Oral evidence: Reforming the water sector, HC 588
Oral evidence, 14 April 2026.
Witnesses
David Hinton, Chris Train OBE and Caroline Sheridan.
Chair
Good morning everyone, and welcome to this meeting of the Environment, Food and Rural Affairs Committee. We return to our ongoing investigation into reforming the water sector, and we will be looking in particular at matters pertaining to outages at the end of 2025 and beginning of 2026 in relation to South East Water. I thank the witnesses for their attendance this morning. Mr Hinton, welcome back; you have brought some colleagues with you this morning. For the benefit of those who are following our proceedings and our own official record, can I invite you to introduce yourselves to the Committee?
David Hinton
I am CEO of South East Water.
Chris Train
I am chair of South East Water.
Caroline Sheridan
I am an independent non-executive director at South East Water.
Chair
Chris and Caroline, you are non-executive directors. As we have heard from David already, I will maybe start with you, Chris. Can you give your understanding of the role and the function of the non-executive director in a company such as this?
Chris Train
The role of the board is to have oversight and deliver good governance for the organisation. In doing that, we challenge the executive team in a constructive manner to ensure that the right thought processes and assessments are taking place in order to be able to both develop and support developments. Our role is to independently challenge the actions on behalf of the customers and shareholders of South East Water.
Chair
Do you see it as being part of your role to hold the executive team to account where you see shortcomings?
Chris Train
Absolutely; that is the role and function of the board.
Caroline Sheridan
I would add that the experience the board brings to a company is very helpful to give a different perspective. Certainly, when we are able to challenge issues and events that may occur, that really helps with the company’s long-term strategic approach.
Chair
How many non-execs and executive directors does the board of South East Water have?
Chris Train
We have two execs and three non-execs on the board: me as the independent chair, and two shareholder representatives. That gives that balance of experience that Caroline was just talking about.
Chair
As well as being customer-facing you have a responsibility to ensure that the shareholder interests are properly protected?
Chris Train
Absolutely. We have to take into account that balance of delivery to customers and the overall long- and short-term operation of the business.
Chair
David, last time you were here, we spoke about the outage at Tunbridge Wells at the end of November, into the early part of December. Let us just say the door had hardly swung shut behind you last time when there was another outage of some significance, in the same area, following Storm Goretti. How would you characterise your response to that outage?
David Hinton
As you say, it was very soon after. The Tunbridge Wells area had not fully recovered and those two events effectively joined up, which meant it was disproportionately affected. Again, I really apologise for that. In terms of how I would categorise it, it was very different to the Pembury event which, as we discussed last time, was an issue with water quality that prevented the treatment works from actually producing the required drinking water to meet demand. In regard to the event that occurred in Sussex and Kent, we effectively had a freeze-thaw event prior to Goretti that increased the demand on the system. The impact of Goretti and the power impacts, as well as decreasing raw water quality, meant our supply was reduced. Effectively that made an imbalance between supply and demand—
Chair
My question was, how do you characterise your response?
David Hinton
We learned something from the previous one; it was obviously very soon after. We responded by utilising the resources available to us and put all our effort into ensuring that we had as much as we could on the ground to support those customers. So, the 12 tankers we had recently purchased and new contracts to help deliver priority service water deliveries to customers: at one point we set up eight bottled water stations, which was more than we needed during the Tunbridge Wells event.
Chair
You will recall that last time we discussed the input of the local Member of Parliament for Tunbridge Wells, Mike Martin. We have received correspondence from Katie Lam, whose constituents were affected. Can I just share with you what she said? “South East Water was unable to answer even the most basic factual questions such as, is there actually any bottled water at this bottled water station?” Members of her team repeatedly had to drive to the station themselves to establish the facts. She had people contact her who were registered as vulnerable and still unable to access water; some had newborn babies. There was no number for her to call to help them. “South East Water could take days to respond to its supposedly instantaneous email address. It simply had no idea what was going on.” It does not sound that different from the November/December outage.
David Hinton
We learned some lessons from these concurrent events; clearly, we have more to learn. To address this we have put in place a short-term resilience plan and a transformation programme for the business, both in terms of engineering and response, which picks up a number of lessons from both events. I am really disappointed to hear that customers have had that experience. One of the things we have put in place—
Chair
Are you hearing this for the first time?
David Hinton
No, I am not hearing it for the first time; I am just recognising that we hate it when customers, particularly those on our priority service registers, do not receive that alternative water. That is one of our key focuses; we delivered nearly 35,000 deliveries to vulnerable customers during the January event and we hate it when we miss any. It upsets me to hear that and we need to do better.
Chair
Your response to the first outage was to tell us that you had commissioned your own independent report, which was prepared by Caroline. What is new in that report that was not in the Drinking Water Inspectorate report?
David Hinton
There is actually a great deal of consistency between the two reports, and I would categorise it—
Chair
Your independent report effectively found the same things as the Drinking Water Inspectorate?
David Hinton
Largely, yes.
Chair
David, if I told you that the Committee felt that the Drinking Water Inspectorate gave a very different picture to that which had been given by you in the evidence, would that be fair comment?
David Hinton
Regarding the first hearing?
Chair
Yes.
David Hinton
We differed on one element: the foreseeability of the event. As I recall from the notes, I did not really give any other factual information around the water quality event that differed from the Drinking Water Inspectorate’s one. The large disagreement area was one on foreseeability.
Chair
The Drinking Water Inspectorate said that not only was it foreseeable, but it had foreseen it and it had warned you about it, did it not?
David Hinton
I believe that is what it said, yes.
Chair
Do you now have any understanding of why you did not act on that warning?
David Hinton
How I answered the foreseeability question was largely predicated on two pieces of information. First, the stability of the plant over many decades running the same way. Secondly, the belief that the raw water quality had changed significantly at the point that the treatment work started to struggle. Both the independent report and the DWI report, which—
Chair
The DWI report would be characterised as independent, would it not?
David Hinton
Yes, it would.
Chair
We will come to that later.
David Hinton
Both independent reports have effectively come up with the same set of conclusions: the problem-solving, the timing and the early reaction. There were definitely early warnings that the treatment was not performing as it should; we should have reacted on those early warnings quicker, and when we got into that situation, our problem-solving around it was too slow and unstructured. Both reports agree on those as a failing at the Pembury treatment works on that particular week.
Chair
Are you still blaming climate change?
David Hinton
No, I am not blaming climate change. At the time—
Chair
You did, and Chris, you did in your correspondence back to me following that session.
Chris Train
It is an element factor, is it not?
Chair
“The speed and severity of climate change in the south-east in particular has outstripped reasonable predictions.” Would that still be your assessment today?
Chris Train
That still would be the assessment.
Chair
You hold to that assessment?
Chris Train
Neither the independent nor DWI report could verify what the state of the water quality in the Pembury Pond was at that point in time. It was, and still is, our belief that that was affected by climate change and the drought that was experienced last summer, and therefore the water levels within that pond.
