Chancellor gives green light to broadband tax

The government wants to see 90 per cent of the population with access to broadband by 2017

Chancellor Alistair Darling has confirmed in his pre-budget speech this afternoon that the government will introduce its controversial Landline Duty to the Finance Bill.

The duty, dubbed the 'broadband tax', will cost households with a landline connection 50p per month, with the revenue generated being spent on bringing rural areas up to speed with their broadband services.

Darling said the government would be investing £200m in the rollout of broadband under the Digital Britain programme as part of the government's Universal Service Commitment.

"We are modernising the UK's digital infrastructure so we can provide the next generation of superfast broadband to 90 per cent of the population by the end of 2017," he said.

A consultation on the practical aspects of the new Landline Duty is to be launched shortly and this will be followed by a consultation on the procurement approach to investing in Next Generation Access.

Julie Owens at moneysupermarket.com welcomed the move and said that while a levy was "a little unfair" to those who have a landline but no broadband, 50p was a small price to pay for what the government sees as vital infrastructure to the UK.

“Every home deserves access to broadband. BT and Virgin Media have already begun the upgrade of their networks but the government and Ofcom need to ensure the rollout of a super-fast network reaches the places that need it most," she added.

However, the broadband tax has angered many in the industry.

In November Charles Dunstone, chief executive of TalkTalk, the second-largest consumer broadband provider in the UK, described the tax as "unjust and regressive", claiming it will serve only to subsidise richer users who can afford superfast broadband.

BT has also cri ticised the soution, with BT strategy and portfolio group director Liv Garfiel claiming that a 50p per month levy on phone landlines would not provide enough funds to cover the entire UK with fibre-optic broadband.

The Conservatives have said they would scrap the tax if they were to win the general election.