The Government will enshrine a permanent water charges cap in law in an effort to persuade homeowners their water bills will not increase substantially once the existing fixed rates lapse.

It is understood the existing caps – which the Coalition revised downwards again yesterday – will stay in place until the end of 2018.

The effective charges for families will now stand at €160 a year. Single adult households will pay an effective €60 rate. Both figures are lower than expected and are inclusive of the annual €100 rebate payable upon registration with Irish Water. The changes mean Ireland will have one of the cheapest water charges regimes in Europe.

Reassurance

Minister for Finance Michael Noonan has said the idea of flat charges “would be preserved” and the Government spokesman said the principle of a “capped rate” would remain. Another Coalition source last night said: “It will always be affordable.”

While sources said the Government was not in a position to set exact cap levels for the future, the principle will be enshrined in legislation.

Homes with meters installed that come in under the capped level will only pay the metered rate in order to promote conservation.

The final water charges plan will be signed off by the Cabinet today and will be unveiled by Minister for the Environment Alan Kelly this afternoon.

It is expected to include compliance measures such as introducing penalties for those who have not paid their water bills, or entered into a payment plan, for one year and attaching unpaid charges to people’s homes, ensuring the charge would remain if they try to sell the home. Fine Gael sources suggested Labour was less enthusiastic about such measures, although this was denied by those in the junior Coalition party.

Taoiseach Enda Kenny told the Dáil yesterday Mr Kelly would bring forward legislation “so that Irish Water will be retained in public ownership and will never be privatised”.

The Government’s scramble to reduce water charges and increase allowances means households will end up paying some of the cheapest water rates in Europe.

Figures compiled by Global Water Intelligence indicate the new water charges regime would place Ireland at the bottom of the EU’s water charges table.

It calculates Europe-wide charges based on a family of four using an average of 15 cubic metres of water a month. When allowances and the water caps are included in Ireland, the charges are likely to work out at under €1 per cubic metre. This is well below EU countries with relatively high water charges, such as the UK (€3.92), Germany (€4.80) and France (€3.66). But it is also lower than rates in the cheapest countries, such as Romania (€1.75), Latvia (€1.71), Italy (€1.52). Bulgaria has the lowest rate at €0.99.

The new cap on charges would ensure a lower Irish rate. The vast majority of EU countries charge on the basis of metered use of water.

Also yesterday, Irish Water said its staff would not be paid any bonuses for 2014, which would be paid in 2015, and the entire pay structure at the company wass to be reviewed.

However, Siptu, the country’s largest trade union, said its members in Irish Water would not accept any unilateral changes to their terms and conditions of employment.