Chair
In fact Ofwat was warning the whole industry as far back as 2008 about the impact of climate change, was it not?
David Hinton
Yes, and climate change has been a factor in our planning. Traditionally, we use government climate change forecasts, particularly when assessing the impact on potential changes to raw water quality, but also in changes to demand and available water. It is fair to say, though, the predictions have been outstripped by the actual weather, particularly the extreme weather events and the number of extreme weather events we have experienced over the last few years. In a period of about three years we have broken the hottest day, the warmest spring and the driest summer.
Chair
This is unique to west Kent, is it?
David Hinton
It is not unique to west Kent, but the south-east of England does experience particularly the hottest summer impact more than the rest of the country. The unique factor at South East Water is our headroom; our gap between supply and demand is much closer than any other company. Other companies have it in pockets; we have it over Sussex and Kent largely. As you know, we also manage an area in Surrey and Hampshire that has larger headroom, and if that was still a company in its own right, that would be the best or second-best performing company on infrastructure. The difference between the two regions is largely the headroom that exists between supply and demand.
Chair
What about your root cause analysis of the difficulties? I understand you have heard what Ofwat had to say about that; what response would you give?
David Hinton
Our root cause analysis is a combination of things. The fundamental thing for us is that our supply-demand balance is really tight. That should not be seen as an excuse; we should monitor and control our assets better in that scenario, and when it does not happen, we take full accountability.
Chair
Ofwat says that you, “Fundamentally misunderstand the nature and purpose of root cause analysis” and in fact, at one point in the course of the investigation, you “sought clarification” on what root cause analysis actually meant.
David Hinton
That inquiry was so that both parties had a mutual understanding of how root cause analysis should be done in this particular case. Root cause analysis has a number of different methodologies; we were trying to establish a jointly agreed methodology so the findings could be mutually agreed once we followed that route.
Chair
Having agreed that, Ofwat concluded that you, “Fundamentally misunderstood the nature and purpose of root cause analysis.” That you were identifying “extreme weather,” “high demand” or “leakage” as causes. It concludes that these are triggers, or “immediate causes.” Does it concern you that Ofwat reaches that conclusion?
David Hinton
Of course, and we are still in that process with Ofwat and are further discussing that. We have put a lot of information into Ofwat about what we believe the root cause analysis is; we don’t think it is a single thing. That is where some difficulty between the parties is arising, but we will continue to discuss this with Ofwat as this process progresses.
Chair
The Ofwat work is pretty fundamental. It is saying that extreme weather is a known risk, and that you should be prepared for cold weather in January. That is not an unreasonable position to take, but obviously you are not.
David Hinton
In 2018 there was the industry-wide Beast from the East, but prior to that there was not really any single event that caused any impact to South East Water. Since 2020, when we started to genuinely see climate change impacting the system, we have worked through the learnings. Our ability to deal with an event is far in excess of what it used to be. We have still fallen short, we have still let our customers down when those events happen, but we have learned a lot, albeit we have more to learn. We have put some considerable resource into it: I have increased the operational resource available—in other words, the operations teams—by over 20% in the last three years and that has allowed us to be able to respond. We still have more to do.
Chair
You have let your customers down. What are you going to do to make up for that?
David Hinton
As a business we have been focused on absolutely getting the infrastructure procured through the regulatory process to allow us to provide future resilience to our customers in the presence of climate change, in the presence of housing growth. That process is now finished. We now have that and we are knuckling down to deliver that infrastructure. Effectively, that is what will deliver the resilience and secure supplies for the customers.
Chair
The question was about what you are doing to compensate your customers.
David Hinton
When the events occur, we compensate them using the GSS payment system for both business and household customers.
Chair
What about the actual losses incurred by businesses?
David Hinton
We opened a fund last week—
Chair
How big is that fund?
David Hinton
We have initially put aside £600,000 for that fund.
Chair
Mike Martin MP has written to the Committee again, telling us that he has conducted his own survey—I do not think he is pretending that this is scientific—and he has had 100 businesses respond with a loss totalling something in the region of £1.2 million. So £600,000 is not going to touch the sides, is it?
David Hinton
The process closes at the end of May. We will run the process and businesses can apply. We will assess those cases as they come in and then we will have a basis on which to make that judgment.
Chair
Do you anticipate that you would compensate anybody who can demonstrate a loss?
David Hinton
We will run the process and we will see how that process—
Chair
Let us look at the outcome. Is the purpose of the outcome to compensate any business that has sustained a loss?
David Hinton
We will look at sustaining a loss, insurability and a number of other factors when we pay the claim. We put aside £600,000 to do that and we will do it on a case-by-case basis.
Chair
What I understand from that is that if you take the view that somebody should have insured against the risk of your company’s poor performance, then you would not expect to pay them compensation?
David Hinton
I am not fully up to speed with the rules of the scheme, but what I would say is we would—
Chair
It is not about the rules of the scheme, Mr Hinton; it is about what you intend to do as a company.
David Hinton
We will not make a judgment on whether they should have insured; we will just take into account whether they have been insured.
Chair
Right. The last time you were here you gave yourself 8 out of 10 for your response to the outage at the end of November to January. How would you mark yourself out of 10 for the subsequent outage?
David Hinton
If I can slightly rewind. When I gave that response of 8 out of 10, in my mind I was thinking about what the teams had done to procure the extra resource, arrange the extra contracts, work on the bottled water stations, deliver in all sorts of weather, and the effort that the teams had put in behind. That was what was in my mind when I gave it 8 out of 10.
Chair
All of which has to do with South East Water and very little to do with customer outcome, if I may say so.
David Hinton
Yes, that is absolutely right. But when you asked me to score, a number of factors were in my mind and for that reason it is really, really hard to score. So I don’t intend to score it again, if that is okay, Chair? It is so, so complicated. As you pointed out, there are staff, there are customers, there are a number of different impacts that need to be considered.
Chair
If you are unable to give me a score, give me a word instead: good, bad, indifferent?
David Hinton
Disappointing.
Chair
Disappointing? Disappointing suggests it is against a framework of expectation.
David Hinton
My expectation is that we deliver to all priority service customers; that the bottled water stations are completely resourced the whole time; and that customers can get access to alternative water at all times. Whenever we do not meet that particular yardstick, then I am disappointed.
Chair
Chris, you are the non-executive chairman. What mark would you give the company for its response to the two outages?
Chris Train
I don’t think that is appropriate, as this is complex. We failed on the basic objective of delivering water to customers and therefore that is a failure, and we recognise that failure.
Chair
Were you told not to answer this question by somebody preparing you?
Chris Train
No, this is what I feel is the right answer to the question. We failed our customers. We worked very hard to rectify that situation, and since the events and the independent reviews we have undertaken a lot of actions to improve the resilience and the operations.
Chair
The purpose of asking you to give a mark is so that your customers have an understanding of how you see your performance on a scale. That is why we ask for a figure like this. You have already told us that it is part of your responsibility as a non-exec director to look to customer interests. Do you not think your customers deserve that degree of accountability from you?
