Source · Select Committees · Environment, Food and Rural Affairs Committee
Recommendation 1
1
Accepted
Select committees do not often focus directly on the leadership, behaviour and performance of individual...
Conclusion
Select committees do not often focus directly on the leadership, behaviour and performance of individual private companies. The water sector, however, is a highly regulated monopoly provider of services essential to public health. Residents have no choice over their water provider yet rely on them entirely for their lives and livelihoods and have little power to hold their leaders to account in cases of failure. Throughout the course of our inquiry into ‘Reforming the water sector’, we have already deemed it necessary to scrutinise the most significant water companies in England and Wales to hold them to account. To report specifically on South East Water, however, indicates the gravity of the situation facing the residents and businesses in the communities it serves. Given the extremely negative and dangerous impact that SEW has had on over 300,000 people since 2020, we feel compelled to apply public accountability to the leadership of a company that otherwise appears shielded from the consequences of its incompetence. (Conclusion, Paragraph 9) Failures at South East Water
Government response summary AI-generated
The government acknowledges South East Water's failures and commits to significant reforms of the water sector, including measures from the Water (Special Measures) Act like banning unfair bonuses and ringfencing investment. It also plans to introduce a Clean Water Bill for a single, powerful regulator with greater supervisory capacity and no-notice inspections, and highlights £104 billion in investment for supply infrastructure.
Summary of the government's response below — read the verbatim text to verify.
Government Response
Accepted
HM Government · verbatim extract
Accepted
The failures at SEW have reinforced the Government’s determination to deliver the most significant reform of the water sector since privatisation. The Water (Special Measures) Act introduced the toughest enforcement powers the sector has seen in over a decade. Unfair bonuses are now banned where environmental or customer standards are not met, and criminal sanctions are available where regulators’ investigations are obstructed. As part of this Government’s work, investment funding is now ringfenced so it cannot be diverted to executive pay or dividends. These measures directly address the accountability failures the Committee has identified. The forthcoming Clean Water Bill, announced in the King’s Speech will go further still. Government intends to replace the current fragmented regulatory framework with a single, powerful regulator with greater supervisory capacity, dedicated knowledge of individual companies, and the ability to conduct no-notice inspections. The new supervisory approach will enable the regulator to apply better judgement, identify issues earlier, and intervene proportionately where required, ensuring poor performance can be addressed before it becomes entrenched. Ahead of legislation regulators will move towards a supervisory approach, improving understanding of company-specific challenges and risks. Government is also working to strengthen the resilience of supply infrastructure more broadly. The water sector’s PR24 investment programme represents over £104 billion in investment between 2025 and 2030. The Government is grateful to the Committee for its thorough scrutiny of these important issues and welcomes its continued engagement as we work together to strengthen the water sector. The failures at South East Water were unacceptable, and the Government is committed to delivering the reforms necessary to drive lasting improvements and reduce the risk of similar failures occurring in the future.
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