Whitehall funding for councils to put services online by 2005 has been dismissed as "paltry" by local government IT chiefs.
Local government minister Nick Raynsford, has said that each of the 398 local authorities will receive just £200,000 this year, regardless of size, to fund e-government projects.
And councils will have to prove they have used the money successfully to receive the same amount next year.
But Jim Haslam, vice president at local government user body the Society of IT Managers, said the money is nowhere near enough to have an impact on authorities' plans to put services online by 2005.
"It is paltry. E-government is demanding more funds than the government is making available and for most unitary and county councils it is completely insignificant and will not have any impact on the councils' own policies," he said.
Haslam also questioned whether the money will be ring fenced to prevent it being used for other council services. "There are big questions about whether there will be restrictions on what it is spent on. The last thing we want to see is e-government funding being spent on other services," he explained.
Local authorities expressed dismay at the funding decision. Chris Walker, IT manager at Northumberland County Council, said the average cost of implementing e-government will run into millions.
"For smaller authorities it is like winning the lottery, but we are one of the smaller county councils and the money is just a pin-prick in what is needed to fund the e-government projects," he said.
"The cost for e-government is all the new application systems, the introduction of customer relationship management, having call centre technology and the front and back office equipment," he added.
Walker said that the decision to give the National Parks Authority in Northumberland the same amount as a county council is ridiculous.
The news also comes as Liverpool City Council chief executive David Henshaw warned that authorities will have to look at making up the shortfall by selling more electronic data on citizens to the private sector.
A spokeswoman for the Department of Transport, Local Government and the Regions said the money will contribute to councils e-government expenditure.
"This £160m over two years will help councils implement the plans for their 2005 e-delivery and we've never pretended it was anything other than a contribution. But it is still a serious amount of money that was divvied up the way ministers thought best," she said.
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