Chris Train
That degree of accountability is that we accept that we failed in our primary duty. We could have done better with all the factors, and that is one of the consistent—
Chair
If I am a customer in Tunbridge Wells, what does that tell me? I think we know that you failed. It is surely important to them that you understand and you are prepared to explain the extent of the failure, and apparently you are not.
Chris Train
Failure is failure, and we have failed. What is important is that we, as an organisation, learn from that in order that we don’t fail at any point in the future. It is absolutely untenable for customers to be without water. Whatever we do on alternative water, and however good we are at alternative water, from a customer’s perspective that does not substitute for not being able to—
Chair
Then, as the non-exec director, why do you reward failure within the company?
Chris Train
We don’t reward failure.
Chair
Remind me of Mr Hinton’s salary increase and bonus? Is it correct that he has a £400,000 bonus?
Chris Train
No, that is incorrect.
Chair
Then tell me what the figures are.
Chris Train
David’s salary is subject to the remuneration committee of the board.
Chair
Yes, we know that, as with the other non-exec directors. What is the salary?
Chris Train
The salary is £400,000.
Chair
Right, and the performance payment on top of that?
Chris Train
We have not finalised the performance payment for this year, but Dave has indicated that he is not prepared to take a bonus this year.
Chair
You were prepared to give him one?
Chris Train
No, we—David—
Chair
This is not an event that has just happened; there has been a history of systemic failing within this company since 2018 onwards, has there not?
Chris Train
There have been a number of failures in the organisation.
Chair
In that time, salaries have gone up and bonuses have increased.
Chris Train
As I say, the RemCo—the remuneration committee—benchmarks the salaries of the executives in order that we make sure that we are getting the best balance of quality of executive for the organisation.
Chair
A company that fails its customers, and presumably its shareholders as a consequence?
Chris Train
We are disappointed. Dave has surrendered his bonus, even if we were going to give it. That probably made the conversation of the remuneration committee a lot easier than it might have been otherwise, but Dave and the board also recognise that—within the remuneration committee also.
Chair
As non-executive directors here, what effective difference do either of you make?
Chris Train
We make a big difference, I think. And the organisation—
Chair
How bad would it be without you then, if you are making a big difference?
Chris Train
Governance is an important part of running an organisation. The experience, quality and challenge that the board and the non-executive directors bring to the executive team is very valuable in running a good company. We have failed in a number of areas in terms of there being opportunities for us to learn and develop. One of the points made within the independent report is around the management of risk and the balance of risk. We have a pretty typical risk management system and framework that we use of parent risks, child risks within the organisation. I think we could improve on that level of balance of the operational risk and the operational decision-making.
Chair
Your company has been criticised by the Secretary of State, the Prime Minister and a whole range of different public and private bodies. Your own shareholders have expressed concerns. But you are still content that you do a good job and you should remain there.
Chris Train
That is a slight misrepresentation. We are concerned; it is not a good position.
Chair
NatWest Pension Fund—a 25% owner—said that it was, “Extremely concerned” by the impact on customers and that it would use its influence, “To direct South East Water’s board to ensure these issues are fully resolved.” Did it direct you in that way?
Chris Train
It did, and that is an absolutely appropriate statement; as a shareholder, you are concerned around the performance of the organisation. It is really important that we learn the lessons. As Dave said, there was no one individual cause of the event but there are a number of failures and weaknesses in the process that we need to make sure are rectified across the piece. As a board we have put a lot of focus on both the short-term and the long-term measures that will improve the resilience, particularly around Tunbridge Wells.
Chair
I have taken long enough on this; I do not think we are going to make any further progress.
Jenny Riddell-Carpenter
Chris, you said earlier that you failed customers; you failed in your primary duty, “We failed in a number of areas, and there are opportunities for us to learn and develop.” As the Chair just said, how bad would things have to get for a change in leadership at the very top?
Chris Train
It is really important for the board to have good leadership in the organisation. As you would expect us to do, we have looked at what the appropriate leadership of the organisation is going forward. The board has given its commitment and its backing to Dave and the executive team going forward as the right solution for delivering what is best for South East Water customers. Alongside that, we recognise that there are a number of forward-looking challenges and we are bolstering the executive team with a number of external hires which will cover a broader spectrum of the leadership across the organisation.
Jenny Riddell-Carpenter
When you were last here we were examining an issue in November. We have called you back as we are examining an issue in January. If we call you back for a third issue in the spring will we be scrutinising the same leadership team, or will it be a new face?
Chris Train
That is not an appropriate question to answer because it depends upon the circumstances. The board is backing Dave as chief executive and the executive team.
Tim Roca
I feel like we are wading through treacle here. You have not answered my colleague’s original question, which is, what would it take for a change in leadership? You have had an outage that affected tens of thousands of people. Another outage that affected tens of thousands of people. A proposed fine because 286,000 customers have been failed, according to Ofwat. The Chair has pointed out that the Prime Minister feels that what has happened is unacceptable. What more has to happen for Mr Hinton’s position to be untenable?
Chris Train
The reason for not answering the question is that I don’t think it is appropriate to hypothesise. What is important is learning what has caused the events and making the appropriate changes within the organisation to deliver against that. The board are backing the executive team to deliver against that; that is not without its challenges, without a doubt, but we are backing the executive team.
Tim Roca
Part of remedying what has happened is people having confidence. Your customers clearly do not have confidence, as has been expressed by the leader of Kent County Council and seven local Members of Parliament, and this Committee has made its concerns very clear. Why is not the confidence of your customers an important part of you turning this around?
Chris Train
Confidence is a hugely important part and we need to rebuild confidence within our customer base that we are doing the right things and delivering against the requirements of our customers. We believe that is best served by Dave and the team delivering.
Charlie Dewhirst
As you have said, this is a failure of your basic objectives. It is failure after failure, excuse after excuse. The board is not doing its job: it is not delivering on governance, it is not delivering on accountability and, as my colleague Tim just said, you have lost the faith of your customers. The only way to rebuild that faith is to take action to change leadership. Why do you not see that that is a basic part of this? Any other company that has failed on its basic objectives, that has made mistake after mistake from 2018 onwards, and has failed to react to implement recommendations one time after another, would—yet here we are. I am frankly flabbergasted that nobody is accountable for the mess that the company is in.
Chris Train
We are accountable for where we are. As a board we have to step back and ask the questions that you are asking, we have to look at the broad context of the organisation, the context of the industry and the sector, and we have to do what we think is in the best interests of South East Water customers.
Jenny Riddell-Carpenter
You might be asking the right questions, but you are coming up with the wrong answers.
Chair
I can see we are not going to shift this, so we will move on. Juliet, you have some questions around foreseeability of the issues at Pembury.
Juliet Campbell
You and the DWI disagree on how far in advance the issues at Pembury could have been foreseen. You claim that between 1 and 15 November the treatment works were operating normally, but the DWI states that there had been clear signals from as early as 9 November. Do you think that the DWI is wrong?
