That this House has considered water supply in Kent.
It is a pleasure to see you in the Chair this afternoon, Mr Twigg. I am grateful to colleagues for coming to the debate, but it is disappointing that we are having to have it at all, after the fourth incident—and the third major one—disrupting the supply of water to South East Water customers in six months. Between November and December, approximately 24,000 customers experienced low water pressure or little to no water supply. When supplies were restored, a boil water notice was issued. In January, about 30,000 customers again had to put up with little or no water supply. In April, around 6,000 customers experienced water supply problems, which South East Water said were
“caused by a burst water main.”
At the end of May, as we know, customers had to cope for 11 days with interruptions to their water supply. On that most recent occasion, around 22,000 customers across Kent, including roughly 4,000 in my constituency, were impacted.
Last week, during an urgent question secured by the right hon. Member for Herne Bay and Sandwich (Sir Roger Gale), I spoke about how, like many of my constituents, I have lost all faith in South East Water due to its repeated failures. Access to clean, reliable water is not a luxury; it is a fundamental expectation. When people turn on their taps, they should be able to rely on a consistent supply of water. That is the absolute minimum any water company should guarantee, but all too often South East Water is not meeting that minimum expectation.
The repeated disruptions are not only inconvenient but deeply distressing for residents, who should be able to rely on water. The impact of these repeated failures is evident from the Consumer Council for Water report last week, which showed that trust in South East Water had been “materially weakened”. More than half of those surveyed now store bottled water at home in case of future incidents.
The most recent incident occurred during a short period of hot weather, when the consequences of shortages can be especially acute. It affected households; farmers, whose livelihoods depend on a steady supply of water; and vulnerable individuals in care homes, where continuity of basic services is critical to wellbeing and safety. The wider economic impact must also be recognised. Hotels, restaurants and pubs across parts of the county were forced to close, losing vital income during what should have been a busy period coinciding with the school half-term holidays.
The hon. Gentleman talked about farmers, who need water to give to their cattle. If they cannot do that, it is almost an animal tragedy waiting to happen. When there are water supply problems, many people suffer, but particularly farmers, who may have to look after 150 to 200 cattle, sheep or whatever it may be. Does the hon. Gentleman agree that farmers need to be looked after as a priority?
I absolutely agree. There are many farmers in my constituency, and I have heard about the challenges they face when there are water shortages and they do not know when the water will come back—even the uncertainty is difficult for them.
For businesses, loss of trade is not simply a temporary inconvenience; it can have lasting repercussions. Taken together, South East Water’s failures highlight a pattern of underperformance that is no longer acceptable and that demands urgent attention and accountability. I welcome the confirmation from Ofwat that the recent incident will be part of its ongoing investigation into South East Water, but can my hon. Friend the Minister set out what actions the Government are taking to strengthen compensation arrangements for customers and what is being done to ensure that those affected by serious outages receive proper support and redress?
I want to recognise those who did their best during very difficult circumstances, including staff from local authorities, other agencies and the health and social care sector, as well as South East Water’s employees on the ground. I would also like to pay tribute to the Water Minister and her officials for the way they actively engaged during the latest incident. In the conversations the Government had with South East Water, did the company give any assurances that lessons would be learned? It is important to have a robust evaluation of the measures put in place to assess what was effective and, more importantly, what needs improving.
I apologise for the untimely interruption earlier, Mr Twigg— if I had been in the Chair, I would have been shouting at me. I wanted to open my mobile phone because at half-past 4 this afternoon a lady from Herne Bay texted me to say:
“Sewage is being discharged into Herne Bay from a combined sewage overflow”.
That is a common occurrence, and most Members present who represent coastal seats will have had messages like that over and over again. We can go around this circuit as many times as we like; we went around it last Wednesday, and then again on Monday, so I suspect that the Minister will get fed up listening to a cracked record.
Yet again, I have to highlight the fact that we are building hundreds and hundreds of houses in our coastal towns and hinterland, for which there is no water supply and no adequate sewerage. I learned today from one of my excellent local councillors in Dover, Martin Porter, that Southern Water is resisting a planning application for a village, simply because it cannot provide a facility to deal with the sewage the little estate will generate, any more than South East Water can supply the water that will be needed. Yet, as we have discussed in the last few days, the water companies have a statutory duty to provide water to every house built and—Southern Water is the sewage authority for both the areas I have mentioned—to dispose of the sewage, but they simply cannot do it.
