An explosive cache of leaked files reveal the Government and its regulators prop up industrial-scale tax dodging, Dame Margaret Hodge has told parliament.

The Paradise Papers show Britain and its overseas territories are “the place of choice” for anyone looking to funnel away funds and avoid tax, said the MP for Barking.

“We are not just complicit in what happens; we are central to its success,” she added.

Dame Hodge spoke at Tuesday’s adjournment debate on tax avoidance and evasion in the Isle of Man.

The debate followed the leak of 13.4 million documents detailing how the world’s rich hide their money from the taxman.

The Queen, Apple and Nike were among the many names found to have invested in secretive offshore funds.

Royal funds placed in “unethical businesses”, said Hodge, were proof of how widespread the dodges were.

“It is the establishment norm for the rich and powerful, yet it is plain wrong and we need to stop it.”

While those named in the leak maintain all activities were legal, campaigners say the papers shine a light on a secretive network bigger and more complex than previously thought.

The Labour MP called on the Government to “tear down the shroud of secrecy” and force tax havens to set up public registers of beneficial owners of offshore companies.

A good start, she said, would be to clamp down on the lax tax policies in British overseas territories and Crown dependencies.

Shell companies registered in places like Jersey and the Isle of Man do not need to reveal their owners or file accounts, placing them at the heart of an offshore empire.

“Our government does not just tolerate tax havens,” said Dame Hodge. “They are using our taxes to enable the Isle of Man to operate as a tax haven.”

The Paradise Papers came about thanks to “brilliant investigative work” and a brave whistleblower, she said.

Another name mentioned in the files, which were obtained by German newspaper Süddeutsche Zeitung and shared with journalists around the world, was Tory donor Lord Ashcroft.

Asked by reporters about his tax affairs, he hid in a toilet.