Chancellor George Osborne said that the government plans to scrap a plan to fund investment in ‘superfast’ broadband infrastructure with a tax on ‘landline’ phone connections.

The 50p tax was first proposed in January 2010 by then-business secretary Lord Peter Mandelson, who said it would raise £1 billion to fund new Internet infrastructure. Osborne’s predecessor >Alistair Darling announced the enactment of the plan in his final budget before April’s general election.

“Already the market is delivering superfast internet speeds of 50Mb to half the country but we cannot be certain that it will reach the communities that are not currently served," Darling said at the time, "which is why we are putting in an extra £1 billion to support the market."

The Conservatives said before the election that they would rather leave it up to the private sector to fund ‘superfast’ broadband. Osborne confirmed that intention today.

The biggest news from today’s budget that VAT will rise from 17.5% to 20% next year. It is expected that the coalition government will vote the budget through.