It is a pleasure to serve under your chairship, Mr Twigg. I commend my hon. and caring Friend the Member for Ashford (Sojan Joseph) for securing this important debate, which is very pressing for everyone in Kent. As the right hon. Member for Herne Bay and Sandwich (Sir Roger Gale) has just said, this issue is causing a lot of anxiety and aggravation for residents across the county.
In my constituency, there are two main elements to that: the supply and the outfall—the sewage. In terms of supply, my constituency is in one of the driest parts of the country—drier even than other parts of Kent, which is already the driest part of the country—because we are on the north side of the north downs and in the rain shadow. That is great for growing apples and pears, and for a lot of the nature and wildlife that we have, but it keeps our marshes a little drier than they would be otherwise.
However, we have real challenges with the supply of water, even with the large investment coming into the area, particularly to the Isle of Sheppey, which is exceptionally vulnerable. It is connected to the mainland of Great Britain by only a single water main that goes under the bridge. I had the pleasure of going underneath the Swale to see it, and it is surprisingly narrow. The entire island—nearly 40,000 people—is supplied by that very narrow pipe. Other infrastructure on the island is old, weak and creaking, and the cast iron water mains need replacing. I am grateful that the extra investment will mean that the 11 km east-west water main across the island will be replaced.
It is a pleasure to speak with you in the Chair, Mr Twigg. I thank the hon. Member for Ashford (Sojan Joseph) for securing the debate.
For people in the Weald of Kent, problems with the water supply have become depressingly common. The most recent outages, last month, left thousands of people without water or experiencing severely low pressure during a heatwave. South East Water, which covers the Weald of Kent, said that it had planned for the heatwave, but thousands of people across the Weald were still once again left without running water, unable to wash, cook, or run their businesses or farms. That followed a larger outage earlier this year, which left tens of thousands of people across Kent and Sussex without running water for days. That time, South East Water blamed a freeze and thaw event and the impact of Storm Goretti.
Come rain or shine, there are clearly serious problems at South East Water. On both occasions, but especially in January, communication was poor or non-existent. South East Water was unable to answer even basic questions, such as, “If I send my constituents to this bottled water station, will there be any bottled water for them when they get there?” The company took days to respond to emails to its supposedly instantaneous email address. It simply had no idea what was going on. For far too many people, this intermittent service and poor communication are part and parcel of life in the Weald of Kent.
It is a pleasure to serve under your chairmanship, Mr Twigg.
I thank my hon. Friend the Member for Ashford (Sojan Joseph) for securing this debate, and I am also grateful for all the other debates that we have had across Parliament on this issue. In addition, I thank the Environment, Food and Rural Affairs Committee for its detailed, scrupulous analysis and for undertaking to meet key stakeholders in the community—I have used some of that feedback for this speech.
In my view, South East Water is manifestly a corporate failure, which has been allowed to metastasise over the last 10 years. That has left customers paying the price for something that is ultimately a basic need in every single household. That failure stems from four key factors. South East Water failed to effectively monitor its management of the only product that it distributes; it failed to maintain its assets, from pipes to supply chains and ultimately the storage areas and the places where water was secured from; it failed to invest in its infrastructure; and it failed to respond to and communicate with not only MPs and council leaders but with other key stakeholders in the region, including the Kent Resilience Forum, leaving people exposed when incidents occurred.
Like others, I celebrate the resignations of key senior managers, but my focus now is on how we drive the company forward so that there is not a repeat of these incidents, which have gone on since before this Government—other incidents occurred from 2020 to 2023. More broadly, it must be said that incidents occur in other parts of the country, albeit on a smaller scale, so this represents a structural failure within the sector. I welcome the Cunliffe review and some of the reforms that we are making to water regulation, so that we can take some of these issues by the horns and deal with them. Fundamentally, though, my constituents want redress.
