The Government has been accused of wasting taxpayers’ money over plans to subsidise high-speed broadband services in central London.

Ministers are currently reviewing the next stage of Project Gigabit, a £5bn programme aimed at rolling out full-fibre broadband in hard-to-reach rural areas. 

Despite the project’s aims, BDUK, the arm’s-length body overseeing the programme, is now exploring plans to use some of the funding to tackle internet ‘not-spots’ in urban areas.

The move has sparked criticism from politicians and industry executives amid concerns that taxpayers’ money is being redirected from the areas that need it most towards cities with good coverage.

Andrew Griffith, shadow technology secretary, said: “If confirmed, this would be a baffling decision by the Labour government that risks leaving people in the hardest to reach rural areas left in the slow lane without any credible path to fast, reliable broadband.

“This programme was explicitly designed to build full-fibre to remote areas where the rollout is not economically viable for commercial providers.

“To divert the funding to highly competitive areas such as central London would be a shocking waste of taxpayers’ money at a time the Government is snatching pensioners’ winter fuel allowances away.”

It is estimated that just over £2bn in funding is still available, though a government spokesman said no decisions had yet been made on where this will be spent. Mr Griffith said he planned to raise the issue with ministers.

Project Gigabit was launched in 2021 as a flagship policy of then-prime minister Boris Johnson’s so-called “levelling up” agenda with an aim of reaching 85pc of the country with full-fibre broadband coverage by 2025.

Dozens of contracts are already in place to subsidise network build in areas that would otherwise be commercially unviable.

BDUK’s potential new strategy means focus could now be shifted to urban areas, where there is already a high level of competition.

As part of this process, officials have categorised swathes of central London as “white” areas, defined as premises where there is currently no gigabit-capable infrastructure and none is likely to be developed within three years. The decision means that these areas could be eligible for support.

This has sparked anger among broadband providers because of concerns such a move would merely serve to subsidise the expansion of BT’s incumbent network division Openreach, rather than supporting smaller regional rivals.

One industry insider said: “It is extremely concerning to see that BDUK is preparing to subsidise fibre rollout in areas that they know to already be served by multiple fibre networks.

“Subsidies in these already competitive areas will undermine competition and deter private investment, and likely end up funding Openreach building over the top of its alt net rivals.”

The source added that the deployment of Project Gigabit funding had been notoriously difficult and plagued by delays. They accused BDUK of shifting its focus to urban areas in a bid to spend the money “regardless of whether it delivers for the taxpayer”.

A spokesman for the Department for Science, Innovation and Technology said: “We have been clear that addressing pockets of poor connectivity in all areas of the country is necessary to reach our goal of nationwide gigabit coverage by 2030 and grow the economy.

“Rural areas remain a priority for us, with over a million rural premises now covered by contracts under Project Gigabit – with many more rural properties set to benefit in future. We are committed to exploring all avenues to achieve this ambition. No decisions have been made yet.”

Efforts to improve rural broadband come as new figures showed the UK is also lagging behind international peers for 5G connectivity, with Britons facing the worst mobile coverage and download speeds.

A report by the Social Market Foundation found that mobile users can access 5G just 10pc of the time. The UK ranked bottom out of 15 developing and advanced countries, behind France, Spain and Italy.