welcome but has simply not gone far enough.

I am Labour to my fingertips, but those of us in political parties have to recognise that party allegiances are far weaker today than they once were – especially among young people. This has big implications for how we do politics, including for how we achieve radical and lasting democratic reform. The 1990s Scottish Constitutional Convention, which brought together different political parties from across a wide cross-section of Scottish civil society, is a good model for us to learn from. Both of these ingredients are needed now – no one party has a monopoly of wisdom and there is plenty of wisdom to be found from those in no political party.

I suggest three key areas for reform: parliament itself, local democracy and political parties.

I worked for a year as Robin Cook’s deputy when he was first leader of the House of Commons. We wanted to modernise the Commons and democratise the House of Lords. There is a lot of unfinished business from that period. The heart of the problem is that the executive has too much power over the legislature. Parliament needs to assert its independence from government. In practical terms, this should include more power for select committees so that they are akin to the committee system in the US. For example, major public appointments should be subject to the approval of select committees. Many big public spending decisions are made at a regional level with little or no direct public accountability. We could give MPs (alongside councillors and MEPs) a direct role in these spending decisions. We should also consider removing the power whips have over the chairs of select committees so that they have the freedom to scrutinise government legislation without fear of party censure.

A fully elected second chamber is a crucial component of change – patronage and heredity cannot have any place in deciding who sits in parliament. Electoral reform for the Commons is another welcome plan back on the agenda. I have no doubt that big Commons majorities based on 40% public support contribute to the chasm between people and parliament. It happened with the Tories in the 1980s and, let’s face it, it has happened with Labour over the past decade as well. Government should consider recent calls to complete its manifesto promise of holding a referendum on proportional representation by staging a vote on the same day as the next general election. A further sensible reform would be to elect parliaments for a fixed term.

A revived, more independent parliament is a crucial component of change. It needs to go hand in hand with a major decentralisation of power. New Labour has had a difficult relationship with local government, borne out of the events of the 1980s. I am convinced that a revival of local democracy is just as important as reforms to parliament. This will require changes to the way local government is funded – with much more freedom for locally elected councillors about both how they raise and how they spend money.

Tip O’Neill said that ‘all politics is local’. Over the past year I have been surveying local people in Liverpool West Derby, and time and again the main issues raised – apart from MPs’ expenses – are local. On the Liverpool Democracy Commission we have been looking at how best to engage local people in the work of the city council, including encouraging a broader range of people to stand as councillors. I think we need to increase the status of the local ward councillor and ensure that local decisions about funding are accountable to local people. The same principle applies in public services as well.

Political parties need to change, too, and very much in line with my three principles of openness, pluralism and decentralisation. For Labour, this means moving away from a ‘command and control’ approach that was an understandable response to what happened in the 1980s. It means valuing party members and seeking to involve wider sections of the community, both as supporters and as candidates for office. I support the idea of ‘primaries’ where all local supporters can decide who should be the parliamentary or local council candidate in an area. Adopting the US system, where people can register as supporters of a party (or as independents), would enhance local fundraising as well as engage more people in politics itself.

This article is not meant to be a manifesto. I know there are many who will agree with much of what I say but who will disagree with me about electoral reform. Those of us who want to see major change cannot be purist – we need a big coalition of forces brought together by a desire for significant change.

Recently, I attended the Upper House of the Liverpool Schools Parliament where democratically elected young people debated and voted on major issues that affect their lives. When I was schools minister, I worked a lot on citizenship education. Although the implementation of citizenship in schools has been patchy, I remain a committed advocate of it. If reform goes hand in hand with better education I think we have the potential to strengthen democracy in a significant way. To this end, we must ensure that Labour’s recent commitment to introducing the vote to 16-year-olds is endorsed in our general election manifesto.

I have concentrated on the institutional changes that I think are needed. In the end, though, our democracy is only as effective as the individuals who work in it. Just as a key ingredient of success for a school is the quality of the headteacher, so too politics requires elected representatives with the skills, ability and experience to do the job well. I so hope that this recent controversy does not lead even more people to turn their backs on electoral politics – both as voters and as candidates.

I joined the Labour party when I was 15 because I wanted to change the world. We need to regain our sense of idealism and passion while recognising that voters are far more sceptical and less partisan than before. If politicians and parties take up this challenge and behave with due humility, this is a real chance to turn a low point in British politics into an historic period of positive and progressive change.