David Hinton
No. I have gone over the information, both from the independent investigation and DWI’s independent investigation, and there are signals in the early parts of November that we should have reacted to. We should have done more in the early part of the period. We should have then used different, more advanced problem-solving skills and remedied the situation quicker, and that would not have impacted customers. Both reports conclude around that same issue that it was the reaction to what was appearing to be a treatment works that was going out of control, that we were too slow on that, and I agree that that is what happened at Pembury.
Juliet Campbell
The DWI identified problems with coagulant dosing assets at Pembury over 10 years ago. It states that it does not understand why you have not installed more modern systems. Could you tell us why?
David Hinton
Without getting too technical, the system at Pembury changes the coagulant with the flow rate. There are more advanced systems available. Pembury is due to be upgraded in 2028. When you change something like a coagulant system, quite often you need to change the control philosophy of the site, and that was very much planned as part of that upgrade. We should have recognised in the interim while we were waiting for that upgrade that we should have been monitoring it more often, harder and more appropriately in the space between where we were and the upgrade itself. It is absolutely intended to upgrade Pembury, when we will upgrade the plant as a whole up to a more modern coagulation system.
Juliet Campbell
Do you have a timeframe for that upgrade?
David Hinton
We are starting in 2028. It will take a number of years to do the whole plant; it is the sole treatment process for Tunbridge Wells so it cannot be taken offline. As we need to do it while it is live it will be a long project, but coagulation will be very early in that process.
Juliet Campbell
It was identified as needing updating 10 years ago.
David Hinton
It is not an outlier in being just a flow-controlled coagulation, but there are more modern equivalents available. As I say, without putting that in we should have monitored it more as an alternative, and we did not do that.
Juliet Campbell
The argument about raw water quality changes was central to your assertion in January that this incident was not foreseeable and it was not preventable. Did you mislead the Committee?
David Hinton
That is what I thought at the time, from the evidence I had at the time. When we have a treatment works failure, or anything, actually, we look to see what has changed because the plant was running in a certain way, and something changed. The raw water quality changed, but it did not become exceptional. At the time I thought it was exceptional but I now accept that it was not exceptional. There were a number of other causes, as highlighted by the DWI and the independent report, that contributed to that. I gave the full evidence as I understood it to be at the time. More evidence has come to light, and I absolutely agree that that position, given that information, was foreseeable.
Juliet Campbell
Will you be taking different actions in the future?
David Hinton
Absolutely. We have already taken a number of actions at Pembury across the whole treatment works in terms of the process. We have installed the two filters that we discussed at the previous hearing; changed some of the washing philosophies on the filters; added more monitors into the system, and we have overall increased the jar testing. We have done a complete overhaul of the risks we face at Pembury to take us to the point where we can do the full refurb of the plant.
Chair
These are the things that the Drinking Water Inspectorate has been telling you for some time to do, are they not?
David Hinton
The DWI audited us earlier in the year and we agreed a set of commitments with the DWI at that time. We are on course to deliver those by the dates that we collectively agreed with each other during that process.
Chair
The difficulty I have with this, David, is that last time you told us you could not talk to your customers at the time because you were leading from the front operationally. Leading from the front operationally, you still did not know at the beginning of January that these failings were there.
David Hinton
As I said before, what I meant by that was there was an event that I was running that was impacting the Tunbridge Wells area pre-Christmas. As you will recall—we talked about this for some time—it was a complicated water quality event and I felt I could add some expertise to that so I went to site.
Chair
This is fundamental stuff that you have been warned about by regulators, so you would surely have been looking for it, were you not? Yet still you are telling us you did not see it.
David Hinton
We did not see this particular issue, and we should have seen it. As I said, the DWI and South East Water have agreed a set of undertakings that we are on course to deliver. We are accelerating those, as you might imagine, and we have done a lot more than was effectively in that set of undertakings with the DWI already, including the two filters.
Chair
Okay. Chris, have you discussed this internally and, as a non-exec, are you satisfied with this?
Chris Train
More than discussing it internally; we have been down to the Pembury works. We have had a look at the facility, the challenges that there are and the work that has been done in order to improve the resilience of the site. Clearly, one of the big things that will help to improve resilience of supplies to Tunbridge Wells is the investments in Bewl, and I am very pleased to say that the Competition and Markets Authority, in its assessment, has essentially funded an extra £100 million in resilience.
Chair
You say you have been down; how often do you go down to Pembury?
Chris Train
I have been down to the Pembury works on one occasion.
Chair
This is your single treatment works and you had not visited it before this?
Chris Train
This is one of 88 treatment works that South East Water run.
Chair
For Tunbridge Wells, though, it is the single point, is it not?
Chris Train
It is not the only single point on the system; this is one of the challenges that South East Water faces. It is why we are very supportive of the Government’s White Paper on setting resilience standards for the water sector. Without that, your ability to invest in resilience is somewhat limited.
Chair
But given all the previous warnings and the history of this plant, you have only visited it once. You have been a non-exec director since 2022.
Chris Train
2022.
Chair
And chairman since then as well? Chris Train indicated assent.
Chair
Okay. We are going to move on now to questions around monitoring, maintenance and culture.
Henry Tufnell
I will start with the maintenance and monitoring. Mr Hinton, you gave an answer to my colleague just now about the need for more advanced problem solving, but what is striking when you look at the DWI report is about the basics. It sets out that routine maintenance was just not being undertaken. Seven of 13 scheduled site visits relating to the DAF stage—the dissolved air flotation filtration stage—were not started or completed between 9 and 25 November, and filters were not being washed adequately in the months before the incident. So you are not doing the basics, are you?
David Hinton
That was one of the root causes identified by the two different investigations.
Henry Tufnell
Hold on a second, because you say that, but in the report you talk about gaps in operation. This is not just a gap, is it? You are not doing over half of what you are meant to be doing.
David Hinton
The maintenance that you are talking about is routine daily maintenance that the individual technicians on site perform. That will never be totally 100% because they react to what is happening on the plant as well, and they were judged on that risk assessment. Seven out of 13 is not good enough. What this has shown to us as an executive team is that the teams are too reactive and are not spending enough time on the routine tasks. The Kent and Sussex area, and particularly the Kent area, needs to have all the treatment works running at all times: it is a very tight supply-demand balance. That has generated a reactive culture that we really need to resolve. This is not the choice of the individuals; it is the pressure that we put on it. That is one of the reasons we have increased the operational staff by 100 people and put in a planned maintenance team that is dedicated to doing the planned maintenance so the operators can operate. These are not things I have put in since November; these have been in for a while. It is a key part of the transformation programme that we have launched going forward. It is to refocus our teams which have been under pressure, ensuring that all plants are running at all times to meet the really tight supply-demand balance in the area. As I said before, the investment is the long-term solution to that, but in the interim we need to get better at this; that is why those changes are already in. We really need to get them deeply embedded to ensure that what we are doing ensures that the plant we have is running at all times. We have the second-best outage record in the industry. In other words, our works run more than anyone else in terms of the percentage of the time they need to run. But that focus has meant that we need to restore some of the resource available to do some of the more basic daily tasks, in my view. That is why we made those changes already—we made those changes 18 months ago, and we are now recruiting into those roles.
