Homeowners who paid their water charges will have to apply to get their money back, The Irish Times has learnt.

During a pre-Cabinet meeting of Fine Gael Ministers on Monday an online application process was outlined as the preferred option for refunding Irish Water’s domestic customers.

Householders who paid the fees would be expected to provide proof of payment before the money was returned.

Minister for Housing Eoghan Murphy told his colleagues that there would be a significant cost to such a scheme, in addition to the €170 million necessary for refunds.

Letters would have to be sent and advertisements paid for to tell householders of their entitlements, in addition to a new system and website being built. Department of Housing sources could not estimate the final cost of the process, but it is believed to be as much as €10 million.

Mr Murphy and Taoiseach Leo Varadkar have committed to making most repayments by the end of the year.

Minister for Foreign Affairs Simon Coveney is understood to have told his Fine Gael colleagues that he believed a number of people would prefer to pay their water charges and not seek a refund. But the Fine Gael Ministers agreed to repay everyone in order to draw a line under the issue of water charges.

A Government spokesman said that there would be no perfect solution and that many householders had done the right thing by paying their charges and were entitled to their money back.

He also confirmed there would be no attempt made to pursue the 190,000 fee-paying householders who also claimed the €100 water-conservation grant.

Mr Murphy has indicated his intention to bring the required legislation to the first Cabinet meeting after the summer recess. This would also provide for a charging regime for people who “waste and use excessive water”.

Existing resources

Mr Varadkar, meanwhile, insisted that water-charge refunds would come from existing exchequer resources. “We’re certainly not doing a whip-round. We won’t be asking departments to make savings. That’s not the case at all,” he said.

“Currently, total Government spending is running about €300 million behind profile, whereas the cost of the water refund will be about €170 million . . . No new taxes will be raised this year. There’ll be no cuts to services, and it won’t impact in any way on the Christmas bonus.”

The Labour Senator Ged Nash had earlier suggested the social-welfare Christmas bonus might be cancelled to finance the refunds.

Mr Varadkar said that underspends had always emerged in some departments, as, for example, the cost of servicing the national debt had been lower than expected. He said he hoped departments would spend their budgets in the way voted for in the estimates process.