The Commons International Development Committee unearthed a project which used cash meant for the world’s poorest countries on Chinese films and museums to boost trade in the Asian superpower.
The Committee demanded an overhaul of the £600million Prosperity Fund as a result.
Committee chairman and Labour MP Stephen Twigg said: “Our report raises concerns that some activities are being badged as ODA without a clear focus on poverty reduction. This lack of clarity risks undermining faith in UK aid.
“Countries should not be selected to receive ODA via the CSSF funding based on security rationale alone.
“With a heavy emphasis on promoting UK trade, the Prosperity Fund risks losing the rightful focus on poverty reduction and is a step towards the return of tied aid. We recommend that existing programmes should be reviewed.
“It is essential that the UK’s spending on aid underpins the reduction of poverty.”
The Labour MP added: “Almost three quarters of the world’s poorest people live in middle income countries but it is unclear to us how some projects – especially those under the banner of the Prosperity Fund – benefit the very poorest, marginalised or most vulnerable communities.”
The Department for International Development is responsible for controlling the Prosperity Fund, which should be spent on poor countries rather than boosting trade.
A Government spokesman said: “We have been clear, we must ensure that the aid budget is not just spent well but could not be spent better and standards are raised across Government to achieve value for taxpayers’ money.
“UK aid spending is best done using expertise across government, with departments working together in a joined up way.”
He added: “We continue to press for quality and consistent aid spend to achieve results for the world’s poorest and to successfully tackle global challenges such as disease and conflict to make us safer at home – which is firmly in the UK’s interests.”
The Daily Express has crusaded endlessly against the Government’s decision to commit to spending 0.7 percent of national income on overseas aid, a United Nations target which has seen the UK budget soar despite austerity cuts at home.