The former home secretary David Blunkett has called for stronger oversight of the UK’s intelligence agencies and warned that the “old-fashioned paternalism” of secrecy based on perceived security interests was undermining public confidence in their activities.

Blunkett called for the legal framework on mass surveillance to be updated on a regular basis and for judicial oversight to be made much more robust and transparent.

The Labour MP’s call came during only the second public evidence session ever held by the intelligence and security committee. Its inquiry into security and privacy was set up following the disclosures by Edward Snowden of the scale of the bulk collection of personal data by GCHQ and the US National Security Agency.

The committee heard evidence from the heads of the intelligence agencies earlier this year – its first public evidence session. The inquiry is to take evidence in public from Nick Clegg and Yvette Cooper on Wednesday and from the home secretary, Theresa May, on Thursday. Half of May’s two-hour session will be held in secret.

The chair of the Equality and Human Rights Commission, Lady Onora O’Neill, told the committee’s MPs and peers that the privacy implications of big data and data mining were such that “the Stasi would have loved it. Thank god they didn’t have it.”

Blunkett, who as home secretary oversaw the introduction of the complex rules surrounding the use of the 2000 Regulation of Investigatory Powers Act (Ripa), which legislates surveillance, warned the committee that it was no longer good enough for the security services to argue that “we know and you mustn’t know” to maintain public confidence in their activities.

He said Britain’s most sophisticated opponents already had a good idea of the capacity of the UK’s security services, and in some cases were ahead of them. Blunkett said it was necessary to tell the public about the methods of the security services to reassure them and to secure their consent: “That is the essence of a free democracy,” he said. “Therefore ensuring people feel comfortable and know enough about what we are doing to feel it is in their interests.

“Sometimes we have to be more sophisticated than saying ‘we can’t tell you anything because it might be a danger’. That actually undermines confidence and consent. It is real old-fashioned paternalism because it is ‘we know but you mustn’t know’.”

Blunkett said the need to update Ripa, which has been described as an “analogue law in a digital age”, was obvious. He reflected that when he first introduced the regulations surrounding the law they were already out of date and needed a ‘second go’.”

The legal framework surrounding surveillance needed updating “each fixed-term parliament” if it was to continue to command public confidence, Blunkett said, “because people are pushing the boundaries all the time.”

Blunkett also called for a much stronger judicial oversight regime, saying the secretive Investigatory Powers Tribunal, which is the only court that can hear complaints of illegal surveillance or human rights breaches by the security services, was in need of a radical overhaul.

“The Investigatory Powers Tribunal needs to be ramped up completely. People need to know a lot more about it. It needs to be a lot more transparent and it needs to demonstrate that it is worth having,” said the former home secretary.