AN MP last night demanded an inquiry into a “secretive” half-million-pound deal struck between Swindon Borough Council and a new technology firm to provide wifi internet across the town.

South Swindon MP Anne Snelgrove told a parliamentary debate that the lack of transparency in the way an agreement was reached with local firm Digital City (UK) risked inviting “corruption” into town hall politics, and warned that if the deal were to fail then taxpayers would be left to pick up the tab.

The wifi initiative, announced last November, is due to provide a limited free internet link to all who sign up, alongside three paid packages aimed at business, home and roving users.

But Ms Snelgrove, a Labour MP, accused the council’s Conservative leadership of gambling public money in “untried companies” when it awarded the contract – and a £450,000 loan – to Digital City without going through a tendering process.

She pointed out that Digital City became active only last September, just weeks before the wifi initiative was announced, and described its track record as “negligible”.

She said: “Should Digital City have gone instead to a high street bank for a £450k loan on the evidence of the business plan and ropey marketing strategy, I imagine they would have been laughed off the premises.”

She added: “The cosiness of the relationships of those involved and the lack of external scrutiny... should alarm all who are interested in local government probity.”

Ms Snelgrove said the council, in exchange for a 40% equity stake in the company, appeared to be taking on “100% of the risk” of the venture, and warned that if it was unable to attract sufficient customers in what was a crowded market then “£450,000 of taxpayers’ money will be lost”.

The MP, who insisted that she supported universal internet access, said: “Whilst I do not believe for a moment there has been corruption on the part of [council] officers, the process they have put in place at the behest of Conservative leaders of the council lays open the possibility of future corruption.”

She added: “I sincerely hope that [the council] cabinet does the right thing and delays any further allocation of taxpayers’ money until a full cross-party investigation can be carried out into the actions of councillors and officers.”

Local Government Minister Barbara Follet, responding, said central government was unable to intervene in council procurement decisions but added that taxpayers’ money did “appear to be at risk” and suggested concerned members of the public could try seeking redress about the matter from an external auditor.

She said: “It definitely will be in the council’s interests to provide satisfactory answers to these questions and make transparent the way in which decisions have been made.

“Then and only then will their residents’ concerns be laid to rest.”