INCREASES in water charges, refuse charges and rates on commercial premises are the only option open to local authorities if the Department of the Environment refuses to provide additional funds to meet a hefty benchmarking pay increase for its general workers.

Unions and management are currently negotiating cost saving measures on a deal which will increase the wages of craftworkers and general operatives in local authorities by 18%. The agreement will cost local authorities an additional ?40m over the next couple of years.

The threat to increase charges to householders and businesses is certain to feature in next year's local elections.

The department has already told all the authorities that they must fund the additional cost of benchmarking pay deals from their own resources. It has ignored pleas for additional aid to defray the costs of the pay deal even though the authorities argue that the deal was concluded nationally under the benchmarking pay process. Local authorities are the only public sector organisations that have to pay their staff from their own funds, rather than central exchequer funds as applies for all the other 250,000 public sector workers. The department's refusal to increase funding means that the authorities have to increase charges across the board to balance the books.

Most authorities have made sufficient provision for the benchmarking payments in this year's budgets, albeit at a stretch.

One quarter of the 18% pay increase is due for payment now and will have to be backdated by almost two years. Consequently, authorities have warned the department that they will have to increase water and waste charges on householders next year in order to meet its rising wage bill.