Committee publication · Correspondence · 2 September 2025
Correspondence from Southern Water regarding legal fees, dated 1 August 2025
From: Environment, Food and Rural Affairs Committee
Inquiry: Reforming the water sector
Summary
Southern Water's CEO responds to the Environment, Food and Rural Affairs Committee's inquiry on water sector reform, providing details on legal fees, regulatory actions, and internal capacity. The company spent £2.6m on external legal fees over five years across seven regulatory actions, while facing 56 drinking water notices and 7 environment agency enforcement notices. Southern Water maintains it cooperates fully with regulators and has invested £1.6bn since 2021 under new management.
Key findings
- Southern Water spent £2.6m on external legal fees relating to seven separate regulatory actions over the last five years, including the £90m fine case of 2021
- The Drinking Water Inspectorate issued 56 legal notices, of which 7 are subject to Final Enforcement Orders; the Environment Agency issued 7 enforcement notices
- Ofwat has taken no enforcement action against Southern Water and has not initiated investigations under Section 203 of the Water Industry Act 1991 in the last five years
- Southern Water's legal team has only two full-time equivalent employees focused primarily on regulatory enforcement matters
- No dividends have been paid to external shareholders since 2017, with none expected until 2030 at the earliest; majority shareholder has invested £1.6bn in equity since 2021
Tone
ProceduralTopics
Key actors
Lawrence Gosden (CEO, Southern Water), Alistair Carmichael MP (Chair, EFRA Committee), Southern Water Services Ltd, Ofwat, Environment Agency, Drinking Water Inspectorate, Competition and Markets Authority
Notable line
“… t he legal costs we incur in relation to these court proceedings, and any resulting fines, are paid by our shareholders and not by our customers.”
Key Quotes
“In the last five years, we have spent £2.6m on external legal fees relating to seven separate regulatory actions”
“We have not "contested" the charges, and in accordance with our obligations under the Sentencing Guidelines have engaged external legal counsel to act on our behalf to provide the courts …”
“… t he legal costs we incur in relation to these court proceedings, and any resulting fines, are paid by our shareholders and not by our customers.”
“Southern Water 's legal team has the full-time equivalent of two employees whose focus is primarily on regulatory enforcement.”
“Since 2021, our majority shareholder has invested £1.6bn of equity in Southern Water and its group, with a further £655 million commitment to Southern Water made earlier this year”
Source · parliament.uk record ↗