Chancellor approves phone line tax to help fund next-generation broadband

Chancellor Alistair Darling has approved a £6-a-year tax that will be imposed on all UK households with a phone line to fund next-generation broadband development.

The tax is designed to cover the additional costs associated with deploying high-speed internet infrastructure in more remote parts of the UK and Mr Darling said it will ensure 90 per cent of Britons have access to faster connection speeds within seven years.

By charging every home with a fixed telephone line 50p a month, around £170 million will be generated each year to help create the new network.

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

The Conservatives have already said they will remove the tax if they win power at next year's general election and they will use a market-led approach as far as possible to spread next-generation connectivity.

Connection speeds of at least two megabits per second have been pledged for every home by 2012, but next-generation networks could deliver much faster services and lead to greater use of VoIP hardware.