When South East Water (SEW) is in the news, the headlines don’t usually make for comfortable reading.
Despite the challenges faced by the water and sewerage industry and its regulators, the sole water supplier, currently facing nationalisation demands, is demonstrating resilience in the face of supply chaos.
It comes like this: 23,000 properties affected by supply issues in Kent and Sussex, and a major incident declared in two counties.
People entered the fifth day without water after storm Goreti caused power outages and burst pipes on Friday and Saturday last week. This was followed in December by a “water quality issue” which meant 24,000 people in Tunbridge Wells went several days without water.
“We are deeply sorry to all of our customers who have been affected,” SEW said in a statement on Wednesday.
“We know and understand how difficult it is to live without water for such a long time and how difficult it makes everyday life.”
Here, Sky News examines what has gone wrong at the Kent and Sussex water supplier over many years and why its leadership team is facing such harsh criticism amid allegations of continued reward for failure.
Who owns South East Water?
The company, which is responsible for supplying 2.3 million homes, has been owned for almost 20 years by a consortium of mainly foreign investment and pension funds known as HDF Holdings.
It has long faced criticism over paying dividends to shareholders while struggling with high debts, culminating in a fresh £200m cash injection a year ago to keep SEW running, pending inflation-fighting bill increases agreed by water regulator Ofwat.
The 20% increase in the 2025-30 settlement (which is still subject to appeal by the company) was to allow greater investment in neglected supply infrastructure.
Lender NatWest’s pension fund also has a 25% stake in SEW.
No water in 25,000 houses
Contacted by Sky News, the NatWest Group Pension Fund said, “We are extremely concerned about the impact these incidents are having on households, businesses and other users who rely on SEW for water services.
“NatWest Group Pension Fund will use its influence as a minority shareholder to direct SEW’s board to ensure that these issues are fully addressed.”
Why is SEW not working?
A water industry source told Sky News that SEW was not fit for purpose, describing it as “a huge failure”.
“The company is not as flexible as it should be,” he said.
“This is a small company that has been cobbled together. They don’t have the interconnectivity to move water around their networks like other companies. They will point to the need for greater investment in resilience and their appeal is now to the CMA, but I don’t think that’s the whole picture. You can see this is a failed company.”
The company’s latest financial data for the 2024 to 2025 financial year shows it recorded a loss before tax of £19.8m, down from a loss of £36.7m a year earlier.
Why is SEW’s boss facing particular criticism?
SEW chief executive David Hinton has faced direct criticism from local and national politicians as well as Kent residents in recent months.
Following last week’s appearance before MPs’ Environment, Food and Rural Affairs (EFRA) committee, where Mr Hinton again suggested that working from home was partly to blame for water supply issues, he and senior leadership have been recalled to give evidence.
Mr Hinton suggested to explain the hosepipe ban that an increase in the number of people working from home in the commuter sector has led to increased supply pressure, as he did in 2023.
The chair of the EFRA committee announced the recall because he was “deeply sceptical about the company’s version of events so far and its board’s track record of holding it accountable.”
Mr Hinton’s salary increased last year. His annual bonus rose to £115,231 from £112,560 a year earlier, while his basic salary rose to £307,274 from £294,042.
What did the regulator do?
Perhaps we should be grateful that SEW doesn’t handle storm drains, as sewage spills have been hit with huge fines more widely by Ofwat in recent years.
We have heard little since 2023, when Ofwat launched an investigation into SEW over the reliability of supply after 23 consecutive days of disruptions.
However, it has long faced criticism over leaks and has had to pay a price for it.
The most recent penalty came in 2023/4 when Ofwat announced an £8m fine for failure to meet targets. This came in addition to additional charges of £3.2 million for supply disruption.
SEW has been contacted for comment.