I assure you that will not be a problem, Mr Twigg, despite my known verbosity. Sadly, the Minister has heard many of my points before. However, I am grateful that she is here, as whatever any of us have said about South East Water, the one thing that unites us is knowing that she is doing her absolute damnedest. She, through her Department, has been absolutely brilliant. Wherever we sit, it is good to see her here. I congratulate the hon. Member for Ashford (Sojan Joseph) on securing this debate. Funnily enough, I applied for a debate on this topic—he won on this one—but I will still not speak for the whole eight minutes.
This is not the first time we have been here, nor the first time we have had a water outage in Kent, as we have heard from other hon. Members. By my records, this is the fifth major South East Water outage to hit the community I am lucky enough to represent since the start of last year. We heard that there were water shortages this winter because it was too cold, and we heard that there were water shortages this summer because it has been too hot. Frankly, South East Water is the Goldilocks company: it will deliver water only when everything is just right.
The common denominator is clearly not the temperature, so what is it? Obviously, the answer is South East Water. Edenbridge and the surrounding areas, which are part of the community I represent, are served by SES Water, and the situation is completely different. Despite remarkably similar—in fact, almost identical—weather to that which can be found a few metres over the border in South East Water’s area, we have not had a single outage—that is remarkable, isn’t it?
The Opposition spokespeople will probably have around six and a half minutes. That will give time for the Minister to wind up and, of course, for the mover of the motion to reply.
It is a pleasure to serve under your chairship, Mr Twigg, and an honour to follow so many fellow Kent MPs and constituency neighbours.
In December last year, 24,000 properties in Tunbridge Wells were completely without water for a week. The following week, they had a boil notice, so they were without drinking water for two weeks. The stories that my constituents shared are harrowing. Someone who was incontinent with colon cancer was left to clean with wet wipes. Another lady who had a miscarriage was unable to clean herself, compounding the trauma. People fainted outside kidney dialysis centres and had to have CPR. Schools shut, GP surgeries received no bottled water deliveries and, as we have all spoken about, our constituents who are supposedly on the priority register did not receive any supplies. My office became a kind of crisis cell where people were able to feed requests to us to pass on to South East Water.
It would be funny if it was not so serious, but when Dave Hinton was brought in front of the Environment, Food and Rural Affairs Committee in January, as he was speaking the water went off again in Tunbridge Wells for a further week. Local businesses in Tunbridge Wells lost millions over both of those outages, and the sum offered by South East Water was paltry. Working with the business improvement district and local businesses, we presented evidence to South East Water and secured a commitment that it would at least look at the size of the compensation it offered. I hope soon to bring the good news to colleagues that South East Water will increase the compensation, but local businesses lost the critical period before Christmas, which is when hospitality businesses make all of their money for the rest of the year.
According to the company, it used tankers to supply more than 2 million litres of water to its network. More than a week after taps started running dry, I was still being contacted by constituents experiencing supply issues. The company needs to explain why it took so long to restore supply during this and other recent disruptions.
South East Water reported distributing more than 1 million litres of bottled water to customers. However, one constituent on the priority services register did not receive water at her property. After my office intervened on her behalf, we were informed that water would be delivered later that day, by which time the constituent had confirmed that her supply had already been restored. The issue of people on the priority services register being left waiting for water was raised in the House during previous outages, but it continues to arise. In any evaluation that takes place, consideration needs to be given to the location of water distribution stations. Those living in rural areas, elderly residents or those without access to a car cannot travel far to collect bottled water. Provision must reflect need.
Communication is another persistent failure. Constituents received little or no information, and updates were often inconsistent. I know that is something that the Water Minister has raised with the company, but it is simply not good enough for constituents to be left wondering what is happening to their water supply, or when it will be restored.
South East Water’s communication with Members of Parliament also needs to improve. During the recent meningitis outbreak, alongside daily updates from the UK Health Security Agency, MPs were offered regular virtual meetings to answer questions. Although South East Water sent out daily email updates, the information I received from constituents often contradicted what the company was saying. It took direct contact from my office to request a virtual briefing before one was arranged.
Of course, the most important lesson to be learned is how to prevent future water supply disruption in the first place. Each time an incident occurs, a different reason is given, whether that is a plant failure, severe weather, a burst water main or increased demand during hot weather. Those explanations do not change the underlying reality: for years the company has prioritised shareholders’ interests over those of its customers, and has failed to make the necessary investment in its infrastructure.
