The situation in which we find ourselves today is that we have five large sites in Wales, which may have insufficient bond cover at some stages in their operating life. They are Ffos-y-Fran in Merthyr, Tower at Hirwaun, Nant Helen at Coelbren, East pit at Gwaun-Cae-Gurwen and Margam at Kenfig. In my constituency, we have Dynant Fawr in Tumble. That is a smaller site, extending to some 33 hectares. Coal extraction has finished, having removed some 100,000 tonnes of coal in total. However, the operator Carmarthen Mining Ltd has been dissolved

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and the site ownership is spread between a number of owners. My local planning authority, Carmarthenshire county council, has released some of the bond to achieve some restoration and currently holds a bond of some £176,000, but that falls short of the full restoration costs, which the local authority believes could exceed £250,000. There are some lessons to be learned from that situation.

I should explain that Dynant Fawr is not a former British Coal site. It was run by a separate private operator. Although the local authority required a bond and the operator was to pay into an escrow account, the bank was slow to alert the authority that payments were not being made. The lesson to learn is that although the local authority tried its best to get the right mechanisms in place, the situation is much more complex than it might at first appear. Making bonds work is not easy when companies disappear and play all sorts of dirty tricks.

The local authority now faces the situation that both the operator and the landowner have conveniently disappeared, so the job of managing the restoration is left to the county. The money that has accrued from the bond is less than the council estimates to be ideal, so it has been looking at different ways of making sure that bonds are more effective. It is not that easy. One has to be certain that the money that is paid in is ahead of the restoration costs. That is quite a hard bargain. Likewise, the council does not accept insurance as cover unless the premiums are paid up front to the county, because if the company does not pay the premiums, the insurance company obviously will not pay out. The council might accept assurances from an insurance company that it would pay up whatever, but that is much more difficult to achieve because insurance companies are also extremely wary.

This is a highly technical area and, as the World Bank has said, a lot of expertise is needed to set up, control and run bonds properly, and to ensure that the restoration is done properly at the end. This is extremely costly and in the current economic climate local authority expertise does not just come from nowhere. Carmarthenshire helps out Powys, which does not have the expertise. Many of the people who are there now may not be there for ever, and they have other pressures on their time. The head of minerals planning in my local authority is working with colleagues from Natural Resources Wales and from Neath Port Talbot, and he is also chair of the group of planning officers across Wales who come together on mineral issues to develop some guidance on making the bond mechanism as effective as possible. That could be incorporated into guidance such as a technical advice note for planners.

The way forward is very much to work together and do whatever we can, but we still need the money to restore the communities that have suffered devastation from people just ripping them off for open-cast.

4.32 pm

Pat Glass (North West Durham) (Lab): I want to speak in this afternoon’s debate because this is very much a live issue in my constituency. I am one of those people to whom my hon. Friend the Member for Bridgend

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(Mrs Moon) referred who have delayed their travel home, so important do we think this is. Given the weather, I am not going to get home tonight, and probably not this weekend.

I am not against open-cast per se. I know that there is more coal under Durham county now than was ever taken out, and with advances in technology more and more coal reserves become accessible all the time. There are good open-cast companies and poor open-cast companies. Reference has been made already to Banks. I have no interest, vested or otherwise in Banks, but if it makes an application we at least know that it will go to great lengths to disturb residents as little as possible, will invest millions in the north-east and will employ local people, and that its records show that it restores 100% of its sites.

There are companies like Banks and then there is UK Coal. I want to refer to the Pont valley in my constituency by way of illustration. It is a beautiful valley full of ancient woodland, rare flora and fauna and local heritage going back centuries. It is a real amenity for local people, and it is under threat. UK Coal, in its various manifestations, has applied four times in 20 years to open-cast the valley. There have been four public inquiries and so far a further appeal allowed on a technicality. Local people have won in every one of those public inquiries, and we await the outcome of the latest inquiry. I know that I and others in the House would like to see some kind of legislative protection for local people who win public inquiries and simply face the same thing again a couple of years later. Some legislative protection is needed to ensure that companies such as UK Coal cannot just keep coming back, blighting lives and threatening surroundings.

One reason for the objections to open-cast in the Pont valley, but not the only one, is the huge question mark over UK Coal’s financial status, which totally undermines any certainty that the company can meet its obligations to restore the site after the coaling phase is complete. At the same time as making further applications to open-cast in my constituency, UK Coal has several existing sites either in development or with planning permission that are up for sale, yet it continues to pursue further planning applications, knowing full well that it does not have the finance to develop or restore its existing sites, but arguing that it needs to open-cast more sites to restore those already complete. The Park Wall North surface mine near Crook in my constituency is available for sale as part of a package consisting of six surface mines, yet the juggernaut of applications from UK Coal for new sites continues, with the threat that if the company cannot get the profit from new sites, it cannot restore the old ones. It is like some sort of bizarre Ponzi scheme. Earlier, a Member said that there has to be a law against this, but I understand that there already are laws against blackmail and Ponzi schemes.