Henry Tufnell
Part of understanding what maintenance needs to be done is that you have to monitor what is happening in the first place. The DWI also set out that there was not enough monitoring going on at the Pembury works, particularly around optimising that coagulation process. There was no continuous temperature monitoring, and the critical treatment parameters—raw water conductivity, coagulant flow, aluminium concentrations—were not being monitored. After the evidence you gave in January, Marcus Rink said to the Committee that you were effectively flying blind in the lead-up to the event. Do you accept that you were flying blind?
David Hinton
I accept that we were not recording absolutely what we should have been recording. We were reliant on the fact that the works had run stable for so long with the parameters we were measuring that we did not think enough about the risk. Risk has been a big learning from both the independent review and the DWI review. One of the big parts of the transformation is to have risk embedded right down to a site level so we have complete visibility throughout the business. The water industry historically manages risk at a site level; that allows the operators to manage the risk, and we want more of that visibility. We are deeply embedding risk right across the organisation so we can see when these issues begin: when issues around maintenance start to arise, when issues around water quality performance start to arise. We need that visibility, so risk has become a really strong learning for us from both the independent reviews.
Henry Tufnell
You have touched on risk, and in your reports there was no structured mechanism for how to capture or escalate risks from the operators during site interviews, so that presumably was incredibly concerning to you?
David Hinton
Just to be clear, it is not my report; the board commissioned this report. Bit that is exactly what I am talking about. Historically—certainly in my experience, though it might not be more widely undertaken—in the water industry the risk is managed at a local level. As you might imagine, they manage it with, “This is the job list for the day and I’m going to undertake this.” That is not good enough any more. It effectively needs to be escalated so there is complete visibility of risk right the way through the organisation, which would have prevented this event. It allows us to operate in an environment that is really water-stressed, and everything needs to be running to maintain supply. That is a key element of the transformation we have launched as a result of these two events, and from the learnings of the previous years, in terms of how tight our system is operating.
Henry Tufnell
You talk about risk, and the regulator is there to manage that risk and hold you to account. The DWI found that you did not carry out any jar testing in October, despite there being a requirement under regulatory notice to do so, and that the original coagulant should have worked had the optimisation process been followed. There seems to be a complete lack of any acceptance that risks need to be managed, they need to work; you are not even complying under your regulatory notices in respect to the lead-up to this event.
David Hinton
We did miss a jar test, I agree, and that is unacceptable. In terms of being able to control the process, post the water quality challenges, as I mentioned earlier, it is a problem-solving process. So once we are presented with a treatment works that is not behaving, there is a set of things to try and do. I don’t think we did that in a structured enough way to get to the point of resolution. We ended up changing the coagulant as the solution, but the DWI is right.
Henry Tufnell
You did not do a jar testing until 28 November.
David Hinton
We missed a jar test, and that is unacceptable; it may well have given us an even earlier warning than the one we had in November. But, as the DWI said, 9 November was the earliest indication that the treatment works was not performing as it should. I fully take it that we should have reacted earlier to that. As I said, we were doing a lot on problem solving—you can see from the Drinking Water Inspectorate’s report that we were not asleep at the wheel in terms of the response on the site—it was just ineffective in terms of resolving the issue.
Henry Tufnell
Let us talk about being asleep at the wheel, shall we? The DWI set out what you were doing in the control room. It is only manned Monday to Friday during the day, and there is no one there otherwise to monitor issues and nothing to see the emerging problems. Do you not think that is being asleep at the wheel?
David Hinton
No, I am afraid that is not correct. We have a 24/7 manned control room that has full visibility of all our 88 treatment works, and the different steps that exist, and they are all alarmed. In fact, I could fire it up on my laptop and look at all 88 treatment works now. So we have full visibility of all those 88 treatment works. As I say, they have warning alarms, high alarms and low alarms; there are alarms set on all those different treatment works.
Henry Tufnell
The DWI recommended better response systems in respect of your control rooms in 2018, 2022 and 2023, but even in April ’24 you still had not taken up any of those recommendations.
David Hinton
I am not familiar with recommendations relating to the control room.
Henry Tufnell
This was in terms of your response systems.
David Hinton
The control room had visibility. The control room operates largely to assist when staff are not on site. The staff on site have local alarms, they see a local, effectively a mimic of the treatment works, and they operate that. The control room operates out of hours, if you like, and has the same view. The alarms—and more importantly than the alarms, the trends—showed there was an issue. Again, I go back to: we did not respond to it quickly enough. I don’t think it was an issue of visibility so much as the reaction to the visibility. We have all looked at the data since—including both independent reports—and, not generating any new data, can see where there was a response required that was different to the one we gave.
Henry Tufnell
It is quite concerning because, Mr Train, I think you have set out in correspondence that this is in line with industry standards in terms of staffing—
Chris Train
And it isn’t.
Henry Tufnell
“Nothing to see here, guv; it’s all fine.”
Chris Train
The response that I put in writing was an attempt to demonstrate why we had said what we had said, which was the question that the Chair asked us within his letter. Different companies, different scales of works and different vulnerabilities will operate sites in different ways. But this is a pretty normal industry standard, running site control room operations. Is there an opportunity to improve that? Yes, there is, and that is part of our transformation plan: to get a more proactive rather than reactive view of the situations on site so that we can proactively manage better. We have essentially become a very responsive organisation rather than a proactive organisation, and when we talk about control systems, this is one of those areas where we really need to invest as an organisation.
Henry Tufnell
You told the Chair that you have been in post since 2022, and obviously your role is to hold the executive to account. Are you concerned that safety was not one of the company’s values, or is not one of the company’s values?
Chris Train
No, safety is very much in the company’s DNA.
Henry Tufnell
But it is flagged in your own report that you have got a reactive and distinctive approach to safety; so it is not part of your—
Chris Train
Our response in this situation was very reactive. That is one of the learnings in terms of what data we were looking at to understand the risks that were being taken on the site. We have said that we did not react to the signals of the changes quickly enough.
Henry Tufnell
In terms of the culture of the organisation that you oversee, and the scrutiny and accountability, are you not concerned that you have been in post for over two years and you have never thought that maybe safety should be part of the organisational thinking?
Chris Train
It is part.
Henry Tufnell
But it is not, in your report.
Chris Train
That is talking of one dimension of safety in terms of the processes. There are multi-factors in terms of the organisation. But organisationally we want to do the right thing for customers, and we have talked about our failures in doing that in this instance.
Henry Tufnell
The reason why I am pushing this point is that the report talks about groupthink. As the chair and non-executive directors, it is your responsibility to guard against that; it is concerning that you do not seem to be doing your job properly.
Chris Train
In looking at the outcome of the investigation report, we are bolstering the executive team. The people we have brought in and will be bringing in are from outside the organisation, and that will create more challenge in the executive team around the decisions, actions and the directions that are taken. We have recognised that.