After years of under-investment, South East Water’s ageing and leaking infrastructure is struggling to cope. That cannot be allowed to continue. After all, if my constituents have poor service from their telephone provider, they can change their network, but because water companies have a monopoly, South East Water’s customers have no choice but to put up with this failing company.
This lack of resilience in our water infrastructure is particularly concerning, given the need for more housing in my constituency and across the county. During the Conservative Government’s last year in power, planning applications were at their lowest point for a decade. As we look to fix this problem, it is important that housebuilding takes place with natural resources such as water in mind. That includes ensuring that water companies and housing developers make the necessary investment in infrastructure.
What action can the Government take to give councils, such as Ashford and Folkestone and Hythe in my constituency, and other planning authorities confidence that all water companies make that investment, to ensure that current needs are met and that future growth, including the demand for affordable housing, can be supported? Building on the proposals set out in the water White Paper, will the Minister update the House on what action the Government are taking to deliver a water system that the people of Kent can depend on?
Climate change makes this challenge more urgent. Last week, the Environmental Audit Committee took evidence on the impact of extreme heat, and we heard that we are likely to see more frequent heatwaves and periods of extreme temperatures. Kent and the south-east of England will be particularly exposed, which will have implications for water supply. Hotter weather increases demand, while dry summers reduce availability. As the Environment Agency has pointed out, Kent is already marked by exceptionally low rainfall.
While I welcome the proposed Broad Oak reservoir, South East Water is not expected to submit a planning application until 2028 at the earliest. That will take time to deliver, and even if it is in place, further action will still be required to safeguard supply. In last week’s urgent question, the Minister mentioned that the Government are looking at desalination plants as part of the longer-term answer to water supply challenges. Those could provide a reliable source of clean drinking water that is independent of rainfall, particularly during prolonged dry periods. I would welcome further details on the role the Government see for desalination within a balanced, long-term strategy for Kent’s water supply.
I would like to ask the Minister one final question. This Government have taken strong action by nationalising the steel industry to protect it for future generations. They have also addressed the failure of rail privatisation by bringing rail companies back into public ownership. Given the steps they have already taken on water, which include passing the Water (Special Measures) Act 2025 and giving the Environment Agency more powers to monitor water companies, what consideration have the Government given to taking failing water companies into public ownership?
Yet again, I make this point: will the Minister please take on board the need to ensure that the water companies are statutory consultees for all planning applications, so that we get a clear steer as to whether water supplies and sewage facilities are available, before yet more houses are built?
The fundamental problem, though, is that we have not been building reservoirs across most of the country, to ensure that we can store water in the wetter months of the year. Sittingbourne is an industrial town with huge water users: we have the largest paper mill in the entirety of the United Kingdom—the second biggest in Europe—which uses massive amounts of water, as do other key industries in my constituency’s towns. They are competing with residents—my constituents—for drinking water. Ironically, the water level in Sittingbourne is very high. Since we lost the other water mill, the River Bourne, which runs underneath the town, and the river at Periwinkle are both running high. We have water in the area that is coming off the north downs, but we cannot necessarily access it for industrial use. There is a bit of abstraction, but not enough. We cannot access water for industries that could really benefit the area, such as hydrogen plants and other things that might come online.
There are options for desalination. We are coastal and have lots of marsh areas, so I would appreciate hearing what the options for Kent are from the Minister. Other parts of the world that are even drier manage better than we do, so there is a fundamental question about how resilient we are in Kent. I would also like to hear from the Minister whether we have a clear plan for securing that sort of resilience across the supply by the end of the decade. What does that look like? My local council, Swale borough council, is extremely concerned by this. It has written to Southern Water and South East Water about the supply problems we have been facing and it wants to understand what the plans are for the future.
As my hon. and caring Friend the Member for Ashford said, we want to understand why the communication has been so poor. It is poor partly because we have a hodgepodge of different organisations—multiple water companies, a drainage board and, to some extent, the Environment Agency as well, which is involved in land drainage. Who people need to go to is often confusing, and when crises are happening, it is hard to get through to the right people; it is not joined up well enough with local government. Recently, as the crisis was happening in places such as Whitstable and Herne Bay, we got a lot of emergency supply come into the area, particularly the Isle of Sheppey. Bottled water stations were set up—they thankfully did not need to be used—and water tankers were moved on, but even while that was happening, it was still hard for local councillors and me to find out exactly what was happening and where. I got a lot of agitated calls from residents and councillors saying, “Do you know what’s happening? How likely are we to lose water supply?” That needs to be tightened up.