The Minister will be aware of the MacKinnon report on what happened in Scotland—as my hon. Friend the Member for Ayr, Carrick and Cumnock (Sandra Osborne) said, the situation is far worse in Scotland than in England, but we are getting there. It is as strongly worded and critical a report as I have ever read. It paints a terrible picture of what can happen when an applicant is in financial distress and faces a choice as to what to do with its limited resources: does it focus on coaling on newer sites, or commit to proper aftercare?

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That is the picture facing people in constituencies such as mine from companies such as UK Coal. I think it is absolutely unacceptable that beautiful parts of my constituency and others, places like the Pont valley, should be attacked by a series of open-cast applications that not only place huge pressure on local people, but put those areas and the people who live in them at ongoing risk of intrusive open-cast extraction and the very real danger that their surroundings will never be restored.

4.37 pm

Mr Iain Wright (Hartlepool) (Lab): This has been a really important debate. I thank the Backbench Business Committee and all who have participated, particularly my hon. Friend the Member for Bridgend (Mrs Moon), for ensuring that the debate took place.

Ensuring that sufficient resources are available to restore open-cast coal sites to a proper state is important. It is universally agreed, I think, that a key principle for the approval and ongoing use of open-cast mines is that operators have an obligation to both local communities and the environment to clean up after themselves, and that financial provision should be made to allow that to happen. The debate has rightly and expertly focused on what happens when the obligation breaks down and what can be done to make sure it is fulfilled.

It is clear from the debate that all parts of the United Kingdom are affected, with speeches from Members representing Northumberland, Durham, Derbyshire, Scotland and Wales, although I was surprised that no Scottish National party Members attended to discuss the subject. Seven mines in Ayrshire, Lanarkshire and Fife closed when Scottish Coal ceased operations in 2013, and my hon. Friend the Member for Ayr, Carrick and Cumnock (Sandra Osborne) has worked diligently to make sure that operators are held to account. Rising water levels, contaminated lagoons and erosion lead to increased health and safety risks, environmental damage and the threat that the taxpayer will have to pick up the bill.

I was pleased to hear the right hon. Member for Berwick-upon-Tweed (Sir Alan Beith) talk about Northumberlandia. I have visited and walked my dog there. It is a fantastic example of what restoration and open art can do. My hon. Friend the Member for North West Durham (Pat Glass) rightly raised concerns about the financial viability of UK Coal and the fire sale of several open-cast sites, calling into question the operator’s ability to meet its obligations to restore the sites after the coaling phase is complete. We have also heard from Wales. My hon. Friend the Member for Bridgend (Mrs Moon) has mentioned two sites—East Pit in Neath Port Talbot and Parc Slip in Margam. There is huge concern about how the restoration of those sites will be paid for. I understand that only £2.5 million of the estimated £115 million has been identified and allocated for East Pit, while at Parc Slip about £5.5 million has been set aside against a total estimate of £57 million.

We have heard time and again in the debate that local communities often had to deal with disruption and pollution for some considerable time while the open-cast mines were operating. Now that the mines have ceased operating, I think the whole House agrees that we do not want the communities to suffer a permanent and dangerous scar on their landscape. I have a number of

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questions to put to the Minister arising from the debate. They essentially fall into two main categories: how did we get into this position, and what do the Government need to do next to resolve the problem?

My hon. Friend the Member for Bridgend said with regard to the Parc Slip site that nothing illegal had taken place between Celtic Energy and Oak Regeneration. I do not want to say anything that compromises the ability of the judiciary to make independent rulings, but I have a number of questions. My hon. Friend mentioned that in 2010 Celtic Energy held a sum of money for restoration purposes totalling £136 million. Within 12 months, that sum had been reduced by £63 million, with no evidence or assurance that it had been spent on restoring the mine. It is perfectly legitimate to ask where that money went. My hon. Friend said that it was considered a provision within the accounts of Celtic Energy. That brings me to my old accountancy past.

I consider that a liability is a current obligation of the enterprise arising from past events, the settlement of which is expected to result in an outflow from the enterprise of resources embodying economic benefits. There seems to be quite a clear liability rather than a provision that is unknown. I am surprised that that entry in the accounts has been reduced. What conversations took place in 2010-11 between Ministers, officials and the company to determine what was being done with that money? Is the restoration fund for operators routinely monitored or audited by the Minister’s Department to ensure that any liabilities can be matched by sufficient resources? What work takes place between his Department and counterparts in the devolved Administrations to ensure that this is adequately dealt with across the United Kingdom? What assessment has he made of the adequacy of other restoration funds at other sites? In the light of question marks over the sufficiency of funds to cover the costs of restoration, does the Minister believe that the existing framework for guaranteeing the maintenance of a restoration fund is adequate? What reforms and recommendations need to be put in place to ensure that it does meet the needs of local communities?

