Senior Government officials delivered a severe rebuke to visiting troika inspectors the morning after the European Commission questioned the new water regime, The Irish Times has learned.

Inspectors from Brussels were summoned at short notice to the Department of Finance to hear a forthright complaint from ranking Irish officials after this newspaper and other media quoted a source close to the commission saying the revised water scheme could jeopardise the Coalition’s fiscal plan.

The meeting took place in Merrion Street shortly after 9am on Friday, November 21st, two days after the Government suspended metered water charges in favour of a lower flat rate.

In the course of tense exchanges, a high-level commission inspector told a senior Department of Public Expenditure figure he was concerned about the “attitude” adopted on the Irish side of the table. Such concerns were immediately and forcefully dismissed.

With the Government under pressure to bed down the new regime and defuse prolonged controversy over water, sources who received reports from both sides of the discussion said the European officials were essentially told to “butt out” of local political debate.

Days after this meeting, Minister for Finance Michael Noonan relayed his concerns in a letter to EU economic affairs commissioner Pierre Moscovici.

Entirely unhelpful

Mr Noonan is said to have made the point that the remarks attributed to the source were “entirely unhelpful” and he reminded the commissioner that the water charge was being introduced to meet bailout conditions. Ireland had met all targets and would continue to do so, he said.

Mr Moscovici is considered likely to reject the Irish complaint, but it is not known whether his reply has been received.

A spokesman for the Department of Finance declined to comment on the episode. A spokeswoman for the commission also declined to comment.

The latest tensions between Dublin and Brussels follow antagonism over the “double Irish” corporate tax scheme, which is being phased out under changes introduced in the October budget.

Several sources said the Government conveyed displeasure to then competition commissioner, Joaquín Almunia, in the days before the budget after newspaper stories emerged about European scrutiny of Google’s Irish tax arrangement.

At issue in the commission’s concern is the question of whether the debts of Irish Water can be carried off the State’s balance sheet. The Government has always insisted that such liabilities will go off balance sheet because the new scheme will be sufficient to pass the relevant “market” test.

Confident on Irish Water

A Government source said the Coalition remained

confident Irish Water would be “financially strong enough” to significantly increase investment to the levels needed to fix the broken water network.

“The European Commission wants higher water charges to reduce consumption. But the Government recognises the need to give people a a period of certainty that the maximum charge they face will be affordable, while also giving households with meters the possibility of lower bills if they use less water,” the source said.

A water protest in Dublin next Wednesday is seen as a big test of the new regime.