In terms of the drainage off the land, the sewage that is going into our waterways is a real concern, as the right hon. Member for Herne Bay and Sandwich said. I am grateful that Sheerness beach recently got its blue flag status renewed—please come to Sheerness for your summer holidays. Lots of local residents have been looking at the water. In Milton Creek in Sittingbourne, Raybel Charters, a group that restored the barge there and are in the water a lot, found that it is dirtier than the River Seine. Open water swimmers have been doing inspections at Queenborough and found bacteria there. National treasure and local legend Danny Dyer, who has been filming on the Isle of Sheppey, has also been investigating, and has found shocking amounts of E. coli and coliforms in the water—he does not want to damage the tourist reputation, given his caravan park.
This is a real risk, and I want to understand what we can do about it. In particular, what are we going to do about securing future supply, especially through reservoirs and desalination plants? What is the plan, Minister?
Earlier this year, I ran a water survey to ask people about their historical experiences with South East Water. Nearly 3,000 households responded, and it was immediately clear that the catastrophic handling of January’s outage was not a lapse in form. The company has been providing a terrible service for years, and people are absolutely right to be fed up with it. One disabled resident reported that, despite being on South East Water’s priority list for receiving bottled water during times of crisis, they received no water at all for the duration of the outage. Farmers, who simply cannot afford to have water shut off for days on end, reported that farms and livestock did not even seem to be a consideration. One local farmer reported that, despite many hours on the phone, South East Water were
“totally unhelpful and rude, suggesting [that] I go and pick up a pack of water”.
To put that into context, this farmer pays for 250 litres of water a day. The company told him to go and pick up a pack of water.
The sheer volume of the individual stories was horrific—one woman who had just given birth to children had to take her toddler in the back of the car to the bottled water stations, because she was on the vulnerable list, but deliveries had not been made. Of those who responded to the survey, four in every five said they had been left without running water over the past decade, and four in 10 said that they had been without running water four or more times over that same period. That is absurd in 21st-century Britain.
Those self-reported experiences have been mirrored in recent months by a number of official inquiries into South East Water’s performance, both historically and in relation to the January outages. Ofwat has recently proposed a £22 million fine following supply failures between 2020 and 2023, noting that South East Water “has not taken ownership” of the underlying issues that caused the outages. Given the recent outages, it is clear that it still has not learned a thing.
The report produced by the Environment, Food and Rural Affairs Committee was perhaps the most damning. It described the company as “devoid of proper leadership” and as “an unaccountable clique.” I thank the members of the Committee for their work in scrutinising South East Water’s leadership, particularly my hon. Friends the Members for South Northamptonshire (Sarah Bool) and for Bridlington and The Wolds (Charlie Dewhirst).
In the light of those reports, both the chairman of South East Water, Chris Train, and the CEO, David Hinton, have resigned. That was a long time coming. Given their handling of the outages in January and the way they responded to the subsequent investigations, it was clear that change at South East Water was impossible under their leadership. They had shown no understanding of why they had failed, and no appreciation whatsoever of the harm they had caused to the people who rely on their service.
Although the resignations are very much welcome, the problems at South East Water did not start with Mr Hinton’s appointment as chief executive and will not automatically end with his resignation. As the results of the survey demonstrate, the issues at South East Water are endemic. I hope the company will use the change of leadership as an opportunity for true transformation and to review how it operates, plans and communicates with the public.
I want to use this opportunity to urge the regulator and the Minister, who I know is very focused on this issue, to do everything they can to encourage the company to go through a proper period of transformation. In this place and elsewhere, we will continue to hold it to account. However, it is important that South East Water is not just punished retrospectively, or after the fact, for its failures. Instead, we must ensure that it is taking the right steps to stop this problem becoming a permanent feature of life in the Weald of Kent.