Unrestored sites are unacceptable as they pose a risk to local communities. Equally, I would question whether it is for taxpayers to pick up the bill, especially when the selling of the coal generated cash and profits for the company, a proportion of which should have been apportioned to the costs of restoration. An additional complication is the falling world price for coal, which means that operators may not generate the revenue anticipated, but will quite rightly be expected to bear the costs of restoration.

How do we settle this matter? My hon. Friend asked what assessment the Minister and his Department have made of the original 1994 agreement, and how the Government can ensure that its terms are complied with. Can we see the original agreement? If the purchase of the land from British Coal and the granting of planning permission were conditional on restoring the site on decommissioning, who, in the Government’s view, remains liable for ensuring that this is done? What powers will the Government use to ensure that this liability will be met?

I understand that UK Coal has submitted a state aid application. Will the Minister update the House on what progress has been made on that specific matter? I have questioned him several times on state aid approval,

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and on matters of urgency and priority on steel and energy costs. I hope that he can update hon. Members today on the current status and expected progress of the state aid application with regard to UK Coal.

My hon. Friend the Member for Ogmore (Huw Irranca-Davies) summed this up succinctly when he said that a company can walk away from its responsibilities without any repercussions. The debate today has shown how the House rages against that and wants to make sure that appropriate procedures are in place so that companies cannot walk away from their responsibilities. I think the Minister will agree. What steps will he take and what measures will he put in place to ensure that those liabilities are met and the restoration of open-cast coal sites is undertaken, leaving less of a blight on the local community?

4.44 pm

The Minister for Business and Enterprise (Matthew Hancock): I join others in congratulating the hon. Member for Bridgend (Mrs Moon) on bringing this debate to the Floor of the House and opening it so clearly and strongly. I agree with the shadow Front-Bench spokesman, the hon. Member for Hartlepool (Mr Wright,) that there is broad consensus across the House on the scale of the challenge, which I acknowledge and which was described by the hon. Members for Bridgend and for Ayr, Carrick and Cumnock (Sandra Osborne), and by the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) in strong and lyrical terms. I acknowledge the scale of the difficulties and I look forward to working with Members on all sides to try to resolve them.

There is also consensus that the operation of open-cast mining involves a resource that can be brought out from under the ground, and therefore that the burden of restoration should fall not on the taxpayer but rather on those who benefited from the excavation and sale of the resource. In the time available I hope to address as many of the questions that were raised as possible.

Several hon. Members, including the hon. Member for Bridgend, commented on the time taken for a planning application to be approved, the different and complicated mechanisms needed, and the number of authorities involved. I acknowledge that and the further complication that the devolution settlement leaves responsibilities both for the UK Government, which are mostly executed through the Coal Authority, and for devolved Administrations. It is therefore important that the devolved Administrations are part of the solution. The hon. Member for Carmarthen East and Dinefwr described clearly the responsibilities of the Welsh Government. I spoke to Fergus Ewing, the Minister for Energy, Enterprise and Tourism in the Scottish Government, about the matter yesterday in advance of the debate today. Although it is disappointing to see that no SNP Members are in the Chamber, I made the Scottish Government aware of their responsibilities in relation to the difficulties that are most apparent in the south of Scotland.

The Chair of the Backbench Business Committee, the hon. Member for North East Derbyshire (Natascha Engel), asked what we can do to ensure that those who do not fulfil their obligations in a reasonable way can be

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debarred from future operations. I thought that was a good suggestion and I will explore the possibility of the Coal Authority having a role in vetting open-cast licence applications to examine past conduct. I cannot give the hon. Lady the full commitment on policy today, not least because this is the first time the possibility has been raised with me directly, but it is a sensible proposition which I will take away, and I will get back to her on that.

In a debate largely driven by consensus, it was good to have the hon. Member for Wansbeck (Ian Lavery), the representative of king coal, in full flow. He demanded that I reach this Dispatch Box and immediately change the tax regime of the United Kingdom to end the carbon price floor. I am sorry to have to disappoint him by saying that that is a matter for the Chancellor in a Budget, so far be it from me to announce it today. The hon. Gentleman will know that from next year we have frozen the carbon price floor and we have taken action to ensure that although we commit to our international obligations on tackling carbon emissions, we also support energy-intensive industries. As he said, carbon capture and storage represents a long-term future for coal consumption in energy production and potentially for UK production of coal.

The hon. Member for Hartlepool asked about the case for state aid for UK Coal. This debate is about open-cast mining, but of course we have a long and strong tradition of deep mining. We have received an application from UK Coal for state aid from Government. We are currently considering that application, and I do not want to prejudge any decision.

Ian Lavery: That is good news. When will the Government be in a position to reply to that request?

Matthew Hancock: I saw it for the first time this week, and it is under active consideration. I would expect to be able to respond in a matter of weeks, certainly before the Dissolution of Parliament.

As the right hon. Member for Berwick-upon-Tweed (Sir Alan Beith) said, restoration bonds are not only about open-cast coal mining; they are also about deep mining, as well as things like the fire in his constituency that raged for months and that he and I have discussed before. It is vital to get restoration liabilities and restoration cash tied together better.

