Committee publication · Correspondence · 10 June 2025
Correspondence from Lawrence Gosden, CEO, Southern Water regarding Reforming the water sector, dated 5 June 2025
From: Environment, Food and Rural Affairs Committee
Inquiry: Reforming the water sector
Summary
Lawrence Gosden, CEO of Southern Water, responds to the Environment, Food and Rural Affairs Committee's May inquiry on water sector reform. The letter addresses executive pay governance, dividend restrictions (none paid since 2017, none planned until after 2030), regulatory advertising spend, legal costs, asset replacement strategies, water poverty measures (targeting 182,000 customers by 2030 via discounted tariffs and expanded hardship support), and data transparency initiatives including a new Rivers and Seas Watch storm overflow service.
Key findings
- Southern Water has paid no external dividends since 2017 and plans none until after 2030; dividend policy now contingent on meeting stretching customer and environmental performance targets.
- Company overspent regulatory allowance by £585 million cumulatively on water asset maintenance (2005–2025) due to Ofwat underfunding; now seeking resolution on £305 million shortfall for AMP8 mains replacement programme (360km planned).
- Water poverty projection of 6.5% by 2030 exceeds industry commitment; mitigation includes expanding discounted Essentials tariff from 161,000 to 182,000 customers and increasing hardship fund from £250,000 to £1.25 million annually.
- Company responded to 721 Environmental Information Regulation requests in 2024 (97% within statutory timeframe in 2025); publishes real-time storm overflow data and tidal modelling to advise bathers of water quality impact.
- Executive remuneration policy under review pending Ofwat's Performance Related Pay Prohibition Rule; Remuneration Committee majority independent non-executive directors.
Tone
ProceduralTopics
Key actors
Lawrence Gosden, Southern Water Services Ltd, Environment, Food and Rural Affairs Committee, Ofwat, Environment Agency, Drinking Water Inspectorate, Alistair Carmichael MP, Surfers Against Sewage
Notable line
“We recognise that mains replacement is the only means to secure long term network performance levels – especially leakage Southern Water, Southern House …”
Key Quotes
“No dividends have been paid to our external shareholders since 2017. Furthermore, there is no plan to pay any external dividend until after”
“This underfunding by Ofwat, despite Southern spending close to the amounts it requested over AMPs 4 through 6, eventually led to a deterioration in performance which had to be addressed through additional spending in AMP7.”
“We are working collaboratively with local authorities to provide auto enrolment to discounted bills, reducing the burden for customers to identify support available …”
“We are proud to have been the first water company to provide such a service.”
Source · parliament.uk record ↗