HOUSEHOLDERS could end up paying bigger bills if a scheme to cut traffic congestion is adopted nationally, utility companies warned yesterday.

Middlesbrough Council - along with Camden Council, in north London - has begun charging utility companies hundreds of pounds a day for digging up roads as part of a Government scheme.

The "lane rental" initiative is intended to cut traffic congestion and improve public transport by ensuring utility companies speed up roadworks.

But yesterday, the National Joint Utilities Group, which represents utility companies on street works matters, claimed the scheme was unfair.

Chairman Bill Linskey said: "This is a tax on essential services. Since legislation exists to penalise unnecessary street works delay by utilities, and the 50 per cent of all works that highway authorities conduct are not subject to lane rental, it will not help reduce disruption. It could restrict the development of modern infrastructure."

A Northumbrian Water spokesman said the scheme could cause bills to rise.

"There are concerns that a scheme of this nature could impact on customers' bills in the long-term," he said. "When we have got emergency works, they are essential. As a business, we already try to operate as efficiently as possible."

As of yesterday, utilities are charged £300 a day for work on bus routes and £50 on other routes in Middlesbrough. If companies have to return to a site to re-do work, they will be charged £500 a day.

Middlesbrough Council's highway services manager Ian Busby said: "We hope the scheme will make a significant contribution to improving the operation of public transport in Middlesbrough."