Henry Tufnell
Do you understand why it is so important, though? Because if you read the DWI report, “The company focused too much attention on the bad batch theory for the coagulant,” which means that that theory effectively fits the narrative being put forward that it is outside the company’s control, even though DWI states there is no evidence for that being the case. If there is a lack of critical thinking going on in respect of you in your role and the role of your non-executive team, that seeps through into the company’s culture. That then has a real direct impact on its customers and on how it operates in the day-to-day.
Chris Train
At the point in time that the incident was occurring, the first thing you do as a response is to look at what is different. What was different was a change in the coagulation batch—there was a changeover—so there was a natural response to look at cause and effect at that point in time. That turned out to be false, and that therefore delayed the organisational and operational response in this instance, in this measure.
Chair
I am struck by the fact that you keep conceding mistakes, but you have never yet explained why these things were allowed to happen and why these things were allowed to happen over a course of years. Caroline, how long have you been a non-exec director for?
Caroline Sheridan
I have been a non-executive for just over a year.
Chair
Just over a year, so some of this was happening on your watch?
Caroline Sheridan
Yes, that is right.
Chair
But you were still allowed to mark your own homework.
Caroline Sheridan
The reason for instigating the independent review was from discussions with the board members around how the Pembury incident and the impact on customers in Tunbridge Wells was not something that we were talking about as a board. To be brutally honest, it was not on our risk radar.
Chair
You do not think, if you had been doing the job of a non-exec, it should have been?
Caroline Sheridan
We were very heavily focused on some of the known issues across South East Water, which have been the lack of resilience, lack of headroom, and the impact on customers because of the supply-demand issue. It is true to say that we spent a lot of time focusing on that.
Chair
We have heard from David here about risk, as if suddenly you have just discovered risk as an issue for the first time.
Caroline Sheridan
No. I have a lot of experience in asset management and engineering, plus water sector and safety-critical environments, and I have been meeting with the team to discuss asset management and to discuss how we look after and maintain our assets. One of the key findings from this report is around the visibility of some of the risks. That is something that we absolutely need to improve so that we can see the risks on single points of failure such as Pembury and can review that we are taking the right action, as has been recommended in this report and the DWI report, and have direct visibility that that is happening so that we can prevent incidents such as Pembury happening again.
Chair
Can you sit there today and tell us that it will not happen again?
Caroline Sheridan
Unfortunately I cannot sit here today and say it will not happen again. Specifically for Pembury, we have taken the action and overseen that the action has been taken for immediate responses to ensure that we have greater visibility of the system, of the water quality process that goes on in Pembury. The DWI is absolutely right to talk about early monitoring and visibility of that.
Chair
In the same way that it was right to talk about all the various things that it would have been talking about for years, and frankly South East Water had just ignored?
Caroline Sheridan
It is very true to say that having the two independent reports has really given us a different perspective to help really inform the conversations that we are having.
Chair
Let us just look at the independence of your report. You were commissioned by the board. You later brought in three other assessors, if I can put it like that. How far into your report process were these people brought in?
Caroline Sheridan
When did we appoint them?
Chair
Yes.
Caroline Sheridan
It was before Christmas that I had the first conversation with the lead investigator. He is known to me; I have not worked with him.
Chair
When was he appointed?
Caroline Sheridan
He started work between Christmas and new year; in terms of payments, that would have been early January.
Chair
What has your report found that the DWI had not already found when we heard from it in January?
Caroline Sheridan
The findings that the DWI presented at the first Committee are in line with what we have found. The reason we did this was to provide a—
Chair
Did you not accept the findings of the DWI report? If you accepted them, what was the point of your report?
Caroline Sheridan
The point of our report was to look internally at broad factors as to what was going on, and how we had not seen this coming when we really should have done. We brought in a range of independent people who had not been associated with South East Water previously to provide that insight. It has been really helpful that they have looked at this. They have had the opportunity to talk to a number of employees of South East Water to help really inform the view of what we must do next. It is fair to say that things were already in motion on a lot of the findings that we have in the independent review.
Chair
Why did they go wrong in the first place? That is the question that we have not heard answered by David.
Caroline Sheridan
Why did it go wrong?
Chair
Why did the failings that led to the incidents in November, December and then the later one in January, happen?
Caroline Sheridan
There is no single root cause. I would say that it is not due to water quality variances of extremities, it is fragility across the system. Pembury fundamentally operates a chemical process; layers of protection have been gradually eroding and we did not have sight of the system as a whole.
Chair
Is that not what you are there to do as a non-exec director?
Caroline Sheridan
That is what we are there for.
Chair
Why did you not do so?
Caroline Sheridan
At the time a lot of the focus was on the long-term resolution that is desperately needed: the investment that we need to make in Pembury. There has been a breakdown in some of the layers of risk reporting and the approach to report risk at a site-by-site level, which is quite normal within the water sector, but we need to be much better at analysing this and looking at our single points of failure. We are in a very good position, having the investment now to be able to increase headroom and resilience. But fundamentally, until we get there we really do need to be making sure that we have control of the sites as a system and understand the controls that need to be in place to ensure that water can be supplied to our customers.
Chair
What sort of company did you think you were joining when you joined the board? Did you realise you were coming into this sort of set-up?
Caroline Sheridan
I knew I was joining a water-stressed company.
Chair
The problems of the company go far beyond water-stressed; surely they are much more deep-seated than that?
Caroline Sheridan
Prior to me joining the company, that is not something that—
Chair
Did you read the DWI and the Ofwat reports going back to 2018 before you joined the board?
Caroline Sheridan
Not going back to 2018, but I did read the DWI reports. It is an excellent source of understanding how a company is performing. But I am very passionate about the water sector and wanted to bring my experience to the board when it has significant demands in increasing the amount of investment, and clearly a need to look at the asset management and the resilience of the network.
Chair
Charlie, you are going to do some questioning in relation to changes on incident preparations.
Charlie Dewhirst
If we go back to 2018 and the Beast from the East incident, and then four years on from that, Mr Hinton, when the 2022 outage occurred affecting 85,000 customers, the company’s own analysis at the time found that 61 actions identified for the 2018 event had not been implemented. Then, at the end of 2025, another 60,000 customers were impacted. What faith can we have now that you are learning lessons and we are not going to get into this Groundhog Day situation, as my colleague Ms Nus Ghani described it, where, one year after another, there is just problem after problem and the company is not learning its lessons?
David Hinton
I am going to have to come back to you on that. I do not recognise 61 incomplete actions on Beast from the East.
Charlie Dewhirst
That was in 2022.
