8th Report – Failures at South East Water

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

South East Water did not have the right processes in place to identify and mitigate risks at Pembury Works, despite previous warnings from the DWI. That the company had “normalised” critical risks and was “flying blind” in the lead up to the crisis is a fundamental failure for a water company responsible for a critical natural resource. In a perverse sense, Mr Hinton was right in saying that the events were “unforeseeable”; but only because the company had actively chosen to not put in the essential monitoring processes that would have enabled action before the outages began. As a result, the company failed to properly monitor threats such as ineffective coagulant dosing systems. A failure to have the right jar test processes meant that manageable problems escalated unnecessarily, undermining routine coagulant treatments, eventually and unnecessarily turning off the taps for businesses, essential services and tens of thousands of customers. (Conclusion, Paragraph 16) 39

Maintenance issues at Pembury contributed to the Tunbridge Wells incident in 2025, but it is South East Water’s self-identified lack of proactive and “instinctive” maintenance across its network that is most concerning. One of the most fundamental and basic responsibilities of a water company is to plan for and have the staff and resources available to maintain assets. Yet SEW did not see this a priority, even in some of its most vulnerable areas, contributing to a series of major water outages between 2020 and 2023. (Conclusion, Paragraph 20)

As regulators told South East Water repeatedly and jointly for over four years, the company needed to invest in new infrastructure to be properly resilient to potential shocks. In particular, single points of failure, supply shortfalls and regional connectivity should have been improved, but the company failed to take action on these well-known long-standing issues for many years. Spending allowances in previous price reviews may have made trade-off decisions more challenging, but ultimately, these decisions are primarily the responsibility of the company, which should have seen the role that poor infrastructure played in events since at least 2018. Worse still, through successive price reviews, SEW has either not attempted or did not succeed in making the necessary investment case. This also suggests that, as the long-term stewards of the business, shareholders also must share a portion of the responsibility for these failures. (Conclusion, Paragraph 25)

Despite South East Water’s assertions to the contrary, periods of peak demand and extreme weather can and should be broadly predicted and prepared for. Ofwat and the Drinking Water Inspectorate have shown that the company failed to model upcoming peaks and troughs and take the necessary steps in preceding weeks and months to boost resilience and reduce the risk of a crisis. Its leadership’s approach to incident response planning is pitiful; there are signs that incident response plans either do not exist or are of poor quality, receiving little or no stress-testing to improve them. The recent experience of its customers, as well as an overreliance on external support, are testament to this lack of planning. This has had real-world consequences for tens of thousands of customers, many of them vulnerable. (Conclusion, Paragraph 30)

Both the Drinking Water Inspectorate and South East Water acknowledge the weaknesses of the escalation processes around the Pembury incident. This meant that operational staff were not given sufficient support to diagnose problems early and that key stakeholders were informed too late, inhibiting preparations and in breach of regulations. We are concerned that the CEO was too involved at the Pembury Works, a potential distraction from his overall crisis command. Either this is a further problem with escalation processes, or a choice by Mr Hinton to go against his company’s own procedures. In either scenario, SEW appears unable to determine when and where its leadership team can provide maximum value. In the case of 40 Tunbridge Wells, this ultimately impaired the CEO’s ability to communicate to customers and may have played a role in the poor crisis response. (Conclusion, Paragraph 35)

Given the huge number of supply interruptions that South East Water has failed to manage over the years, it is remarkable that the company still struggles with the supply of bottled water during outages, has failed to learn and apply lessons and relies on the goodwill of communities. Problems discussed elsewhere in this report could arguably take significant time and resources to resolve, but knowing where to set up bottled water stations and having enough bottles to go around is a fundamental and basic responsibility. That the company is only now considering more local ways of delivering water bottles speaks to its disregard for the consumers relying on it for a life-sustaining provision. (Conclusion, Paragraph 41)

Similarly to the provision of alternative water supplies, South East Water now has years of experience in communicating during supply interruptions. It is incomprehensible that SEW still lacks a crisis communications strategy or a well-developed communications team given the company’s propensity for water outages. This put communication teams in a difficult position. Basic communications errors, like giving incorrect and inconsistent information about bottled water stations, using the wrong postcodes, poorly chosen language and a lack of empathy with customers, should not need external consultants to resolve. Vague answers to our questions to the company have not outlined what will happen to embed lessons, prevent future disconnections with operations, and ensure that a new communications “playbook” will be kept up to date and stress-tested. This does not give us confidence in the leadership’s ability to learn from its previous mistakes and address the problems we have identified. (Conclusion, Paragraph 46)

For a company with such regular issues with outages, South East Water’s approach to supporting vulnerable customers gives the impression of a business caught completely by surprise. We accept that it is challenging to continuously update the Priority Services Register: people will not always inform you of vulnerabilities, transient or permanent. However, the fact that there were fundamental problems with deliveries for those that were on the PSR is indicative of a problematic approach, one that fails to record and consider the needs of customers. Moreover, vulnerable sites such as care homes were also let down, which should have been easily identifiable, had proper business continuity plans been in place. Again, the specific needs of these sites should not have been a surprise: the company’s history of outages should have given it a wealth of experience in where needs are greatest. (Conclusion, Paragraph 51) 41 A culture of failure

