When Maurice Smith, a former chief inspector of schools, ruled that it was OK for BNP members to teach our children, he exhibited an astonishing level of naivety about how racism works in the classroom. That the then schools secretary Ed Balls chose to accept his advice was one of the most depressing examples of how the dying New Labour government showed it had completely forgotten why it was in power.

In reaching his decision, Smith had said that barring the BNP was "taking a very large sledgehammer to crack a minuscule nut". And he added: "The existing measures in place to protect children and young people from discrimination or political indoctrination are well-grounded, and comprehensive enough to mitigate the risk."

Today his lack of understanding was exposed when Adam Walker, a teacher and BNP activist, was cleared by his profession's watchdog of racial intolerance – despite using a school laptop to claim in an online forum that Britain was a "dumping ground for the filth of the third world" and lauding the BNP as "the only party who are making a stand and are prepared to protect the rights of citizens against the savage animals New Labour and Bliar [sic] are filling our communities with".

The General Teaching Council's three-member disciplinary panel said it was merely "troubled" by Walker's postings but not convinced that his views suggested intolerance.

So, having had the judgment that it's OK to have BNP members teaching our kids, it seems these extremists don't even have to be quiet about their bigotry. What exactly would it take for a deep-seated racist to be ruled unfit to teach? Is anything short of virulent racist abuse directed at a ethnic-minority pupil enough? Would it be rejected as cause if not caught on CCTV?

This case blows a coach and horses through Smith's argument that somehow the equal-opportunity policies in place at our schools would protect children from racists. How can anyone expect someone like Walker to walk into class and give his black and Asian pupils the level of care and attention any parent has the right to expect? Yet that's what the "existing measures" decree.

If Smith had any sense of decency, he would immediately repeal his earlier report – or at least ask to "review" it. Likewise, Ed Balls should admit he was misguided. Some chance.

Fortunately, though, there is hope that the new government will see sense. When pressed on this matter while addressing a black pre-election audience, Tory leader David Cameron said: "I think being a member of the BNP and being a teacher is completely incompatible." He continued: "Any good headteacher would not have a member of the BNP within a hundred miles of a school. They should be able to fire someone for that reason."

Cameron, who was responding to a question by audience member Dotun Adebayo, recognised that this was not about the issue of free speech: Walker, after all, who resigned after the incident in 2007, is free to continue posting his vile comments online. This is an issue about parents being able to leave their children at the school gates, in the charge of teachers, without the fear that they will be abused, humiliated, downgraded or disciplined because of their skin colour.

That is a fundamental right, and one which this new government must recognise clearly, and quickly.