When South East Water (SEW) is within the information, the headlines don’t usually make for comfy studying.
Whereas the water and sewerage trade and its regulators have little to cheer about, this water-only provider is now dealing with calls to be nationalised – such is the power of feeling over efficiency because it grapples with provide chaos.
It comes as 23,000 properties had been affected by provide points throughout Kent and Sussex, and a major incident was declared within the two counties.
Folks entered a fifth day with out water as Storm Goretti brought about energy cuts and burst pipes on Friday and Saturday final week. It adopted a “water high quality problem” in December, which meant 24,000 folks suffered days with out water in Tunbridge Wells.
A SEW assertion on Wednesday mentioned, “We’re very sorry to all our clients who’ve been affected.
“We all know and perceive how tough going with out water for such an extended time period is and the way tough it makes on a regular basis life.”
Right here, Sky Information will look at what’s gone improper on the Kent and Sussex water provider over a few years and why its management crew is dealing with such stringent criticism amid accusations of continued rewards for failure.
Who owns South East Water?
The corporate, which is chargeable for provides to 2.3 million houses, has been owned by a consortium of primarily overseas funding and pension funds often called HDF Holdings for almost 20 years.
It has lengthy confronted criticism over the funds of dividends to shareholders whereas grappling with excessive money owed, culminating in a contemporary £200m money injection a 12 months in the past to maintain SEW afloat pending inflation-busting invoice hikes agreed by water regulator Ofwat.
The 20% improve within the 2025-30 settlement (which remains to be topic to attraction by the corporate) was to permit for higher funding in uncared for provide infrastructure.
The pension fund of lender NatWest additionally owns a 25% stake in SEW.
When approached by Sky Information, the NatWest Group pension fund mentioned: “We’re extraordinarily involved by the influence these incidents are having on the households, companies and different customers who depend on SEW for water providers.
“NatWest group pension fund will use its affect as a minority shareholder to direct SEW’s board to make sure these points are totally resolved.”
Why is SEW not working?
A water trade supply informed Sky Information that SEW was not match for objective, describing it as “an infinite failure”.
“The corporate just isn’t as resilient because it must be”, they mentioned.
“It is a tiny firm that has been patched collectively. They do not have the interconnectedness to maneuver water round their community like different corporations do. They’d level to needing extra funding in resilience and their attraction is with the CMA now, however I do not assume that is the total image. You’ll be able to see it is a failing firm.”
Newest monetary figures for the corporate’s 2024 to 2025 monetary 12 months present it recorded a £19.8m loss earlier than tax, lower than the £36.7m lack of a 12 months earlier.
Why is SEW’s boss dealing with explicit criticism?
SEW’s chief government, David Hinton, has are available for direct criticism in current months from native and nationwide politicians in addition to Kent residents.
After an look earlier than the Atmosphere, Meals and Rural Affairs (EFRA) Committee of MPs final week, the place Mr Hinton once more urged working from dwelling was partly in charge for water provide points, he and senior management have been recalled to offer proof.
Mr Hinton urged the rise in folks working from dwelling within the commuter space has added to produce strain, as he did in 2023, to clarify a hosepipe ban.
The chair of the EFRA committee introduced the recall as he was “deeply sceptical concerning the firm’s model of occasions up to now, and its board’s monitor document of holding the corporate to account”.
Mr Hinton’s pay rose final 12 months. His annual bonus elevated to £115,231, from £112,560 the 12 months earlier than, whereas his base wage grew to £307,274 from £294,042.
What is the regulator executed?
Maybe we ought to be grateful that SEW doesn’t deal with storm drains, given the huge penalties handed out by Ofwat lately over sewage spills extra broadly.
We’ve heard little since 2023 when Ofwat opened an investigation into SEW over the reliability of provide following a string of outages – the worst lasting 23 days.
It has lengthy confronted criticism over leaks, nonetheless, and paid a value.
The latest penalties got here in 2023/4 when Ofwat introduced an £8m fantastic for a failure to fulfill targets. That got here on prime of an extra £3.2m cost for provide disruption.
SEW has been contacted for remark.