David Hinton
Okay. There were a number of actions in there in 2022; again, I do not recognise 61 being incomplete. We have the list of actions we put in place following all these events. The scale of our response across a wide geographical area is one of the real challenges. As I said before, we have employed 20 tanker drivers just to do alternative water, and we can set up 10 or 12 bottled water stations; for Beast from the East we could only do two. We have contracts to deliver to livestock with third parties so that we can peak block, and third parties to deliver to vulnerable customers. We have third parties to assist with bottled water stations. You will understand that it is necessary to have the third party support because you suddenly—potentially instantaneously—have a demand on resource. All those things are in place, as are some of the learnings already from the recent event. The communication about bottled water stock levels has already been mentioned today. We have developed, for want of a better expression, an app that allows us to communicate with each other and soon to be with customers about livestock levels, so there is a list of learnings that we have taken from each one. Prior to 2018 we had not had any events that were greater than a burst main—an 18-hour interruption for a much smaller number of customers. We have had to resource and increase the resource exponentially. As I said before, we are not all the way there. There is more we need to do on livestock and more resource we need to do on the priority services register. I get deeply upset about missing any customer on the priority services register, and we have to make sure that that does not happen. That is further resource in the technology, largely, and in the list of priority services. We have moved on an enormous amount, but we are not fully there yet.
Charlie Dewhirst
You mentioned livestock; that is interesting as my colleague, Helen Whately, said to me ahead of the meeting that you were frankly dismissive of farmers when they raised concerns because they could not access water towards the end of last year. I appreciate there is a hierarchy of priorities in terms of vulnerable customers and so on, but would you accept that you were dismissive of farmers?
David Hinton
Absolutely not. I found it a really tricky issue. We were trying to prioritise, as you rightly say, between the different areas, and it was an uncomfortable conversation. I would not like anyone to be concerned about their livestock. This issue does not exist across all our patches. There is both farming livestock and, if you like, owned livestock as on a domestic property, so horses. We have now set up, again with dedicated contracts, to be able to deliver standing water to livestock. Our next step we promised is to create a livestock register, which will be the first in the UK, so we understand where the livestock are prior to the event happening rather than being reactive to the livestock needs. I apologise if I came across as dismissive; that was not my intention.
Charlie Dewhirst
Just in terms of escalating matters more quickly, which was something we discussed at the previous hearing here, there was some criticism that perhaps things had not escalated. Do you have faith in a multi-agency approach—the local area, the local resilience forum and so on—to be able to implement action plans more quickly?
David Hinton
Yes, and we are working really hard with the local resilience forums. We are doing some workshops with local resilience forums and stakeholders to examine the response to alternate water in what everyone is calling peacetime, so that we can look at locations of the bottled water for different times of the year that we all agree on. We are working really closely with the local resilience forums to run joint exercises to test both of our responses. There is a real keenness from the local resilience forums to assist in some areas, such as priority service register deliveries. Again, I go back to the biggest worry, which is that they do not get a delivery, so we need co-ordinated resources and co-ordinated activity. But we are working very hard with the local resilience forums to do that; they are very receptive to that, and they were extremely supportive during both events.
Charlie Dewhirst
Would you accept that some of the sites chosen to distribute water last time were pretty farcical in terms of their accessibility? The other services that they were being used for at the time, for example, was the shuttle bus to Heathrow location, a train rail replacement service, and so on. I hope all of that has now been taken into account, but can you give us confidence that, in a future event, those sites are already identified and are appropriate?
David Hinton
Yes, we had the sites identified, and what we need to do and what this event and the Christmas event highlighted to us—that seems obvious when I say it now—is that we need different sites for different times of year and an understanding of what is going on locally. For example, there was a Christmas event that needed to use the car park that we intended to use. We did not know that. If we had spoken to the local authority it would have informed us that that car park was not available. Again, with the rail strike we were not effectively aware that the buses would be using the car park, and so on. That goes back to working really closely with local resilience forums to understand the local situation. The local response is the response that we need to give. The other thing we are working hard with local authorities on is local, if you like, bespoke bottled water stations that are effectively dropped off in parish car parks, cub Scout huts—those kinds of things. The populations of small villages very much wanted to run that themselves. Again, it is a control issue, making sure everyone gets it, but it then eliminates the need for some of those really rural communities to travel a long way to, say, the centre of Tunbridge Wells or the centre of East Grinstead. Again, that is on our action list. We did it on a couple of occasions in this particular period, but that is definitely on our action list for the future.
Charlie Dewhirst
Mr Train, you received a letter from six local MPs in January—Helen Whately, Mims Davies, Rosie Duffield, Helen Grant, Katie Lam and Tom Tugendhat—calling for a change in leadership. MPs are not shy of writing letters, but it is unusual for them to write a letter calling for such a severe change in a local private company. Ms Sheridan, what was your reflection on that letter?
Caroline Sheridan
We have already discussed the board backing Dave and the reasons for that. I acknowledge that we, as a board, really hear the voice of the MPs; they have an important job to do and are representing their constituents. As Chris has already outlined, we have to look at the entire picture and the risks that we are trying to manage. It is fair to say that, while the reading of both the independent reports—our internal one plus the DWI’s—is difficult reading, a lot of the findings have already had action undertaken by Dave and the executive team that are simply just not going fast enough. We therefore need to ensure that we put this transformation plan around South East Water so that it can go faster for customers. We have made changes to the leadership team and new people have been coming in. As a board, the independent non-executives have been working very closely with the executives to help articulate our concerns, and the focus that is necessary. In response, we acknowledge and understand their concerns, but we are ultimately here to do the right thing for our customers, for now and for the long term.
Charlie Dewhirst
Was there unanimous support for the current leadership from the board?
Caroline Sheridan
As a board, yes.
Chair
Do you think that, by adding people to the leadership team, you will fix the culture of groupthink you have identified?
Caroline Sheridan
We will fix it, first, by acknowledging that there is a risk within the culture of South East Water, which comes from the history of the company. There is a very family feel to the company; many people have worked there for a long time and are themselves residents in the local community. That has strong benefits, but it also has red flags. We have therefore strengthened the executive team, deliberately bringing in people with broader experience who have a voice and are able to challenge. I see that dynamic on the board as well, where we bring in a voice and a different perspective to the challenge—
Chair
This culture has not just happened; it has grown up over years, has it not?
Caroline Sheridan
Yes, and changing a culture will not happen immediately. But we need to take steps, first to identify the risks—
Chair
What are the metrics that you identify as important in showing that you have been successful in changing the culture?
Caroline Sheridan
As a board, there are a number of things that we need to consider in how we measure—
Chair
What are the metrics? How will we know what success looks like?
Caroline Sheridan
First, the outcomes for customers will definitely change. Because there is a common thread between the culture of an organisation and the ability for people to speak up and have a systematic approach to risk management, we will ultimately see that in customer outcomes, so we can measure the journey to get there.
Chair
Do you have a metric for customer satisfaction?
Caroline Sheridan
It is certainly something that we should be considering.
Chair
You should be considering it?
Chris Train
There is a measure on customer satisfaction, but the question is whether it is differentiated enough.
Chair
What major improvement do you intend to see in that metric? Can you give us figures today?
Chris Train
The bit that I think is really important—
Chair
Sorry, I am running this long, so please keep tight to answering the questions that are asked.
Chris Train
The point I am trying to make is that what is really important is what local customers are feeling, and that can get hidden in a metric.
