The chairman of Manx Utilities came under pressure in the House of Keys over the 6.4 per cent ’inflationary’ hike in the water rate.

Alex Allinson was questioned over the MUA board’s decision to increase prices by the higher RPI measure of inflation rather than CPI.

Ramsey MHK Dr Allinson said he was a ’little bit disappointed’ that people hadn’t focused on the freeze on electricity tariffs or the standing charge in 2017-18 for domestic or commercial users.

He said the board had to consider its long-term financial plan which includes paying off the £75m water bond by 2030 but also the former MEA’s £185m bond that has to be repaid by 2034.

Dr Allinson said the board would rather have gradual increases in prices in line with inflation rather than hiking prices when costs rise as expected over the next three years.

But the water rate rise has clearly irritated Ministers who had pledged to tackle the constant ’drip, drip’ of increased charges and fees.

Policy and Reform Minister Chris Thomas asked: ’Did the MUA board take into account the Budget statement about 2 per cent being the target increase for fees and incoming charges?

’And secondly, did the MUA take into account the assumption it had previously made of a 3 per cent increase in water rates in the MUA financial plan when it decided to increase water rate?’

Dr Allinson told MHKs that Treasury was represented at the board meeting on January 27 when the new tariffs were set.

He said: ’Were we aware about the statement in the Budget limiting charges? It was very, very close to when we had to decide on these tariffs.

’However, we did have a representative of the Treasury at that meeting to try to make us aware of various problems that might occur should we use an inflationary increase according to RPI.

’We looked at a number of different schemes that would either increase, keep static of even decrease various charges across the board.

’The board felt that freezing electricity prices, freezing the standing charge was very important economically. However, we decided to ago along with an RPI increase in water rates to fit in with our long term financial plan.’

He added: ’It was not a very easy decision but it was made by the board. The chairman is here to represent that board’s decision without necessarily making it unilaterally. ’

Dr Allinson said he was saddened to hear accusations of these being stealth taxes levied by Treasury or CoMin on the people of this island.

He insisted: ’These are an increase agreed by the MUA board which to many degrees are independent of CoMin.’