The hon. Member for Hartlepool quite reasonably asked about questions of the past and questions of the future. In getting the future right, it is vital that we have a regime, including depositing money in escrow accounts and restoration bonds, that is watertight. On privatisation in 1994, the calculation of the costs of restoration was part of the decision as to how much companies paid for the opportunities they bought when they bought rights to a site. That was taken into account at the time. It is therefore not reasonable to say that money was put into a fund, with the taxpayer paying for the restoration at the end of the process. The money paid to the taxpayer for the coal that was bought, which was then in the ground and was going to be extracted, had set against it the future costs of restoration. That was encapsulated in the cost at which the companies purchased.

Nia Griffith: What mechanism did the Government put in place to ensure that the money was then used for restoration? That is what seems to be missing.

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Matthew Hancock: That is exactly the issue at hand for the mines that are reaching the point at which they need restoration. The liability lies with the company, but, as we have heard from the many testimonies today, getting it to act is too difficult. That is the challenge that we face.

I turn now to the future, because the question that we all want to answer for our constituents is how we can solve this problem.

Mrs Moon: Celtic Energy is saying that it was given a 10-year exclusion from having to carry out any restoration because it paid a higher price for the licence. In 1994, the Government said that it did not have to put money aside. Is the Minister saying that it is wrong, and in fact the price it paid implied that it had to put more money aside rather than put no money aside?

Matthew Hancock: The expected cost of future restoration was taken into account in the amount that the companies paid at the time for the right to mine.

We will work with all parties on this. I look forward to working with Treasury civil servants and, I hope, Ministers, but also with Members in the House today, with the Coal Authority, which has an important role to play, and with devolved Administrations and local government. I confirm the offer of the meeting that we discussed earlier this month. I will ask the Coal Authority to make sure that it makes itself available to Members to discuss, in particular, the detailed issue of having the often highly specialist expertise needed within mineral planning authorities to tackle these problems.

I want to turn to the Hargreaves proposal, which was recently discussed in Westminster Hall. The suggestion is that if available resources at unrestored sites orphaned by failed companies could be mined and sold exempt of carbon price support payments, sufficient revenue could be generated to restore the sites to a good standard. The proposal is unusual because it suggests using a tax exemption to pay for a cash obligation. Employment creation and retention and the offsetting of tax generated are cited as additional benefits, above and beyond the core environmental question.

We are working with the Treasury on whether there can be exemptions from the carbon price floor. The Treasury has the lead on the carbon price floor because it is a tax, but that issue is worth considering. The CPF exists to enable us to meet our climate obligations, and it is an important part of our armament for tackling climate change. We have capped the carbon price floor—we have fixed it, so to speak—but I am happy to look at that and to continue to discuss it with my hon. Friends.

Ian Lavery: The Hargreaves proposal only relates to Scotland. Is the Minister happy to meet CoalPro, which represents open-cast operators in the UK, to discuss a UK-wide solution based on the Hargreaves proposal?

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Matthew Hancock: The carbon price floor is a UK tax, so although the proposal was made in response to the problems in Scotland, it could be applied across the UK. I cannot, however, commit to taking that forward. It may well be that a tax solution to what is essentially a spending liability is not the most resource-efficient policy for a Government who do not have much freely available finance, for reasons that we all know and understand.

I want to turn to the payments or restoration funds available. Under British Coal, once coaling ceased and restoration began, the restoration lump sum was released progressively to the contractor to finance the process. We must remember that British Coal primarily operated on a commercial basis, and the revenue it derived from licensing coal for extraction was offset against its operating costs. The fact that that has now moved to a private company does not change the fundamental question of whether enough has been put aside to ensure that, after the event, we can restore sites where coal was brought out of the ground.

I end by saying that when such a process is done well, it can be very positive for the local environment. In my constituency and others across the country—from Berwick-upon-Tweed to south Wales—sites have been restored effectively and, if anything, they are more beautiful and positive than sites elsewhere. That is a difficult task, but I look forward to working with Members from all parties to resolve this very difficult issue.

4.59 pm

Mrs Moon: This has been an excellent debate. We have been told that good and responsible companies are making tremendous efforts on restoration, and some sites are an asset in their local communities. We have been told not only that we need restoration bonds, but that they must be at the right level. We have heard about far too many eyesores that have blighted lives and communities.

The problem is poor legislation, which is exploited by cowboy builders. Now is the time for joint working, and for accepting that the problem exists and that solutions must be found. I am worried that we seem to have moved from pass the parcel to hunt the thimble. Where is the money? Money has clearly been generated, but we need clarification of how we can make it available to the local authorities that have been left with the problem of restoration.

Question put and agreed to.


That this House has considered financial support for restoration of open-cast coal sites.

29 Jan 2015 : Column 1111

Wreck of HMS Victory 1744

Motion made, and Question proposed, That this House do now adjourn.—(Gavin Barwell.)