Chair
You measure that. You have a figure at the moment; you have your baseline. Where do you want to get that figure to? Do you have that figure?
Chris Train
Not off the top of my head.
Chair
You do not. Okay. Sarah, you wanted to ask a question.
Sarah Dyke
David, the last time you were before the Committee you told us that during the crisis back in November and December, your natural position was to go to the operational side—that was your comfort zone. You explained that you had a team of scientists and technologists who were there to carry out the role. Do you feel that you are now embedding a culture with those frontline staff where they do not feel undermined, and that they can escalate their concerns without you feeling as though you have to head into that space? It felt as if you had dropped the reins on the wider strategic elements required in your role as chief executive at that time.
David Hinton
The Pembury event was different to what we were experiencing in the business; it was a water quality driven event. I have over 15, 20 years’ experience in water quality. We are not a massive company, so I was contributing to the debate on that particular issue. On every other debate, I operate the gold command: I oversee the overall approach to incident management. We have talked a lot about the culture of South East Water, and Caroline is absolutely right. The risk of groupthink is one thing, but it has a strong, unified culture where we operate effectively under a period of stress while nevertheless working for each other. In that particular example I wanted to lend support to the team, which I knew was under stress. For that same reason I visited bottled water stations and other areas where we were looking at vulnerable customer support. That is the good part of the culture of South East Water. But on all other events and incidents, I am very much running the gold command, as you would expect from a CEO, overseeing the company overall with the rest of my executive and key members of the management team. I did that for the January event and I have done that for many other events. The Pembury event was different because of the area affected; I felt I could add a non-CEO piece of expertise, and that is what I did.
Sarah Dyke
What do you think you would do differently in future?
David Hinton
I would do very much what we did at Pembury, but I would put in early warnings, better monitoring, improved escalation processes, and problem-solving earlier in the process. We put on extra filters at Pembury as an extra stop. Obviously, we are going across the business to make sure this is not replicated anywhere else, and that exercise has already started. Pembury is a complicated works that ran stably for a very long time, and that meant we were not monitoring what we should have done. It did not give us any alarm bells as we went through, but using the risk approach we have all spoken about, we should have spotted those issues earlier. The transformation and change programme we put in place very much adds the resource and impetus for the business to be able to do this.
Sarah Dyke
What lessons have you taken from other utility companies in preparing for a stronger incident response performance? How have other chief executives guided you in terms of your role in an emergency?
David Hinton
On the first point, we are well aware that Severn Trent is a company that has done a very good job in recovering from interruptions. Although as an industry we are meant to compete in a regulatory framework, we always share best practice and we always share water quality. So we went to see how Severn Trent manage this, and it was very similar to how we organised our tanker stock and how we ran it, and was based on a model that we saw working elsewhere. In terms of supporting my role as chief executive, we discussed last time whether I communicated early enough in the event. I canvassed their opinion on that and they agreed with me that I got it wrong. That is very much a lesson we have learned and it has gone into the playbook of how we handle future events. The industry is very good at mutual support and trying to understand these difficulties because we are all trying to provide a public health service for our customers. That fundamentally runs through the DNA of anyone who works for a water company and that is why this sharing goes on.
Sarah Dyke
In terms of your response as a chief executive, how would you implement that change going forward? You have admitted you got it wrong.
David Hinton
I did; it was something that I had not experienced at that level before. We are now using consultants to help us work out an effective crisis comms playbook, and the role everyone has in that playbook. We went through the pain of getting it wrong; part of the transformation process is to learn from that, and it is already well embedded into the organisation. We have made a lot of progress in that area in the last three months.
Sarah Dyke
How do you think you are empowering your scientists, your technical staff and your new senior team members?
David Hinton
I am not a command and control leader; that is not the style of South East Water, so they are heavily empowered. Bringing in the two external executives is adding a different dimension, particularly in terms of allowing the existing executive to have more resource. We have had a five-person executive for a number of years, but we are a bigger business now. That is one of the big drivers of change. Just in terms of the effect of the totex we need to spend, that has gone from £1 billion to £2 billion over a five-year period, so there is a lot for us to do. The focus is very much on new ideas, new impetus and new experience against a lot more to do for our customers, which we are really excited to do. We think we have a real opportunity to make a difference and these two new roles are doing that. We very much empower them to do what they need to do in their area, and to deliver the assets they need to deliver. We have a new technical information director who will be looking at the insights we are getting from smart meters. This is a new world where investments can allow us to get customers’ resilience back on track where we want it to be and get us ahead of climate change, so that we can get back to a new place where we are really delivering for our customers. That is the north star of our business.
Chair
You said that you are bringing in consultants now.
David Hinton
We are bringing them in on communications; as a water company, the internal expertise on crisis communications was not there.
Chair
Right; so you are just bringing them in on the communications side of things.
David Hinton
We use consultants for various roles, as most businesses do, but the one I was referring to there—
Chair
How much are these consultants going to cost you?
David Hinton
I do not know the number off the top of my head, but our customers told us that, apart from the fundamental lack of water supply, one of our biggest issues was that communications were poor.
Chair
I am intrigued to explore your role in Pembury. You lost days because of the “bad batch” theory. Did you author that theory? Who was responsible for that?
David Hinton
It was not mine. I did not—
Chair
Did you challenge it?
David Hinton
Yes. By the time I arrived on site and had the site-level detail, they had already swapped the batch to try a different batch. As Chris said, they went back to a scientific principle; if something starts behaving differently, what is the changing input? But we should have explored more than one potential cause.
Chair
Is there any reason why you did not?
David Hinton
Again, I go back to problem-solving.
Chair
Exactly; that is what I hoped we would get to this morning.
David Hinton
The thing is, sometimes issues with treatment works take a number of days to resolve. That is just a fact; it happens all over the industry. We did not help ourselves because we did not spot it early enough, and that lost days. As we have said elsewhere, because there is not a lot of storage in the South East Water area system, we do not have days to spare, and those two things combined. Fundamentally, I am not blaming the storage in the system; that is a fact, but it has nothing to do with this. The issue is that we did not spot it early enough. If we had spotted it earlier, we would have resolved it. We could also have made it less likely to happen with some impacts on site, but most importantly, we could have worked our way through that issue and solved it if we had spotted it earlier and responded to it earlier.
Henry Tufnell
How long have you been working with Severn Trent on best practice? How long have you been learning from it?
David Hinton
We have probably been talking to Severn Trent since we ordered the tankers about three or four years ago.
Henry Tufnell
You have been taking best practice from Severn Trent for three or four years?
David Hinton
On the tanker design, yes.
Henry Tufnell
Then why have you not been doing best practice internally within your company? That was something your report identified.
David Hinton
In which particular area?
Henry Tufnell
The report says that on-site visits and interviews were observed where best practice was not implemented. So why were you learning from best practice with Severn Trent, but not doing that internally?
David Hinton
We always try to seek best practice. On this particular example, we were not following it.
Henry Tufnell
Your own report says that you do not.