The Tunbridge Wells incident and Ofwat investigations reveal that South East Water’s leadership has repeatedly proved itself incapable of implementing the lessons learnt from previous incidents, even simple ones such as having a communication strategy for when resolution timeframes are unclear. While the company was clearly trying to learn from its previous mistakes, it caused more problems in doing so, indicative of an inability to understand and resolve core problems. This is not through lack of warnings or proposed solutions, but an inability to adapt swiftly to mitigate future risks. Despite claims that they are otherwise a “good company”, this has manifested in a shocking performance, failing to deliver the basic function of a water company: delivering water. No other metrics of success can offset this fundamental shortcoming. (Conclusion, Paragraph 56)

Since at least 2020, South East Water clearly has had, and continues to demonstrate, an inability to establish the root causes of its supply resilience problems. There are likely many facets to this, including a failure to monitor the key asset indicators, and a tendency to blame external factors, as highlighted elsewhere in this report. The company leadership seems to be divorced from the real-world situations, either due to a lack of feedback data and processes, or a willingness to ignore problems. There also appears to be a fundamental inability to properly analyse the data it does have, most recently demonstrated by its first misleading analysis of the Tunbridge Wells outages in November-December 2025. This misunderstanding appears to have happened throughout the organisation, including at the very top. While the company now does accept it has a problem with its problem- solving processes, vague conclusions after the event also suggest that the current leadership have still failed to conduct and accept a proper analysis. (Conclusion, Paragraph 63)

South East Water’s leadership team has demonstrated a clear preference for blaming factors outside of their control for performance issues, and in some cases, they continue to do so, despite clear evidence to the contrary. A lack of data-analysis skills might be partially to blame, but it is also clear that a culture of obfuscating responsibility has also taken hold, seriously inhibiting their ability to analyse problems and learn lessons. The company’s investigations, as well as that of the Drinking Water Inspectorate, have identified potential issues with a lack of challenge or groupthink within the company: that “family feel” may be closer to a “clique” than a benefit. We have serious doubts that the addition of two more executives will tackle this pervasive problem. (Conclusion, Paragraph 68)

South East Water has failed to engage with key stakeholders outside the company to help it learn from its mistakes. It is unwilling to properly listen to its customers, who have repeatedly complained of addressable failures 42 and yet continue to suffer them. The company’s leadership has taken a defensive approach with regulators to the point of trying to obstruct their reports and in so doing mislead credit agencies, demonstrating at best a lack of transparency, and at worst an attempt to actively deceive external stakeholders. This is yet another cultural problem that must be addressed to allow South East Water to account for its own actions. (Conclusion, Paragraph 72) Conclusions and next steps

Continued leadership failure is grounds for leadership change. Time and again, since 2020, South East Water’s leadership has failed in its fundamental task of supplying water to its customers. That is around six years of poor performance, sometimes with multiple incidents within the same year. Most problematic from a leadership perspective are the failures identified in the company’s monitoring and managing of risks and the incident response. These are largely procedural matters, entirely within the company’s control and have hardly improved from incident to incident. There are some signals that action is now being taken, but it is too little, too late. Even as of April 2026, that same leadership continues to cite mitigating factors that should have been known and properly prepared for. This is the same leadership that failed to give an accurate account of the Pembury incident to our Committee in January, an issue that we will continue to deliberate on. (Conclusion, Paragraph 76)

These failures are symptomatic of significant cultural problems that cannot be readily explained by issues with the wider regulatory framework: this includes South East Water’s failure to engage with external stakeholders, inclination for groupthink, inability to analyse problems, incapability to implement basic changes and a propensity to shirk responsibility. This culture, which permeates through all the company’s key decision- making processes, needs to change, and culture starts from the top. As such, we have no confidence that the executive team at South East Water is capable of this challenge, nor any confidence in the team itself. (Conclusion, Paragraph 77)

Repeating the same actions and expecting different results is not a well- regarded tactic for resolving problems. Yet the non-executives of South East Water have time and time again chosen to back a leadership that is clearly not capable of improving outcomes for customers. Their only response to the Tunbridge Wells incident is to author an unhelpful report and appoint more people to the SEW Executive to provide the constructive challenge that they themselves should be providing. On top of this, they were also the decision-maker behind an attempted and unjustifiable injunction which, we believe, is the worst example of the company’s defensive, 43 antagonistic and deceptive attitude towards external stakeholders. The only possible conclusion to draw from this evidence is that the SEW Board, potentially influenced by the “family feel” that they identify alongside the executive, is incapable of holding the executive team to account. As those ultimately represented by the Board, shareholders also must demonstrate a willingness to restore resilience and trust. A new leadership team, more investment and special measures will be necessary to affect meaningful change. (Conclusion, Paragraph 81) 44