5 pm

Mr Kevan Jones (North Durham) (Lab): On the afternoon of 4 October 1744, HMS Victory was struck by a storm and sank without a trace, along with its crew of 1,100. It was discovered in 1995, but nothing happened until 2008, when Odyssey Marine Exploration, a treasure hunting company based in Tampa, Florida and listed on the NASDAQ index, told the Ministry of Defence that it had located the site of the wrecked vessel.

In early 2009, Odyssey announced at a press conference in London that it had found the ship. Odyssey let it be known that it believed that HMS Victory had been a treasure ship, and it allowed the press to speculate about the value of its cargo. As a Royal Navy warship lost on active duty, HMS Victory was protected under international law by the concept of sovereign immunity. No one, including Odyssey, could interfere with the wreck site unless the Government gave their permission. That did not stop Odyssey claiming to be salvors in possession of the wreck, which was simply not true. One can speculate that that was a ruse designed to give the impression to its investors that it had some legal control over the wreck, when clearly it did not.

In 2010, my right hon. Friend the Member for Barking (Margaret Hodge) and I—she in her capacity as a Minister at the Department for Culture, Media and Sport and I in my capacity as a Defence Minister—launched a consultation on the management of the HMS Victory wreck site, laying out various options and seeking expert opinions on the best way forward. However, when the consultation reported back in July 2011, it recommended that the Government set up an independent charitable trust to manage the site. It recommended the Sir John Balchin Maritime Heritage Foundation, a charity that had only recently been established by Lord Lingfield, formerly Sir Robert Balchin, who had just been ennobled as a Conservative peer by the Prime Minister.

Sir Robert was introduced by Odyssey as a direct descendant of Admiral Balchen of the Victory, and he described the admiral in a TV interview as his forebear. It has since been demonstrated that Sir Robert Balchin, spelled B-A-L-C-H-I-N, is not a direct descendant of Admiral Balchen, spelled B-A-L-C-H-E-N. Odyssey deliberately changed the spelling of Admiral Balchen’s name to match that of Sir Robert Balchin for reasons we can only speculate about. When it was pointed out that Odyssey and Sir Robert had changed the spelling of Balchen to Balchin, Sir John’s name was quickly dropped from the name of the charity. At about the same time as HMS Victory was found and Odyssey became involved with Sir Robert Balchin, the spelling of the admiral’s name on the Balchin Family Society website was changed to match that of Sir Robert.

Balchen’s true descendants, the Temple West family, contacted Odyssey’s chief executive officer, Greg Stemm, to protest and raise their understandable concerns about the fraudulent nature of Lingfield’s claims. Stemm responded by rubbishing their concerns:

“Sir Robert has always been insistent with us that he was not a direct descendant, just that he was part of the same family. While that has possibly been changed to ‘descendant’ in some instances

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by the media, I trust that you are as cynical about the media’s ability to get everything right as I am.”

It is therefore remarkable that Odyssey commissioned a set of portrait photographs by Emma Duggan of Lord Lingfield standing in front of a portrait of Sir John Balchen to use as evidence that he was connected to the admiral’s family.

If Lord Lingfield was actually a direct descendent of Sir John Balchen and wanted the best for HMS Victory, he could have chosen to work with English Heritage and with many highly respected archaeologists in the UK to protect and study the ship, which is one of our most important Royal Navy wrecks. Instead, he chose to work with Odyssey, a secretive American commercial salvage company with a labyrinth of subsidiaries and linked companies and massive accumulated debts. I will discuss Odyssey’s scandalous track record in a minute.

After the 2010 general election, with the consultation on HMS Victory already under way, Lingfield began conducting a lobbying operation, using his connections to senior members of the Conservative party, on behalf of Odyssey and its business model. He set up a meeting with the current Secretary of State for Health, then the Secretary of State for Culture, Media and Sport, which took place in early July 2010. The meeting was first explained by the Department of Culture, Media and Sport as a constituency meeting, and was then described in more detail in a written answer by the hon. Member for Weston-super-Mare (John Penrose), then a Minister in DCMS, in July 2012. He stated:

“The Secretary of State for Culture, Olympics, Media and Sport met with Lord Lingfield in July 2010 in his constituency surgery in his capacity as MP for South West Surrey. The HMS Victory 1744 was discussed; no commitments, formal or informal, were made.”—[Official Report, 3 September 2012; Vol. 549, c. 218W.]

In fact, the current Health Secretary is not Lord Lingfield’s local Member of Parliament—that distinction goes to the hon. Member for East Surrey (Mr Gyimah).

The Department has therefore admitted that HMS Victory was discussed at the meeting. If that is the case, it is difficult to see how the topic of the meeting was not Government business directly related to the then Secretary of State for Culture, Olympics, Media and Sport’s role. Yet no officials were present, and it seems that no notes were taken of what was said or suggested. There are clearly serious questions for the right hon. Gentleman to answer.

