The Government must take action to prevent UK-based mining companies avoiding tax in some of the poorest parts of the world where they operate, MPs demanded today.

Miners have been repeatedly accused of using sophisticated networks of anonymous shell companies and bribery of local officials to avoid paying their fair share of local taxes in return for the minerals and oil they remove from the land.

The Business Select Committee, in a major report into the industry, said more must be done to stamp out the practice of shifting profits to low-cost tax havens and using transfer pricing techniques to keep down tax bills that should be paying for local schools and hospitals.

The inquiry was held after various controversies surrounding the short-lived stock market life of the Kazakh miner ENRC, which quit its listing after a welter of scandal and bad publicity for London.

Adrian Bailey, chairman of the committee, said mining companies contributed to the UK through taxes, dividends and employment, “but reports of poor practice around the world are a cause for concern and give extractive industries a bad name”.

The committee recommended an index to track the social responsibility of mining companies. Based on the model used by the Johannesburg exchange, this would measure the companies’ environmental and social behaviour. The committee said the Government should consider beefing up the accountability of the “sponsors” of stock market flotations. These are commonly brokers who promote the company’s shares as well as vouching for their good character. Sponsors are required for miners with a limited financial track record to gain a premium stock market listing. In ENRC’s case, that was Deutsche Bank.

The report said the Financial Conduct Authority and the Government should be more aware of the conflict of interest risk inherent in the sponsor’s role.

The committee criticised how long it had taken the UK to sign up to the international Extractive Industries Transparency Initiative – a global attempt to force miners to disclose how much they pay in local taxes and other fees.

To make up for it, the UK should become a “beacon” for best practice, the committee urged.