Committee publication · Correspondence · 19 May 2026
Correspondence from the Trustees of the Nat West Group Pension Fund regarding failures at South East Water, dated 12 May 2026
From: Environment, Food and Rural Affairs Committee
Inquiry: Reforming the water sector
Summary
The NatWest Group Pension Fund, a 25% shareholder in South East Water, responds to the Environment, Food and Rural Affairs Committee's inquiry into failures at the company. The Fund states it has already concluded that both the chair and CEO are not tenable and supports their recent departures. It emphasises regulatory constraints on shareholder intervention and commits to ongoing engagement with the board while supporting leadership succession and sector-wide regulatory reform.
Key findings
- NatWest Pension Fund acquired its 25% stake in SEW in 2017 and has provided approximately £88 million in additional capital investment.
- The Fund had reached the view by April 2026 that both the chair (Chris Train) and CEO (David Hinton) were not tenable, independently of the Committee's report.
- The Fund acknowledges regulatory restrictions on shareholder governance interference, noting that direct interference could breach 'ultimate controller undertakings' and expose both the company and shareholder to sanctions.
- The Fund states it will continue shareholder engagement with the board on leadership succession and governance improvements, but recognises its role is limited by regulation.
- The Fund notes SEW failed to secure regulatory approval for significant additional investment it would have supported, and calls for broader sector-wide regulatory and legislative reform.
Tone
ProceduralTopics
Key actors
NatWest Group Pension Fund, South East Water, Alistair Carmichael, Chris Train, David Hinton, Lisa Clement, Vantage Infrastructure, Utilities Trust of Australia
Notable line
“… the regulatory regime deliberately separates the governance and management of the company from its shareholders, with potential sanctions to both the company and the shareholders if this is breached.”
Key Quotes
“A key principle built into the regulation of UK utilities is that the board of a water company should operate independently of its shareholders.”
“In our view, the events since December 2025 demonstrate that leadership changes are needed. This extends to both the chair and the CEO of SEW.”
“Earlier in the year we reached the view that the CEO position was not tenable as we were dissatisfied with the leaderships' handling of the situation.”
“No and we therefore support the substantive leadership change that is now underway. Our view is that this leadership reset is needed in order to create the circumstances necessary for SEW to begin the process of restoring confidence and to allow SEW to move …”
“We are pleased the latest regulatory price review goes some way to provide for necessary investment to upgrade SEW's infrastructure, but we note that SEW was unable to secure regulatory approval to make significant additional investment which we would have supported.”
Source · parliament.uk record ↗