Further criticism of the proposed 50p-a-month broadband tax has been provided by a leading lobby group.

The Federation of Small Businesses (FSB) claims the government's plan to levy all landlines will backfire, as the UK's broadband needs are best served by the private sector.

According to the organisation, telecoms firms have no choice but to invest in next-generation technology if they wish to maintain customer loyalty – meaning public spending on network developments is unnecessary.

The FSB argued: "Small businesses shouldn't have to pay for a service which could be encouraged by opening up the market to more competition from internet providers."

It added that the private sector should be compelled to adopt modern fibre-optic technology to attract custom.

The FSB comments echo those of Shadow Culture Secretary Jeremy Hunt, who claimed this week that a Conservative government would scrap the levy altogether.

During a debate staged at the London School of Economics, he said a market-driven approach would serve the UK's digital needs most effectively, reports the Guardian.