Fewer than half of local authorities in the UK expect to hit the 2005 deadline for online public services, and 15 per cent have said they will not even try.
According to the IT trends in local government report from public sector IT body the Society of Information Technology Management (Socitm), almost a third of local government services are now available online, compared with 25 per cent in 2001.
But information overload, funding issues and resistance to change are continuing to hold back progress.
However, progress reports by local authorities submitted to the Office of the Deputy Prime Minister (ODPM) - as a prerequisite for receiving second-round £200,000 funding - have suggested a far more encouraging state of readiness.
A spokeswoman from the ODPM told vnunet.com: "The majority of local authorities have indicated confidence in hitting the 2005 deadline. Where they are experiencing difficulties, further support and assistance is being provided."
But Brian Westcott, editor of the Socitm report, urged the government to set targets relating to take-up of services, and said the focus needed to be on delivering and marketing innovative services that deliver real benefit to consumers.
"The government was right to set the deadline because it got everyone going, but why try to do everything for the sake of 2005?" he said.
"In Chester where I live you can pay your council tax on the website but only two of the 100,000 inhabitants have done it."
In a statement the ODPM said: "The report is limited in scope as it is based on the views of IT managers rather than of those responsible for implementing the e-government strategy.
"Ultimately, we are encouraging e-government to improve the quality of service and competitiveness of GB plc.
"The ODPM does not have specific targets for service take-up, but it is in line with the ODPM's own Public Service Agreement targets, and we will be having a greater push on take-up in the coming years."
The statement also criticised the report's findings - based on questionnaires completed during July - for being dated and for failing to reflect the growing confidence of local authorities in their ability to achieve the target.
"It is based on a survey carried out some time ago, before either the national strategy for e-government, or the national projects, were announced.
"It is in local authorities' best interest to achieve the 2005 target, since it will bring them the benefits of modernising government as quickly as possible," the statement said.
The Socitm report also warns that a lack of clarity surrounding funding would stall projects. Councils estimate that delivering e-services will cost over £2bn in total, but do not know how almost half of this will be funded.
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