Broadband tax included in pre-Budget report

The government's controversial broadband tax has been given the green light by chancellor Alistair Darling in his pre-Budget report.

The £6-a-year levy will be imposed on all households with a fixed line phone.

The money made will be put into a fund to ensure rural areas of the UK do not miss out on super-fast broadband services.

Mr Darling said the government would provide super-fast broadband to 90% of the UK by the end of 2017.

Announcing the tax, Mr Darling said: "We are modernising the UK's digital infrastructure and, in the process, creating thousands more skilled jobs.

"We have provided funding to help extend the opportunities of the broadband network to more remote communities.

"We now want to go further, so we can provide the next generation of super-fast broadband to 90% of the population by the end of 2017."

Market-led approach

PRE-BUDGET REPORT DOCUMENTS Documents in full [3.87MB] Most computers will open this document automatically, but you may need Adobe Reader Download the reader here

The broadband tax has attracted criticism from within the industry with some experts saying the fund will fall short of what is needed to provide fast broadband services to all areas of the UK.

The money is earmarked for the 30% of homes that experts think will be by-passed by commercial fast broadband plans.

It is estimated that the broadband tax would raise about £170m a year, which is some way short of BT's estimate of £5bn needed to provide super-fast fibre services to every UK home.

The Conservatives have vowed to scrap the tax if they win the next general election.

Shadow culture secretary Jeremy Hunt has been given the Conservative remit for broadband.

He has said the Conservatives will favour a market-led approach with public funds only considered once the market has taken broadband as far as it can.

Currently BT is committed to rolling out next-generation broadband to about 40% of the UK with Virgin Media offering speeds of up to 50Mbps (megabits per second) to about half of UK homes.

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