MPs have accused the leadership of South East Water of incompetence over repeated water outages affecting tens of thousands of customers, and expressed no confidence in their ability to reform the company. The parliamentary committee took the unusual step of declaring no confidence in chief executive David Hinton and the board, citing a culture of unaccountability.
Damning Report After Major Outage
The environment, food and rural affairs committee said South East Water, which supplies 2.3 million customers in Berkshire, Hampshire, Kent, Surrey and Sussex, operates as an "unaccountable clique" despite describing its leadership as having a "family feel". The company faces a £22m fine from Ofwat over serious supply disruptions. The report follows a major outage in November and December last year that left tens of thousands in Tunbridge Wells without water for two weeks, including elderly and vulnerable people in care homes. A further disruption occurred in January this year.
Exceptional Failure of Management
Alistair Carmichael, committee chair, said MPs took the necessary step of declaring no confidence to highlight the gravity of the situation. "This is an exceptional failure of management and of corporate governance," he said. "The refusal of anyone in the company to be accountable for this failure cannot be overlooked." He added that the dangers of losing water supply for extended periods, including schools, GP surgeries and care homes, cannot be overstated.
The report stated that shareholders—Utilities Trust of Australia, NatWest Group Pension Fund, Desjardins Group and associated holding companies—had a duty to hold the company accountable and shared blame for its performance. South East Water was described as "devoid of proper leadership," with cultural problems raising serious concerns about whether Hinton and other executives could bring the company back into compliance with its licence.
CEO Bonus and Misleading Claims
Hinton, on a base salary of £400,000 and a £115,000 bonus last year, was recalled to the committee in April over concerns he misled MPs. At his first appearance, he gave himself a score of eight out of 10 for handling water shortages. During his second session, he said he would forgo his bonus and apologised to customers. The report found the company failed to monitor critical risks at Pembury water treatment works, where failures led to the two-week outage, and failed to maintain assets and invest.
Failure to Invest Despite Known Risks
MPs said the company and shareholders knew for four years they needed to upgrade infrastructure to be resilient to shocks, but failed to make the necessary investment case in negotiations with Ofwat. In March, Ofwat said South East Water had one of the worst water supply interruption performances in the industry and issued a £22m fine for multiple disruptions between 2020 and 2023 affecting over 286,000 people.
Attempt to Block Report
South East Water sought to challenge the findings and tried to keep the report secret by seeking an injunction, but a judge threw out the attempt. MPs condemned the board's attempt to block publication as "at best a lack of transparency, and at worst an attempt to actively deceive external shareholders."
Environment secretary Emma Reynolds said the disruptions were "completely unacceptable" and that she had hauled in the CEO and chair to demand a serious recovery plan. A South East Water spokesperson said the company is carefully considering the report's details.