As my hon. Friend the Member for Ashford mentioned, we know from the statistics that 24,000 customers were impacted in December and that 22,000 were impacted in May. Although we did not have water shortages in my constituency, several key villages—Wouldham, Burham, Eccles and Larkfield—and the town of Snodland were placed in the “at risk” category. Although their water supply was not restricted, in effect they given a warning that it would be and had to prepare for that, and they are next to a key water supply station.
I was inundated by messages from concerned people over the Christmas period—“When is this going to happen?”, “What is going to occur?”—so I would say that the company first needs to fundamentally improve its communications, which I think have been lamentable. Nor do I think that it was particularly effective at communicating with Ministers on how it manages crisis situations, and the way it communicated with local council leaders, local community leaders, MPs and others was absolutely atrocious.
The senior management of the company has now changed, but what processes have been put in place to ensure an absolutely clear line of sight and experience in communication? Indeed, one of the outcomes from 2023 was that South East Water was supposed to improve communication, but it has clearly learned absolutely no lessons.
My second point is about the company’s failure to maintain its assets. I know that colleagues here today will talk about Pembury works, Bewl Water and parts of the supply chain, but water companies are supposed to present to Parliament five-year capital management plans and get support from their shareholders for where that will go in future, so there is a real question about whether shareholders were holding the company responsible. Also, why did the company’s own internal processes not even record some of these events?
It was quite telling that when David Hinton appeared before the Environment, Food and Rural Affairs Committee, he said, “Well, we couldn’t have foreseen some of these events.” Possibly not, but that was because the company was not monitoring the very things that it needed to monitor before those outcomes occurred. What is the company doing now, and what are the Government doing to press it to act on this?
Investment is also critical. With all the infrastructure expansion we are expecting in Kent—not only new homes but new businesses and industrial and commercial enterprises—there is clearly now demand for future water supply. Given the company’s questionable financial status in terms of worth, where are we heading on its financial sustainability? What are the Government doing to prepare for any financial outcome around financial market confidence in the organisation? Although this is not a Thames Water situation, in my view we are very close to something similar occurring.
Lastly, in my view—this was also the conclusion of the Committee—the company should be held to account according to the standards of public accountability. When water companies fail, how specifically do we intervene—as any businesses or consultancy coming into a business would—to direct some of that change? I worry that, without leadership, the company will drift and these incidents will repeat every six months or every year for the next three years. We need to know that there is light at the end of the tunnel, and my residents need to know that when they pay their water bill at the end of the month, they will get the service that they expect.
Although much of the focus over the winter was understandably on Tunbridge Wells, and this time it has been on Whitstable and the areas around Ashford, in reality an outage could happen anywhere. Each time we have had a water outage, a different community has been affected. Across the five outages I have experienced, there were issues in north Tonbridge, south Tonbridge, Penshurst, Plaxtol, Mereworth, Offham, Platt, West Peckham, Wrotham, Addington and Trosley. Each time, it has seemed to catch South East Water by surprise, and its response has always taken too long.
Last week, my right hon. Friend the Member for Herne Bay and Sandwich (Sir Roger Gale) secured an urgent question in the Chamber on this topic, during which I said that South East Water is the worst company I have come across in my 11 years as an MP. I am delighted to say that many people have been in touch on social media to confirm their own impressions of the company, so I can represent that as the view of the whole constituency.
Here is why: South East Water simply does not know where the problems are coming from. It is constantly astonished that it is expected to deliver water—it is almost as though it thought its job was merely to rake in the bills. Now, why has this happened, and how will it recover? It causes so many issues that it is impossible to trust any information that it gives during an outage. Usually, we hear directly from residents first.
Let me explain what happened just a few weeks ago in my own community. At 9 o’clock on 28 May, residents at the top of Mereworth lost water. There was no communication at all from South East Water, and nothing on its website. Very late at night, water bottles arrived and were apparently made available only to those on the priority services register. Actually, many of those on the register did not get them. It was only because of an extremely assiduous local councillor, Sarah Hudson, that any of them were picked up and delivered to local residents. It is fantastic that we have such a great local councillor, but we cannot rely on local councillors every night and every time South East Water fails.
It took until Saturday evening for water supplies to be delivered to Mereworth, 36 hours after the water was lost. Again, it was local councillors, this time Matt Boughton and Sarah Hudson, who facilitated and unloaded the delivery in a pub car park for residents to use. Even worse, come Sunday it was established that Mereworth did not have enough water. It just could not be pumped to the properties. Why? Because the booster had failed twice at Bough Beech reservoir. Why did it fail? The view of residents is that it is in the wrong place.
