Labour has sought to capitalise on the Tories’ catastrophic handling of the Panama Papers scandal by demanding a public inquiry as it published a five-point plan to increase tax transparency.

John McDonnell, the shadow Chancellor, said the row over tax avoidance came down to an “issue of basic morality and national security”.

Now the party has published a series of demands to designed to deal with “the impression of a nexus of influence and opacity” involving senior politicians and business people around the world.

Its proposals are designed to increase scrutiny on David Cameron, who will be forced to defend himself again today, when he makes a statement on the Panama Papers to MPs.

Labour is proposing:

An immediate public inquiry into the revelations contained in the Panama Papers.

To force MPs and peers to publish details of any offshore investments they hold.

Increased resources for HMRC to investigate potential breaches of the law, politicians facing conflicts of interest, and the tax arrangements of businesses and wealthy individuals.

A “beneficial ownership” register revealing the ultimate owners of foreign companies when they bid for contracts in the British public sector.

Country-by-country reporting for multinational firms to be negotiated at EU level.

McDonnell said it should be a “matter of shame” to the Government that more than half the companies named in the Panama Papers were registered in UK-governed tax havens.

“Not only has this Government impeded international efforts to crack down on tax avoidance and to tackle tax havens but senior figures are personally implicated in these immoral schemes.

“Labour’s Tax Transparency Enforcement Programme will stop the super rich hiding their wealth from legitimate taxes whilst the rest of us our told there is not enough money to pay for the public services we all rely on. No longer will the richest wilfully avoid paying their fair share while disabled people have their support to live independently brutally cut.

“Under this Government there has been one rule for the rich and another for the rest of us. Tax haven corruption is not just a tax issue – it drives at the very heart of our democracy and its credibility. We risk eroding public trust in our democracy if we do not tackle the issue head on.”

McDonnell also sought to link tax avoidance to the funding of other crimes, including violence.

“These sorts of schemes fund terrorism and launder criminals’ money. It’s not just about tax avoidance. It’s an issue of basic morality and national security to take on this sort of behaviour.