The meeting took place shortly after the consultation on HMS Victory closed. If the then Secretary of State for Culture, Olympics, Media and Sport wanted to avoid any accusation of improper ministerial conduct, holding a meeting with Lord Lingfield about HMS Victory without any civil servants present may not have been the best way to go about it given Lord Lingfield’s role with the Maritime Heritage Foundation and Odyssey. I will write today to the Cabinet Secretary to ask him to investigate what I would say is a clear breach of the ministerial code by the current Health Secretary.

The mishandling of the case of HMS Victory does not end there. The important point is to look at Odyssey itself and explain what type of outfit it its. From the moment when Odyssey became involved with the Ministry of Defence over a previous case in the late 1990s, the heritage community has rightly been concerned about that organisation. Ministers from the current Government have ignored advice that they have received from English

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Heritage about the Maritime Heritage Foundation and Odyssey Marine Exploration, which are clearly not to be trusted.

Odyssey has a proven track record of playing fast and loose with historical facts and archaeological ethics. This is a company whose chief executive officer, Greg Stemm, told shareholders last September that it did not have enough cash to see it through the winter. There is plenty of evidence to suggest that if Odyssey were forced to raise equity, it would have to file for bankruptcy. Its shares are worth absolutely nothing.

Odyssey also has a proven track record of ignoring the law, manipulating historical data and making exaggerated and unproven claims to would-be investors of the value of its projects. For example, there is no evidence whatever that there was, to quote Greg Stemm,

“more than a billion dollars of gold”

on board HMS Victory, yet that was claimed by Odyssey’s share pumpers and never denied by the company. That lack of evidence has been verified by a Wessex Archaeology report, the only proper, independent investigation into the HMS Victory site. However, Odyssey communicated the claim to its investors via a third party, presumably with the sole intention of raising its share price and attracting new investors for its stock.

The company is well versed in that practice, having inflated the value of wreck sites in the past, leading to newspaper articles in The Daily Telegraph, The New York Times and The Sunday Times. Those newspapers have unwittingly been used by Odyssey to add credence to its claims about the values of those sites, which are then used as part of its campaigns to attract new investors for the company.

If deep-sea exploration and treasure hunting were such profitable and economically attractive ventures, surely other deep-sea offshore oil and gas exploration companies worldwide would be actively searching for shipwrecks and exploiting their cargoes? Of the 17 projects Odyssey has pursued, it has excavated and generated material revenue from only two. In fact, on the rare occasions that Odyssey does carry out deep-sea exploration and salvage work, it charters ships from others and hires temporary staff to perform the work.

Odyssey has also repeatedly pumped non-existent “secret” treasure cargoes, including on the SS Gairsoppa, which Odyssey won the contract for from the Department for Transport in 2010. Odyssey changed the terms of that contract with the Government after it was signed to the company’s advantage, meaning that Odyssey withheld $4.9 million from the Government to cover its salvage costs, which it had no entitlement to retain. I will write to the Permanent Secretary at the Department for Transport to investigate why the company kept what should be taxpayers’ money, and will also ask the National Audit Office to look at that.

In the case of the sovereign Spanish ship, the Mercedes, Odyssey took 17 tonnes of silver coins from the wreck without any permission, only to be subsequently forced by US courts to return the treasure to the Spanish Government. The only compensation Odyssey’s lawyers succeeded in getting was a payment of $20 per bucket for the 551 containers the coins were returned in.

Odyssey is a scam, which operates by encouraging mainly small investors to invest in its outrageous claims of future returns from the salvage of wrecks. The company

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has lost $185 million since its inception, and is backed by what can only be described as a web of secret offshore companies. They have little or no real value but are highlighted by Odyssey to give the impression that it has major investments in a number of companies, including those that practise underwater mineral extraction. A close look at the companies shows that the valuations are false, and that many of the individuals involved in Odyssey also sit as directors of the other companies. Odyssey strangely seems to pay those companies for “work” at exorbitant rates. Some of the directors are also highly dubious—some of the directors of a Panama-based subsidiary have been investigated for money laundering.

The only people who appear to have made money out of Odyssey and this lucrative scam are Greg Stemm, who is a former PR man for the comedian Bob Hope, John Morris, and the other members of Odyssey’s senior management team. As Odyssey is an American company listed on the NASDAQ, I believe that the Securities and Exchange Commission in the United States should investigate its practices. Later today I will pass on the information that I have collected on the company. It is not the first time that Greg Stemm and John Morris have been investigated by SEC—they were debarred from holding office in a previous company.

One very simple question needs to be answered. Why have the Government entered into a contract to hand over one of the nation’s most historic wrecks to a company such as Odyssey with such a shabby record? It appears that no due diligence has been carried out by the Government into this company. The facts are not difficult to establish, as most of the information that I have found is in the public domain.

