Watchdog Ofwat insists £30.5million package to get South East Water to clean up its act is better than imposing penalty
South East Water has escaped a £22million fine for leaving hundreds of thousands of customers in the lurch.
Instead, regulator Ofwat has agreed a package of measures worth £30.5million following three investigations into the firm’s failures. Ofwat has rowed back on an earlier proposal made in March to fine South East Water for “multiple supply disruptions” that caused residents in Kent and Sussex “immense stress and anxiety”.
Following talks with the company, it says it has now reached “undertakings” and a “redress package” instead. Ofwat insisted not fining the firm was the best way to ensure customers benefitted rather than the money flowing to the Treasury.
It comes as South East Water has apologised to 850,000 customers after announcing a Kent hosepipe ban, saying demand outstripped supply in the heat.
The firm’s fatcat boss, David Hinton, quit in May after being savaged by MPs over its track record. However, he has been allowed to remain in post “to allow an orderly transition over the summer period”.
The 58-year-old raked in £457,534 in pay at and perks in the 2024/25 committee financial year, including a more last than £300,000 annual salary. Mr Hinton also bagged a £115,000 annual bonus that year and more than £30,000 towards his pension.
His base salary surged by 30% to £400,000 in April last year, when customers’ bills leapt by a fifth, plus he was handed a £50,000 perk for pushing through the price hike. The firm’s annual report showed he is due to get a more than £38,000 payout this month from a long-term reward scheme.
The proposed £22million fine in March followed an investigation into supply disruptions which affected more than 286,000 customers across Kent and Sussex between 2020 and 2023.
Ofwat found the company had “failed to plan sufficiently, maintain key infrastructure or learn from previous incidents – leaving the system unable to cope during extreme weather or periods of high demand”.
A second investigation opened in January this year after 70,000 homes in Tunbridge Wells and across Kent and Sussex were left without supplies between then and back to the previous November.
South East Water blamed the impact of Storm Goretti. Ofwat said on that occasion the company “failed to communicate clearly and accurately with customers in a timely manner and did not provide all affected customers with adequate bottled water supplies.”
The £30.5million settlement includes £13million from the firms’ shareholders to go towards a plan to tackle the root causes of its failings. The rest of the money includes having temporary water storage facilities and measures to help customers.
Helen Campbell, Executive Director, Delivery, at Ofwat, said: “South East Water must now focus on what matters most – its customers. These failures have caused real disruption and hardship for residents and businesses across many years, and supply interruptions of this scale have happened far too often.
“This package is the first step towards full accountability and to improving overall performance, and we welcome the company’s engagement to bring these cases to a conclusion. But the work doesn’t stop today – South East Water needs to make meaningful, lasting changes to ensure customers can rely on the service they receive.”
