Tens of thousands of rank-and-file police officers should have part of their membership fee for the embattled Police Federation refunded, a powerful group of MPs has said.
At national and local level, the Federation is sitting on around £70 million of its members' money, far in excess of its operating costs, the Home Affairs Select Committee said in its damning report on reform of the staff association.
Ahead of the Federation's annual conference next Monday, the MPs have called for cash held by the organisation's national rank committees, which totals around £29.5 million, to be returned to members as a subscription rebate with membership fees frozen for next year and further reductions in future years.
A 50% reduction in reserves held by central committees would add up to a rebate of nearly £120 per member, the Committee's report added.
Committee chairman Keith Vaz MP said: "Police officers from every corner of England and Wales should receive an immediate rebate on their current subscriptions, which have accumulated into unnecessary reserves of around £70 million, and a subscription freeze for next year."
Membership of the Federation is automatic for all police officers up to and including the rank of chief inspector, although payment of the subscription is voluntary. Its membership currently stands at around 125,000.
The organisation is experiencing one of the most turbulent periods in its history, facing accusations of adopting a politicised approach and claims of extravagant spending during a time of austerity.
In addition, the behaviour of some Federation representatives in the wake of the so-called Plebgate row involving former Tory chief whip Andrew Mitchell further damaged its reputation.
Current Police Federation chairman Steve Williams, who is to step down after next week's conference, commissioned an independent review of the organisation by former Home Office permanent secretary Sir David Normington, which ultimately recommended a range of far-reaching reforms.
Mr Williams accused senior colleagues in the organisation of bullying him in a letter handed to the Committee as part of their inquiry.
Mr Vaz said: "We were shocked by the scale of bullying that we found at the Federation's Headquarters. It rivals any popular soap opera. It is disgraceful that any chairman should have been hounded out for championing the long-overdue reforms set out in the Normington Report."
Echoing the Normington review findings, the Committee has recommended that the national chair is elected by all members, as opposed to the current system, which sees the 30-strong Joint Central Committee appoint the role.
The MPs also attacked the Federation's decision to appoint radio "shock jock" turned PR guru Jon Gaunt as a "serious error of judgment".
Mr Gaunt's role "damaged, rather than enhanced" the organisation's reputation, the Committee added.
Mr Gaunt, who was paid around £100,000 to orchestrate a spin campaign using "blitzkrieg" and "guerrilla" tactics, earlier this month admitted he saw the Plebgate affair as an "absolutely fantastic" opportunity to promote the Federation's political agenda.
Three officers, who called for Mr Mitchell's resignation following the incident outside Downing Street and were advised by Mr Gaunt, are now all facing an investigation by the Independent Police Complaints Commission (IPCC).
Mr Williams said: " Today's Home Affairs Select Committee report touches on a number of key issues for the Police Federation of England and Wales.
"In December 2012, the Police Federation announced the commission of an independent review of itself - to be carried out by Sir David Normington - and work is well under way within the Police Federation to implement that review's 36 recommendations.
"We welcome the Home Affairs Committee's reiteration of the principles contained within that report and of its modernising agenda which we will be working to implement at our annual conference next week."
A Home Office spokesman said: "Police officers do a difficult and often dangerous job and they deserve a representative body that is transparent and accountable.
" In his independent report into the Police Federation of England and Wales, Sir David Normington clearly identified the need for radical and urgent reform.
"If the Federation is to have public legitimacy, the Normington recommendations must be implemented swiftly and in full."
Shadow policing minister Jack Dromey said: "The police need a strong and effective voice, as the Normington Report noted. But it should always move with the times.
"Change is necessary and it is in everyone's interests for a more open organisation.
"Certainly any culture of bullying must be called out and eradicated. No police officer I know would consider that acceptable.
"The Federation has the chance to change at its annual conference next week."
Police minister Damian Green told BBC Radio 4's Today programme: "The reputation of the Police Federation, which is as low as it could possibly be at the moment, reflects on the reputation of police officers as a whole.
"The vast majority of police officers every day do a difficult and sometimes dangerous job. They deserve public support, and everything that's happened in the Police Federation over the last few years - and going back a long way - actually damages public support for the police.
"This is an organisation that gets the vast bulk of its income from its own members, who are of course paid by you and me as taxpayers - we pay the police salaries. They pay quite a considerable contribution to the Federation and, as we discover, some of this has been salted away into number two accounts with no transparency. Nobody at the centre of the organisation has any handle on what's going on with that money.
"It's a statutory body set up by law, and it needs to be open and transparent in the modern world.
"What has to happen now is that the Federation has to join the rest of us in the 21st century as a transparent and representative organisation."
Mr Green added: "The police ought to be one of those public services that we wholeheartedly admire, and public confidence has been dente d for a number of reasons. One of the reasons is that the representative body of rank-and-file police has been seen to be dysfunctional, to be secretive, to have this culture of bullying that the select committee has represented. That all contributes to the lack of public confidence.
"I want every member of the public to be confident in the police, so that they co-operate with the police. The police can only be really effective if they get instinctive, habitual co-operation from every citizen of this country."