That is not good , even though the heater should not be there, I would have thought a spur or switch for isolation should be fitted.
This can not now be fitted due to the fact of the bath.
That butyl flex must somehow join to the fixed wiring , and you may have filled over it.
For the envirement it is in I would get it checked or even ISOLATED until you get written confirmation it is safe.
Sorry but I think the issue with the tap is nothing compared with what you are showing.
It does look like the unit needs relocating and connecting properly.
It may be worth getting it inspected and a written report to send to the council, or the people that installed it.
Alternatively as the council deal with part p ask them to send one of there inspectors at there cost to confirm it is safe.