The Chancellor of the Exchequer, Kenneth Clarke, has said that delays are needed in implementing European legislation on sewage treatment to help people cope with the costs.
Ofwat had asked ministers to take a stance on soaring water bills. The watchdog warned that bills could rise by pounds 100 by the end of the decade because of the cost of meeting European Union requirements on water quality.
Ofwat says the Urban Waste Water Directive is a major part of that price increase, costing an estimated pounds 10bn in capital expenditure in England and Wales plus a further pounds 2.5bn in operating costs. The original estimate was pounds 2bn, which also covered Scotland.
Mr Clarke admitted yesterday that it was the Department of the Environment rather than Brussels that had underestimated the cost of the European sewage legislation.
'It is not the first piece of capital investment I've encountered where the initial estimates turn out to be wrong,' he said, admitting that the United Kingdom had been a willing signatory to the 1991 directive that set standards for sewage by 2005.
However, he suggested that all EU legislation should be 'overseen' by finance ministers meeting in parallel with other specialist ministers in charge of environment, social policy or agriculture.
'This issue is not the immediate responsibility of European finance ministers but there is a more general point. Decisions are often taken by specialist councils that can have unexpected economic consequences for member states. At a time when we are all trying to work together to create the right climate for economic growth and employment it is right that finance ministers should be able to look closer at the implications of directives,' he said.
Mr Clarke said that the waste water legislation was 'highly desirable' in environmental terms, but that the 2005 timetable just could not be met. 'We cannot pass this charge on to consumers,' the Chancellor said.
'The Secretary of State will be looking again at the directive to see if there is any leeway,' he explained, adding, 'it would be a good test of the post-Maastricht Europe to see if there is any scope to amend or alter EU legislation.'
An Ofwat spokesman said: 'We are delighted the Government is acting in this way on behalf of consumers.'
Britain is not alone in underestimating the costs. Germany has reckoned that implementing the directive will cost Bonn the equivalent of an extra pounds 40m.Reuse content