Leading article: Let there be light on the murky world of MI5

Allegations of extensive MI5 bugging operations, made by the former agent David Shayler, are not only plausible, they are deeply worrying. They are of a piece with the story told by Peter Wright in Spycatcher; they cohere with the report by Cathy Massiter, an honourable woman to whom dumb loyalty to the Security Service counted for less than the need to tell the public the full extent of its surveillance, personal files and monitoring.

What Mr Shayler confirms is MI5's promiscuity. Its staff, along with home secretaries, prime ministers and other senior politicians, condoned operations that at best displayed a cavalier attitude to personal privacy and at worst illegally infringed basic civil liberties. In a sense, though, the most serious charge is that of downright inefficiency. During the Cold War there were plenty of real enemies at large. To waste scarce public resources listening, instead, to UB40 lyrics, let alone to Jack Straw's or Peter Mandelson's phone calls, is little short of criminal. Even the most rudimentary political intelligence would differentiate the groups of bearded teenagers and twentysomethings competing for office in the National Union of Students, from out-and-out subversives. The absence of such judgement inevitably makes outsiders wonder about MI5's capacity, never mind its purpose.

As for Mr Mandelson - given the anti-Communist credentials of his grandfather Herbert Morrison, it seems ludicrous to imagine him being recruited as a Soviet bloc "sleeper": the mere idea tells us all we need to know about the blind, right-wing biases of the organisation. If MI5's Cold War business was defending Britain, the country its staff had in their hearts and minds was not the one lived in by the rest of us - a pluralist place where a position in the National Council for Civil Liberties is hardly the mark of Cain.

But, of course, that is all in the past (except that the files are still extant, and inaccessible to the victims of MI5 paranoia). The Cold War is over. The student president of yesteryear is now Home Secretary and, as such, responsible for the Security Service. The suspected Soviet agent Mandelson now sits close to the spot in the Cabinet Office that co-ordinates flows of intelligence. And besides (it is claimed) MI5 is reformed, chastened, modernised, feminised. So should we just relax, treat these latest allegations like a piece of contemporary historical fiction and let the 2,000-strong organisation housed in splendour on Millbank go its own sweet way? Messrs Straw and Mandelson may, this week, face more urgent matters in the shape, for example, of bulging prisons and millennium domes, but sooner or later they will need to get their heads together on the subject of MI5's future. Although the commitment of Tony Blair's administration to open government is at best ambiguous, we have to hope that when they do review the Security Service they will do so openly. The public - the paymasters and alleged beneficiaries - have a right to know its powers, its costs, and above all what in the 21st century its purpose is supposed to be. They may well conclude that its historical term is over.

Jack Straw's hand is going to be forced soon. Labour has promised to reform the Metropolitan Police, replacing the Home Secretary as police authority for London with a committee of magistrates and local authority nominees. What this will precipitate - surely - is some fundamental review of the operations of Special Branch and those other units within Scotland Yard which do "national" work. There is, clearly, a world of difference between the skills and forces needed to police the streets of Brixton or Bexleyheath and those needed to protect diplomats, harry terrorists and do whatever else Special Branch should do. But where does the remit of Special Branch end and that of the Security Service begin, and how do both relate to the growing apparatus of national criminal intelligence gathering?

Only Pollyanna says everything in the post-Cold War garden is lovely, that there is no longer a need for a domestic agency with the capacity to tap telephones, monitor the flow of funds, and follow papers and people. Counter-espionage is no ignoble function, and spying and other games of international relations will continue. It remains true that freedom requires vigilance (just so long as you keep in mind what freedom is for). But whether this work requires MI5, with its operational past and culture and vast superstructure, is a question the Conservative government consistently refused to ask. For all its talk about effectiveness in government, it spared security and policing from basic interrogation of costs and benefits.

MI5, meanwhile, has been allowed to get away with waffle about the drugs war and combating the IRA. So what is the Security Service doing now Irish peace has (temporarily) broken out, especially since the Government believes that the solution to terrorism is not counter-terrorism, but a political readjustment in Ulster? Meanwhile MI5 may have something to bring to intelligence-gathering about international narcotics trafficking, but it is not the only agency with expertise. Ministers should be deeply suspicious of government agencies (Customs and Excise as well as MI5) that talk up drugs as a way of protecting bureaucratic structures.

The British love the secret world - witness the puny powers Parliament awarded its own intelligence committee, and the pusillanimity of the Public Accounts Committee in failing to ask for proper studies of MI5's effectiveness (an international comparison with other counter-espionage agencies, say). Until 1989 that love-affair at least had some strategic justification. Now, however, it risks being pathological. It is time for an exact rendering of accounts for the security and counter-espionage apparatus. Perhaps Mr Straw's understandable desire to see the contents of MI5's files on him will speed the necessary review.