Southern Water boss defends £200 bill hikes to MPs

Lawrence Gosden was quizzed by MPs on Tuesday

The boss of Southern Water has defended plans to hike customers' bills by 53%, or £200, in the face of recent troubles.

Chief executive Lawrence Gosden was quizzed on the increase by MPs at the Environment Committee on Tuesday.

Under proposals revealed in October, Southern Water - which serves Hampshire, the Isle of Wight, Kent and East and West Sussex - had initially planned to increase bills over the next five years by more than any other UK water company.

It comes after recent anger over a major water outage for customers just before Christmas, a record £90m fine in 2021 for dumping raw sewage into the sea and a £183,600 bonus for Mr Gosden.

He was called in front of MPs for the committee's first evidence session into its inquiry into the water sector which was launched last month ahead of Ofwat's price review announcement.

Mr Gosden told the committee the bill increase "relates simply to geography".

He said the south-east of England was designated as water-stressed and highlighted its large population.

This resulted in less rainfall per capita than Namibia, a country in southern Africa that is largely made up of desert, he said.

"That means that we have very large forward investment plans for water resources...," Mr Gosden told the committee.

"There's a very large water resources [requirement] to safeguard this part of the country from climate change and that is on top of a very significant environmental improvement and investment programme to redesign sewer systems.

"Effectively there is double the impact of investment in this part of the country because of the geography of the region."

A fault in December saw 58,000 Southern Water customers face disruption

Under Southern Water's initial proposals, average household bills would have risen from £420 to £768 a year.

The 85% increase over the next five years was more than 30% higher than what water regulator Ofwat suggested was required in its own assessment.

In its final determination, the regulator allowed the firm to raise its bills by 53%.

December's announcement came during a major water outage in Hampshire, which saw 58,000 Southern Water customers face disruption.

Following the incident, which was blamed on problems at a supply works, the water firm said it would spend £9.7m in compensation to customers.

During questioning by Hastings and Rye MP Helena Dollimore, Mr Gosden said Southern Water would review a decision not to compensate residents affected by a major water outage in Hastings last May.

More than 32,000 properties were left without supplies when a pipe burst, prompting more than a million litres of water to be distributed – making it the biggest bottled water operation ever handled by the company.

Asked by Ms Dollimore whether the company would look again at the compensation decision, Mr Gosden replied: "In simple terms, yes."

Following the session, Ms Dollimore said: "I believe there has been a dereliction of duty by Southern Water not to compensate us when the taps run dry."

'Flat bills'

As part of the panel, Mr Godsen was also questioned about Macquarie - the company that owns an 87% stake in Southern Water.

He said the firm's record was one of "investing in Southern Water to enable the company to get back on track and for it to deliver these huge infrastructure improvements".

The Australian bank previously owned a majority stake in the embattled Thames Water, which it sold in 2017.

"If you look back, particularly over the last 10 to 15 years, as is the same with Southern Water, is that this last decade or 15 years' worth of flat bills has certainly done damage [to Thames Water]," Mr Godsen, who previously worked for Thames Water, said.