MPs have accused the leadership of South East Water of incompetence over repeated water outages affecting tens of thousands of customers, in a damning report that expressed no confidence in their ability to reform the company. The report from the Environment, Food and Rural Affairs Committee described the board as 'an unaccountable clique' and criticised a culture of unaccountability.
Following the report's publication, South East Water announced the resignation of its independent non-executive chair, Chris Train, stating that new leadership was needed to oversee a period of transformative change. However, MPs said further leadership changes were required, particularly targeting chief executive David Hinton, who earns a base salary of £400,000 and received a £115,000 bonus last year.
The company faces a £22m fine from regulator Ofwat over serious supply disruptions. The committee's investigation was triggered by 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.
Committee chair Alistair Carmichael said the unusual step of declaring no confidence in Hinton and the board was necessary to highlight the gravity of the situation. 'This is an exceptional failure of management and of corporate governance,' he said, adding that the refusal of anyone in the company to be accountable could not be overlooked.
The report found that South East Water failed to monitor critical risks at its Pembury water treatment works, where failures caused the two-week outage, and failed to maintain assets or invest adequately. MPs noted that the company and its shareholders had known for four years that upgrades were needed but had not made the necessary investment case with Ofwat.
Shareholders, including Utilities Trust of Australia, NatWest Group Pension Fund, and Desjardins Group, were also criticised for failing to hold the company to account. A water company repeatedly breaching its licence can be placed into special administration, a form of temporary nationalisation, by the environment secretary and Ofwat.
