MP Ian Liddell-Grainger has questioned the CEO of South West Water after it was revealed the company is under investigation again by Ofwat.

He said: "She should pack her bags and go.

“South West Water has been caring for its shareholders rather than its customers while senior staff have been pocketing obscenely inflated rewards for failing."

The water watchdog has launched an enforcement inquiry looking at the accuracy of statements the company made last November about its performance in reducing leaks and on customer consumption rates.

This is in addition to a separate Ofwat probe into how the company’s waste water treatment plants are being managed.

Mr Liddell-Grainger, MP for Bridgwater and West Somerset and prospective Conservative candidate for the new Tiverton and Minehead constituency, said the latest Ofwat intervention marked another low point in South West Water’s existence.

“It may well be that all will be found to be in order,” he said. “But Ofwat does not launch inquiries of this nature lightly and clearly in this case it has good grounds for believing somebody has been cooking the books.”

Last month Susan Davy, CEO of the Pennon Group, which owns South West Water, announced she would not be taking her £450,000 bonus because of public anger over sewage pollution in rivers and seas.

Mr Liddell-Grainger, said: “The company has failed to increase storage capacity in line with the demands created by the growth in tourism and huge amounts of housebuilding with the result that the region is chronically short of water and consumers are already having to restrict their usage even before the main holiday season has started.

If the Ofwat inquiry uncovers discrepancies in SWW’s reporting on leaks and consumption it could face a penalty equivalent to 10 per cent of its turnover.

If it is found to be in breach of wastewater regulations it will be ordered to implement improvements and could also be fined, the cost in both cases falling on shareholders.

A South West Water spokesperson said: “It’s important our customers have confidence in our data. That’s why we rigorously check our data which is externally audited by an independent third party. We will of course provide any information the regulator requests and we will fully cooperate.”