I have offered South East Water the chance to take me round to see why that did not work, and to explain it with its engineers. But guess what? It said no. Worse than that, exactly the same issue happened in February, and many of the same properties were without water for the same reason. The alternative provision of water was just as slow. Nothing had changed. How do we stop that happening again? There are things that this company needs to do urgently. Some of it has started, including getting rid of the chairman and the chief executive, but it also needs to improve the list of potential bottled water stations.
There is still much more to do. South East Water’s business continuity plan is a joke. Its staff are not empowered to develop local knowledge of each town and village and how to establish the best responses. Given the sheer number of communities affected, one would hope it had started yesterday, but it has never started at all.
South East Water also needs to be bolder and braver. It needs to be forthright about the fragility of our water system. It needs to be clear about its inability to serve our community. I am pleased that has started, and that it has objected to the Government’s housing target for Tonbridge and Malling’s local plan. That is the right thing to do because, despite many of us wanting more homes in our area, if the water supply to current households cannot be guaranteed, how on earth can we supply 20,000 more households across Tonbridge and Malling by 2042?
I had to debate this in this very room in March, and we debated it in the main Chamber only a few years ago. In the debate with Ministers from the Ministry of Housing, Communities and Local Government, it was very clear that the planning needed to happen. Either the supply of water has to increase dramatically or the housing targets have to be reduced. I know the council is directly engaged with the water delivery taskforce, but I understand that the promised position statement has not materialised—certainly not to the standard that Tonbridge and Malling borough council needs. That will leave the council with no choice. It will have to stand against the Government’s housing targets.
The Government seem to have no answers for the simple issue that their housing targets for Kent are way in excess of what South East Water can provide. I once again thank the Minister for her hard work. It is very gratefully received, but there are many challenges ahead.
As has been mentioned, the chair and the CEO have gone. I am glad that we all united around the calls, originating during the December outage, for the CEO to step down—no change could happen at South East Water without the CEO, in particular, going. I have met the new chair, and I am impressed. There are some small seeds and shoots that we can look at, because although the chair and the CEO leaving is necessary, it is not sufficient.
In Tunbridge Wells, we need to look at investment going into Pembury water treatment works specifically, as well as at the interconnections between all of our constituencies. South East Water was cobbled together from 20 other companies over 50 years, and the interconnections have not been built between those separate water networks.
There is another point about shareholders and accountability. South East Water is owned by three major shareholders: the NatWest Group pension fund, Desjardins and Utilities Trust of Australia. One way they make a return on their capital is by charging extortionate interest rates on loans to the company—in the order of 10%. Putting reputational risk aside, it is effectively a risk-free investment because, in reality, the Government back the water network.
South East Water’s debt interest runs at £3,000 an hour, so while my constituents did not have water in December, South East Water’s shareholders made £1.8 million in interest from the company. The result is that we have under-invested infrastructure that fails and causes outages, leading to the terrible problems we have been speaking about.
I echo what everyone has said about the Minister being extremely forward-leaning and helpful in these crises. She suffered a personal tragedy during one of the outages in Tunbridge Wells, and before she went off on compassionate leave, she reached out to my office to make sure I had everything I needed from the Department. That speaks to her approach to the job, as well as her professionalism.
The Water (Special Measures) Act 2025 fixes some of the regulation issues. The Liberal Democrats had been calling for a long time for the abolition of Ofwat and the creation of a regulator that brings together all these myriad regulators and strengthens their power, so we are very glad. However, I gently say to the Minister that there is an issue around the debt that the water companies hold.
The sector is worth about £100 billion in asset value, and it borrowed £70 billion against that. A sector that has a 70% debt-to-equity ratio is not a sector that is able to deliver proper investment, and I have spoken about the high interest rates. We are in this mess because of financial engineering by the likes of Macquarie and other investors. Without looking at that financialisation and solving those problems, particularly around debt, it will be difficult to drive the investment required in companies such as South East Water.
I want to touch very briefly on Ofwat, which recently fined South East Water £22 million. I think I have about a minute left.