Committee publication · Special Report · 10 July 2026 · HC 551
3rd Special Report - Failures at South East Water: Government Response
From: Environment, Food and Rural Affairs Committee
Inquiry: Reforming the water sector
Summary
The government responds to the Environment, Food and Rural Affairs Committee's May 2026 report on failures at South East Water. The response acknowledges serious and unacceptable performance failings—including supply disruptions affecting 20,000 properties, credit rating downgrades, and regulatory breaches—and details enforcement actions underway through Ofwat and the Drinking Water Inspectorate. The government outlines reform measures including the Water (Special Measures) Act, planned Clean Water Bill, and £104 billion sector investment.
Key findings
- South East Water's credit rating downgraded to Ba1 by Moody's in May 2026, breaching licence Condition P26 and triggering Ofwat enforcement duty.
- Ofwat proposed £22 million penalty for supply resilience failures (2020–2023); DWI deemed Tunbridge Wells November/December 2025 incident foreseeable and preventable, placing company in formal Transformation Programme.
- May 2026 disruptions affected approximately 20,000 properties mainly in Kent due to elevated temperatures and demand; government recognises serious concerns about operational resilience under seasonal pressures.
- Government doubled customer compensation for service failures and introduced new standards including 'boil water' and 'do not drink' notices; Tunbridge Wells incident was first 'boil water' notice issued under new standard.
- Resignations of Chair and Chief Executive recognised as reflecting seriousness of failures; government committing to comprehensive water sector reform including Water (Special Measures) Act and forthcoming Clean Water Bill with single powerful regulator.
Government position
The government accepts the Committee's findings on South East Water's serious and unacceptable performance failings. It acknowledges repeated disruptions, operational weaknesses, and regulatory breaches as unacceptable. The government states it is working closely with Ofwat and the Environment Agency on a coordinated response protecting customers and restoring confidence. It partially accepts accountability by supporting the resignations of leadership and implementing reforms (Water (Special Measures) Act, ringfenced investment, doubled compensation), while framing the solution through existing and forthcoming legislative frameworks rather than addressing specific Committee recommendations.
Tone
FactualTopics
Key actors
Alistair Carmichael, Environment, Food and Rural Affairs Committee, South East Water, Ofwat, Drinking Water Inspectorate, Moody's, Department for Environment, Food and Rural Affairs (Defra), Environment Agency
Notable line
“South East Water's performance is clearly below the standard that customers and Government are entitled to expect.”
Key Quotes
“South East Water's performance is clearly below the standard that customers and Government are entitled to expect. Repeated disruption to supply, weaknesses in operational resilience and the company's ongoing regulatory breaches point to serious and unacceptable failings.”
“The disruption highlights my serious concern about the company's resilience under predictable seasonal pressures.”
“It is right that South East Water's leadership has taken responsibility for the ongoing failures.”
“The failures at SEW have reinforced the Government's determination to deliver the most significant reform of the water sector since privatisation.”
Source · parliament.uk record ↗