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Tories would scrap 50p broadband tax

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A Conservative government would scrap the planned 50 pence per month tax on every landline - which the current government plans to use to subsidise faster broadband in rural regions - "as soon as possible", according to the shadow culture secretary Jeremy Hunt.

The levy hasn't yet been implemented but is a cornerstone of the current government's Digital Britain strategy. Ministers estimate it would raise £175m per year fund to pay for fibre in sparsely populated areas which BT believes do not justify a privately-funded network upgrade.

Former technology PR man Hunt said in an interview with the Financial Times today that the tax would be immediately binned after the next election if the Tories win.

BT currently has so far announced plans to improve broadband speeds for 40 per cent of the country by 2012 with a mixture of fibre to the cabinet and fibre to the premises deployments. The investment is targeted at urban areas where the return is likely to be greatest.

Hunt was not quoted as offering an alternative funding mechanism for "the final third" of broadband upgrades, where multiple economic assessments have found there is no case for private investment in rural regions without some form of government intervention. The relevant Conservative spokespeople were not available this morning.

One controversial alternative to subsidies would be to simply accept a new digital divide between town and country, although it would be an unlikely policy from David Cameron's neophile Tory party.

Indeed, in a speech in January, Cameron said a Tory administration would aim for ubiquitous high speed broadband within ten years. He didn't give any substantive details of how this might be achieved, but said his government would facilitate upgrades "by letting it be known that it will encourage and support the private investment required to develop the network".

The incumbent government meanwhile intends that communications providers will collect the levy on its behalf via a surcharge on line rental, so Hunt's plan to scrap it is likely to be privately welcomed by industry.

However Stephen Timms, the minister responsible for delivering the Digital Britain strategy, last month pledged to impose the levy before the next election. Firms could therefore be forced to bear costs of setting up and then within months dismantling a tax collection apparatus if both politicians get their way.

The latest the next election can be held is 3 June 2010, and the Queen's Speech, when Timms plans to introduce the necessary legislation, is on 18 November. ®

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