State took €70m hit on water charge refunds

The Government took a €70m hit on water charges because it feared legal issues over trying to recoup the water conservation grant.

The €100 grant had been paid to householders on a universal basis, including to many who claimed they never actually paid any water charges.

A briefing note prepared for the Department of Housing showed how three options were given on how to refund households that had paid their water bills.

The document was only released after nearly a year-long battle with the department, during which it repeatedly refused to make it public.

Simon Coveney, the then housing minister, was told the cheapest option would be to refund customers while taking account of payment of the €100 conservation grant. That would have cost €100m for the refunds and an estimated €9m to €11m in administrative costs in sifting out who was owed what.

The briefing said: “Administratively, this arrangement will be more complex, with data protection issues to be addressed, as information on payment of bills and payment of grant will have to be exchanged between IW [Irish Water] and DSP [Department of Social Protection].

“There may be legal issues to be addressed in netting off a payment which had originally been made as a universal payment.”

A more straightforward option was also presented of just repaying water charges by Irish Water and disregarding the water conservation grant.

The submission explained how around €171m had been collected under the water charges regime with a similar amount uncollected.

Giving it all back would cost the full €170m with a lower bill of between €3m and €5m in administrative costs as it would be less complex.

Mr Coveney was told this was a “proactive approach” where Irish Water would simply issue a refund cheque to everyone who had paid.

It was, said the submission, “the most straightforward and administratively cost-effective option”.

Only those who have paid benefit, and all those who received the water conservation grant are treated equally. This is the least risk option in terms of matching information,” it said.

Comparing the two approaches, it was explained that €70m could be saved by taking the grant into consideration and recouping it.

It pointed out that this could be fairer as those who did not pay but claimed the grant would not get an advantage over those who had paid at least some of their water charges.

Mr Coveney was also given a third option to look at a system of tax refunds. However, this never seems to have been a serious consideration as it could have penalised those on lower incomes who had paid their water charges.

The submission explained how they might not pay enough tax in a year to benefit from a tax refund, particularly if they were only on state pensions.

In a statement, the department said it had been “prudent and necessary to take into account factors that may impact” on any repayment plan.

It said it would not make any comment on the legal advice that had suggested there would be difficulty in recouping the water conservation grant. It said data protection issues could also have arisen and that any repayments would have to be “consistent with the law and the data protection policies of the bodies [involved]”.

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