Water quality campaigners hope new owners of Southern Water Macquarie will improve pollution record

Asset management fund Macquarie has bought a majority stake in Southern Water for £1bn, a month after the utility company was fined a record £90m for widescale pollution.

The new owner has said the money will be used to invest significantly to upgrade its network. It will also create 1,000 jobs.

Bosses at Macquarie also said they will be ‘strengthening a zero-tolerance mindset to environmental pollution: a commitment to significantly improving Southern Water’s environmental track record, which Macquarie Asset Management recognises is one of the worst performing in the UK water sector’.

Around £2bn will be invested over the next four years to fix the pipes, pumping stations and sewers which are under-performing and causing harm to the local environment, the company said.

The news has been welcomed by people who use Langstone Harbour, who say improvements are long overdue.

Mike Owens from Hayling Sewage Watch said: ‘Yes! Any investments that stops Southern Water poisoning humans and our environment must be seriously welcomed. But...the message from Southern Water's CEO represents a missed opportunity to address the dire situation we find ourselves in following decades of underinvestment.

‘Ian McAulay has previously identified that it is rainwater filling the sewage network that is the biggest problem facing Southern Water, and he is 100 per cent right but this remains unaddressed!

‘This rainfall leads to massive and routine excrement-laden stormwater discharges into our harbours and the Solent; such discharges significantly more volume than any faecal pollution from relatively minor but nonetheless headline grabbing raw sewage spills which he is pledging to fix.

‘With a relatively modest investment Southern Water could immediately stop stormwater discharges into our local harbours by simply building increased capacity storm tanks to help protect the environment he says is a top priority. This approach was successfully deployed at Fort Cumberland, Eastney; stormwater discharges ceased overnight. Ian McAulay appears to have chosen not to prioritise investment in the area he knows is his biggest pollution problem which is very disappointing.’

Hugo Wilson, secretary of the Havant Sea Angling Club, said: 'It is absolutely wonderful news, we look forward to having clean waters.

'I'd be interested to hear how they intend to ensure that we're not going to have incidents in the future similar to what we've had in the past.

'There has been a significant under investment in the mains water systems over the past few years. What are their plans for investment?

'We welcome this promise for the future for Langstone Harbour. We've had too many incidents in the past.

'We look forward to cleaner waters, better fishing I hope, and after the disgraceful episodes we've had in the past with Southern Water, we hope we won't be having these issues again.

'We hope we can go forward together into the future.'

Macquarie said it has been in regular contact with regulator Ofwat over the proposals, setting out its intentions and commitments.

Along with reducing pollution by more than 50 per cent compared with 2019, the new owner also plans to invest £230m to upgrade Southern Water’s pipes, to reduce leaks.

It has also committed to ensuring water bills do not rise by more than inflation and will honour £123 million owed to customers over historical incidents of leakage and pollution.

Customer services will also be improved to lift Southern Water’s position from second worst-performing in the UK water sector.

Leigh Harrison, head of Macquarie Infrastructure and Real Assets, said: ‘Southern Water needs significant investment to improve its operational and environmental performance, and financial health.

‘Without it, the business will be unable to fulfil the expectations of the millions of customers that rely on its services each day or reduce its negative impact on the local environment.

“This major £1bn equity investment by one of our long-term infrastructure funds will help put Southern Water back on a stable footing and enable an ambitious multi-year transformation plan to make essential water and wastewater services in the South East of England more sustainable and resilient.’

Southern Water chief executive Ian McAulay said: ‘This is good news for our customers, the local environment, and the regional economy.

‘It strengthens our ability to tackle the longer-term challenges posed by climate change and population growth, at the same time as being responsible custodians of southern England’s rivers and seas.

‘Importantly, this new investment will help Southern Water create around 1,000 new jobs and expand our apprenticeship programme, assisting the economic recovery of our region as we tackle the global Covid-19 pandemic.’

The deal comes a month after Southern Water was fined £90 million when bosses admitted dumping sewage illegally thousands of times over a five-year period.

The company pleaded guilty to 6,971 unpermitted sewage discharges – the equivalent of one pipe leaking continuously for seven years.

Tonnes of sewage polluted rivers and coastal waters in Kent, Hampshire and Sussex between 2010 and 2015, a court heard.

Mr Justice Johnson, at Canterbury Crown Court, said of the formal 51 guilty pleas that the company’s behaviour had been “shocking”.

Bosses were also accused of deliberately painting a misleading picture of compliance to the Environment Agency, which brought the criminal prosecution.

The case followed a £126m penalty imposed on Southern Water in 2019 as a result of the company’s regulatory failings over the same period.

Macquarie has £310b assets under management, investing pensioners’ savings including £50bn into infrastructure projects since 2005.