Water Supply in Kent

Debate between Derek Twigg and Mike Martin

Wednesday 10th June 2026 Westminster Hall

[Mike Martin (Tunbridge Wells) (LD)]

It is a pleasure to serve under your chairship, Mr Twigg, and an honour to follow so many fellow Kent MPs and constituency neighbours.

In December last year, 24,000 properties in Tunbridge Wells were completely without water for a week. The following week, they had a boil notice, so they were without drinking water for two weeks. The stories that my constituents shared are harrowing. Someone who was incontinent with colon cancer was left to clean with wet wipes. Another lady who had a miscarriage was unable to clean herself, compounding the trauma. People fainted outside kidney dialysis centres and had to have CPR. Schools shut, GP surgeries received no bottled water deliveries and, as we have all spoken about, our constituents who are supposedly on the priority register did not receive any supplies. My office became a kind of crisis cell where people were able to feed requests to us to pass on to South East Water.

It would be funny if it was not so serious, but when Dave Hinton was brought in front of the Environment, Food and Rural Affairs Committee in January, as he was speaking the water went off again in Tunbridge Wells for a further week. Local businesses in Tunbridge Wells lost millions over both of those outages, and the sum offered by South East Water was paltry. Working with the business improvement district and local businesses, we presented evidence to South East Water and secured a commitment that it would at least look at the size of the compensation it offered. I hope soon to bring the good news to colleagues that South East Water will increase the compensation, but local businesses lost the critical period before Christmas, which is when hospitality businesses make all of their money for the rest of the year.

As has been mentioned, the chair and the CEO have gone. I am glad that we all united around the calls, originating during the December outage, for the CEO to step down—no change could happen at South East Water without the CEO, in particular, going. I have met the new chair, and I am impressed. There are some small seeds and shoots that we can look at, because although the chair and the CEO leaving is necessary, it is not sufficient.

In Tunbridge Wells, we need to look at investment going into Pembury water treatment works specifically, as well as at the interconnections between all of our constituencies. South East Water was cobbled together from 20 other companies over 50 years, and the interconnections have not been built between those separate water networks.

There is another point about shareholders and accountability. South East Water is owned by three major shareholders: the NatWest Group pension fund, Desjardins and Utilities Trust of Australia. One way they make a return on their capital is by charging extortionate interest rates on loans to the company—in the order of 10%. Putting reputational risk aside, it is effectively a risk-free investment because, in reality, the Government back the water network.

South East Water’s debt interest runs at £3,000 an hour, so while my constituents did not have water in December, South East Water’s shareholders made £1.8 million in interest from the company. The result is that we have under-invested infrastructure that fails and causes outages, leading to the terrible problems we have been speaking about.

I echo what everyone has said about the Minister being extremely forward-leaning and helpful in these crises. She suffered a personal tragedy during one of the outages in Tunbridge Wells, and before she went off on compassionate leave, she reached out to my office to make sure I had everything I needed from the Department. That speaks to her approach to the job, as well as her professionalism.

The Water (Special Measures) Act 2025 fixes some of the regulation issues. The Liberal Democrats had been calling for a long time for the abolition of Ofwat and the creation of a regulator that brings together all these myriad regulators and strengthens their power, so we are very glad. However, I gently say to the Minister that there is an issue around the debt that the water companies hold.

The sector is worth about £100 billion in asset value, and it borrowed £70 billion against that. A sector that has a 70% debt-to-equity ratio is not a sector that is able to deliver proper investment, and I have spoken about the high interest rates. We are in this mess because of financial engineering by the likes of Macquarie and other investors. Without looking at that financialisation and solving those problems, particularly around debt, it will be difficult to drive the investment required in companies such as South East Water.

I want to touch very briefly on Ofwat, which recently fined South East Water £22 million. I think I have about a minute left.

[Derek Twigg (in the Chair)]

Just a bit less.

[Mike Martin]

I would argue that, rather than fining the company after the event, we should be forcing it to invest equivalent or larger amounts in infrastructure. I presented a resilience plan drawn up with water experts for Pembury water treatment works. That fine should be commuted. It just goes to Ofwat and then to the Treasury, but that money should be invested in the water network.

I will conclude by looking ahead. The Water (Special Measures) Act is necessary but not sufficient—a bit like getting rid of the chair and CEO. Without tackling the debt burden and the financial structures of many of these firms, in which bonuses are still paid and part of the corporate structure is in the Cayman Islands or whatever, we will not get to the root of the problems in the water sector.