Parliament may question water outage investors

Investors in South East Water, which left tens of thousands of households without water in Kent and Sussex last week, could be brought to parliament to answer questions on their role in the crisis.

The firm is owned by Australian and Canadian investors and the NatWest Group pension fund. Mike Martin, the Lib Dem MP for Tunbridge Wells, said investors should face cross-examination by the environment, food and rural affairs committee.

Schools and businesses closed in Tunbridge Wells and other towns in the south east last week after an outage blamed on a rapid freeze and thaw in water pipes. A few hundred homes still had no access to water or low pressure on Saturday evening.

Last November, thousands of properties in the south east were cut off after a failure at a water treatment works.

“The ultimate institutional owners who make money out of this must answer questions. They have to sack the CEO, and not put any more money in until they change the board,” Martin said.

He claimed the company – including the board – suffered from “groupthink”, which meant it failed to respond adequately to the challenges it faces. South East Water is “out of [its] depth” and the company “disintegrates” when facing an emergency, Martin said.

During last year’s outage the company was accused of a series of operational failures, including:

• Blaming a water outage that affected Tunbridge Wells residents on an “unexpected failure” of a chemical used to remove solid particles from groundwater before it is disinfected. The Drinking Water Inspectorate found that the water treatment plant had been operating suboptimally for several weeks before the company declared a problem.

• Opening a bottled water station in Tonbridge, another town in Kent, seven miles away from Tunbridge Wells, where supplies were affected.

• Reports that care homes and medical facilities did not receive supplies of bottled water.

Ofwat, the water regulator, has launched an investigation into South East Water’s water supply and if it is meeting customer service standards. If the company is found to have breached its licence it could be fined up to 10% of its turnover.

“South East Water really give the impression of a company that has completely lost control of its network,” Keil said.

“There is quite an interesting contrast between South East Water who have taken, you know, the best part of a week to recover from last weekend’s weather, and South West Water who took the broader brunt of Storm Goretti. They did have some interruptions, but they recovered within a few days.”

South East Water said in a statement that it is “committed to delivering the infrastructure investment needed”. The company said this would improve resilience as it faced the challenges of climate change and population growth.NatWest Group pension fund said in a statement that it was extremely concerned by the impact of the disruption and it would “use its influence as a minority shareholder to direct SEW’s board to ensure these issues are fully resolved.”

Photograph by Carl Court/Getty Images