BT has dismissed calls by more than 100 MPs to separate broadband arm Openreach as "wrong-headed", in response to a damning report that found that despite the telco having received £1.7bn in subsidies to get Britain online, 5.7 million people still cannot access the internet.

The report, titled "Broadbad" was from a coalition of MPs who call themselves the British Infrastructure Group (BIG) and the House of Commons Library.

It said that despite the large sum of taxpayers’ cash having been "pumped into subsidising the construction of UK high-speed broadband, there are still a staggering 5.7 million people across Britain who cannot access the internet."

"BT benefits hugely from these subsidies," it said. "They get to spend the money given to them and will own the newly created infrastructure afterwards. This effectively means the UK taxpayer is subsidising BT owned infrastructure through Openreach that they will then profit from."

It added that the problem is even worse for business, with 42 per cent of small businesses reporting problems with their internet connection, at an estimated £11bn of cost to the British economy.

Next month Ofcom is expected to make its official recommendation on whether to break BT's fibre dominance by recommending a formal separation of Openreach.

The report was unequivocal in its view of what the regulator should do. "Unless BT and Openreach are formally separated to become two entirely independent companies, little will change," it said.

However, unsurprisingly, BT disagreed with this recommendation. A spokesman said: “We understand the impatience for progress to be even faster, but improving broadband is a major engineering project that involves contending with all manner of physical and geographic challenges.

“The idea that there would be more broadband investment if BT’s Openreach infrastructure division became independent is wrong-headed. As a smaller, weaker, standalone company, it would struggle to invest as much as it does currently.”

Tory MP Grant Shapps wrote in his foreword to the report: "This research highlights the serious problems that the UK broadband network is facing. It argues that the current situation of large inconsistencies in service leading to millions of citizens and businesses experiencing slow or non-existent connections is now untenable."

It seems the MP has changed his tune from last year, when he said the UK has some of the best super fast broadband in Europe. ®