In order for Odyssey to gain access to the wrecks, to inflate its share price and sell new stock, it has used Lord Lingfield to create what I would describe as a front organisation—the Maritime Heritage Foundation. MHF is not independent of Odyssey. They share a PR company, Brunswick, and a maritime consultant, Dr Sean Kingsley. MHF entered into a multimillion pound commercial contract with Odyssey, yet it has no money apart from £65,000 in the bank, having spent just £495 on charitable activities in 2013-14. A simple question is: how exactly is it going to fund this multimillion pound contract? It would also be interesting to know where the £65,000 came from. Did it actually come from Odyssey in the first place?

Serious questions can also be raised about the individuals involved in MHF: Sir Robert Balchin, eminent plastic surgeon Professor Alan Roberts, and Mr Nigel Branson, a member of the corporation of the City of London. None of those individuals has any background or expertise whatever in marine archaeology or in managing archaeological projects. I will be writing to the Charity Commission and asking it to investigate this charity.

There are also serious questions about the procedures that led to the Ministry of Defence gifting the wreck of HMS Victory to MHF in January 2012. It was to this almost non-existent charity, with no expertise and non-existent funds, that the Ministry of Defence gifted HMS Victory in 2012. The threshold for gifting currently stands at £300,000, meaning that a departmental minute is laid before Parliament when items valued over this figure are gifted by the Government. This arrangement provides transparency to allow Parliament to raise concerns

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about such gifts. The maritime archaeological community agrees that the guns alone on the wreck are worth several million pounds. Why did the Ministry of Defence not place a departmental minute before the House so that the gift could be properly scrutinised? I have raised this matter with the Chair of the Public Accounts Committee who has herself raised the matter with the National Audit Office. I have also written separately to the permanent secretary at the Ministry of Defence to ask him to investigate why Ministers agreed to this.

Why was Lord Lingfield, a man with no expertise in maritime archaeology, given such a prominent role in the preservation of HMS Victory? We need to be clear about what motivates him. He could just be an innocent Walter Mitty character claiming to have ancestral links to boost his standing in the society in which he moves, or he could have direct or indirect financial links or association with Odyssey, either through direct payments, shares or an involvement in hedge funds trading in Odyssey’s shares. If that is the case, it would be very serious. It would clearly be a matter not only for the House authorities, but the police. I am at a loss to know what his motivations are, but we need a clear explanation from him, including how he became to be associated with Greg Stemm and John Morris of Odyssey.

I am also at a loss as to why the Government should hand over this wreck to an individual like Lord Lingfield, who has no experience in this field. They might as well have handed this to the first member of the public who strolled past the MOD main building that day. The only difference is that we know Lord Lingfield is very well connected within the higher echelons of the Conservative party. The Government should immediately cancel this arrangement with Odyssey and the Marine Heritage Foundation.

Our nation rightly honours citizens who die in the active service of our country. I am a commissioner of the Commonwealth War Graves Commission and I am truly privileged to serve on it. Just like the true descendants of Sir Robert Balchen, the British public will be outraged and scandalised by the sleazy way the Government have treated the last resting place of HMS Victory and her crew.

5.19 pm

The Minister for Culture and the Digital Economy (Mr Edward Vaizey): I am grateful for the chance to respond to the debate called by the hon. Member for North Durham (Mr Jones), whom I congratulate on securing it. He is a distinguished former Minister at the Ministry of Defence, and, as he said, he was responsible for beginning the consultation on the future of the wreck of HMS Victory.

I begin by making it clear that the MOD’s decision to allow the Maritime Heritage Foundation to recover at-risk surface artefacts from the wreck is currently subject to a judicial review action.

Mr Jones: We had a Defence Minister here earlier, but he has obviously left the Chamber—oh, he is now returning. Why is a Minister from the Department for Culture, Media and Sport replying to the debate, rather than an MOD Minister?

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Mr Vaizey: As I think became partly clear in the hon. Gentleman’s speech, different Departments are involved in the wreck’s future. DCMS, being responsible for the Government’s relationship with the UNESCO convention and English Heritage and for the protection of marine archaeology, has an important role in ensuring that the wreck site is treated appropriately. However, I must put on the record my thanks to the Under-Secretary of State for Defence, my hon. Friend the Member for Canterbury (Mr Brazier), for being on the Bench with me this evening. He is here, also, to listen to the hon. Gentleman’s points, which, I might add, he put extremely forcefully.

As I said before the hon. Gentleman’s intervention, the decision to allow the Maritime Heritage Foundation to recover at-risk surface artefacts from the wreck of HMS Victory is subject to judicial review. With the greatest respect, therefore, it would be unwise for me to go into the subject, given that court action might be imminent.

I would like to put the debate into context. As the hon. Gentleman indicated, it is unusual to find the remains of a British first-rate warship from this period, and the wreck is not just the predecessor of the Royal Navy’s most famous ship, the HMS Victory we know so well as Nelson’s flagship; Balchen’s Victory has historic resonance of its own. In its day, it was the pinnacle of naval technology. For example, it was fitted with a complete arsenal of bronze cannon, which is extremely rare. The wreck is located in the English channel, but outside British territorial waters, meaning it is not subject to the Protection of Wrecks Act 1973. Normally, a wreck within our territorial waters would be designated under the Act and therefore protected.

