Scrap metal dealers should be banned from trading in cash and be subject to tough licensing arrangements, a Labour MP has said.

Graham Jones, MP for Hyndburn, 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."