MPs accuse South East Water leaders of incompetence over repeated outages | Water industry
MPs accused South East Water management of incompetence over repeated water cuts to tens of thousands of customers and expressed distrust in their ability to reform the company.
MPs from across the political spectrum said SEW chief executive David Hinton: Board of Directors There was a culture of lack of accountability at the company, which provided drinking water to 2.3 million customers in Berkshire, Hampshire, Kent, Surrey and Sussex.
SEW describes its leadership in official communications as having a “family feeling”, but the environment, food and rural affairs committee of MPs said they were better described as an “irresponsible clique”.
The company, which is facing a £22 million fine from the industry’s regulator Ofwat for serious disruptions to water supplies over many years, has comprehensively failed to provide water to the consumers it serves, MPs said.
The damning report comes after the committee launched an investigation following a major water outage in Tunbridge Wells that left tens of thousands of people, including the elderly and vulnerable, without water for two weeks in November and December last year. There was another disruption in supplies in January this year.
Committee chairman Alistair Carmichael said MPs had taken the unusual but necessary step of declaring they did not trust Hinton and the board to highlight the seriousness of the extraordinary predicament.
“This is an extraordinary failure of management and corporate governance,” he said. “In our view, it cannot be ruled out that anyone at the company refuses to be responsible for this failure.”
Liberal Democrat Carmichael added: “The danger of many communities, including schools, GP surgeries and care homes, losing their water supplies for long periods cannot be overstated… someone from this company needs to take charge of the situation, take responsibility for their failures and fix them.”
The report said the company’s shareholders, the Australian Utilities Trust, the NatWest Group Superannuation Fund, Desjardins Group and their respective holding companies had a duty to take action to hold the company to account and shared some of the blame for its performance.
MPs said SEW “lacked appropriate leadership” due to cultural issues that raised serious concerns about whether Hinton and other executives could bring the water firm into compliance with its licence.
A water company found to have repeatedly breached its license may be placed into special administration, a form of temporary nationalisation, by the environment minister and Ofwat.
Hinton, whose basic salary is £400,000 and received a bonus of £115,000 last year, was recalled to the committee in April over concerns he had misled them in an earlier appearance. In his first appearance, Hinton gave himself an eight out of 10 rating for tackling water scarcity.
In his second appearance before MPs, Hinton said he would give up his bonus and apologized to customers.
The new report found the company failed to monitor critical risks, protect assets and invest at its Pembury water treatment works, which led to a two-week outage in Tunbridge Wells last year.
MPs said the company and its shareholders had known for four years that they needed to develop and invest in new infrastructure to be resilient to potential shocks. However, the company either did not attempt to make the necessary investment or failed in its negotiations with Ofwat.
In a report in march Ofwat said this year SEW had one of the worst water cut performance in the industry. Subject to consultations, it imposed a £22 million fine for multiple supply disruptions affecting more than 286,000 people between 2020 and 2023.
SEW attempted to contest the report’s findings and in the meantime sought to keep the report secret by seeking an injunction to halt publication of the report. But a judge threw saying that it was an attempt at precautionary measures. “Far from convincing.”
The board’s attempt to block the publication of the damning report was condemned by MPs, who said it was “at best a lack of transparency, at worst an attempt to actively deceive external stakeholders”.
Environment secretary Emma Reynolds said: “The water disruptions facing businesses and homes in Tunbridge Wells are completely unacceptable.
“I brought the CEO and chairman of South East Water into my office, asked them why we were seeing continued failures in leadership and service to customers, and took the extraordinary step of asking Ofwat to investigate the licensing conditions.
“I demanded a serious rescue plan and rapid action to prevent such an incident from happening again.”
When approached for comment, a SEW spokesperson said: “We are carefully considering the details of the Efra committee report.”