Neither is the wreck like the Mary Rose. It is not a single large piece remaining to be excavated. Its remains are scattered over a wide area, which is an important point, because it means that the wreck is highly at risk from environmental factors—shifting sands and bottom currents—

Mr Jones rose—

Mr Vaizey: I will lay out why I think it is at risk, and then the hon. Gentleman can tell me why it is not at risk.

First, there are the environmental factors; secondly, the wreck is at risk from trawler fishing—I gather there are scratches on some of the cannon and that some have been dragged up to 300 metres away from the wreck; and thirdly, of course, it is at risk from illegal salvage. Indeed, one cannon, I gather, was removed illegally from the site by a Dutch salvor, but recovered by MOD police.

Mr Jones rose—

Mr Vaizey: I wait to be corrected by the hon. Gentleman.

Mr Jones: The only independent report into the wreck, the Wessex report, found no evidence it would deteriorate. That was the excuse pushed forward by Lord Lingfield and Odyssey for why they had to start work on the wreck.

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Mr Vaizey: As I said, as far as I am aware, there has been at least one illegal salvage from the wreck, and it is obviously in a busy part of the world. It is not in a remote location that requires an expensive operation to take artefacts from it. It is in the English channel and therefore potentially subject to illegal salvage by amateurs looking to make a quick buck. It is important, I think, to recognise that. The hon. Gentleman mentioned the Wessex archaeology report. That shows that the Government have been very careful to commission reports and get advice on how the wreck should be treated. In our opinion, it is important to recover some of the artefacts to help our understanding of Britain’s great naval heritage before it is lost for ever.

The hon. Gentleman referred to the gifting of HMS Victory. It is true that a deed of gift was signed in January 2012, transferring to the Maritime Heritage Foundation the ownership of the wreck of HMS Victory and all associated with her in the vicinity of where she is lying, except for personal property not belonging to the Crown.

The Maritime Heritage Foundation is a registered charity, and its chairman is indeed Lord Lingfield—and the hon. Gentleman has expressed his opinions on him. MHF was established especially to recover, preserve and display in public museums artefacts from HMS Victory and to promote knowledge and understanding of our maritime heritage, particularly through educational projects. The nature of this work lends itself to being completed by a charity, as charities have access to funding streams that the Government do not, and it is Government policy to give voluntary bodies the chance to use their enthusiasm and expertise to deliver functions that hitherto have been the prerogative of the state.

All artefacts recovered will be declared to the receiver of wreck in accordance with existing legislation to determine ownership. As specified in the Victory project design’s key management principles, artefacts transferred under the deed of gift that are recovered and accessioned from the wreck and the associated archive, including site plans, drawings and photographs, will form the “Victory 1744 Collection”, which will be managed and curated in line with the Museums Association’s code of ethics for museums.

MHF and Her Majesty’s Government are committed to making the artefacts accessible to the public through a mixture of exhibitions and virtual tours. MHF will publish more information about this on the website, but discussions have taken place with the National Museum of the Royal Navy, which already has two cannons from

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the ship. Since the beginning of last year much progress has been made. There have been constructive discussions between the Government, MHF and the advisory group, which were required for the project to move forward.

Mr Jones: Considering that the organisation has no expertise on its board and has no money, which is the more important thing, how is it going to achieve this? How does this square with information from the United States about Odyssey, saying that it will get its money back by selling artefacts from the ship?

Mr Vaizey: It is important that the hon. Gentleman has referred to the trustees of the charity, but the charity has been set up expressly to recover artefacts from HMS Victory. It is important to stress that we set up a management advisory group, which includes the National Museum of the Royal Navy, English Heritage, the receiver of wrecks, the Marine Management Organisation and officials from my Department and from the Ministry of Defence. I can tell the hon. Gentleman, who knows me well enough, that as the Minister with responsibility for this work, I have at no point allowed MHF to proceed with any actions when this advisory group said that it should not do so.

Mr Jones: I agree, and I commend the Minister for that. Let me ask him, then, to stop the consultants and advisers to MHF and the consultants who work for Odyssey from attending those meetings?

Mr Vaizey: Perhaps it reflects my style of ministerial management, but it is important to me that where my advisers and indeed external experts are raising concerns, those concerns should be heard at first hand by those who might ultimately be responsible for collecting and recovering artefacts from the site so that the concerns can be taken seriously and acted on.

The hon. Gentleman puts his points forcefully and he is going to take a number of actions. The Under-Secretary of State for Defence, my hon. Friend the Member for Canterbury will write to him to explain the role of the Ministry of Defence, and I certainly pledge now in the House that I will take the hon. Gentleman’s points very seriously indeed, go back and consult my officials and write to him subsequently.

Question put and agreed to.

5.29 pm

House adjourned.