Thomas Cook

With your permission, Mr Speaker, I would like to make a statement about the steps that the Government have been taking to support those affected by the collapse of Thomas Cook, particularly for the 150,000 passengers left abroad without a flight back and the 9,000 people here who have lost their jobs in the UK.

This is a very sad situation. All parties considered options to avoid the company’s being put into administration. Ultimately, however, Thomas Cook and its directors themselves took the decision to place the company into insolvency proceedings, and it ceased trading at 2 am on Monday 23 September. I recognise that this is a very distressing situation for all those involved. I assure Members of the House that the Government are committed to supporting those affected, including by providing repatriation flights free of charge for all those people.

We have been contingency planning for some time to prepare for this scenario, under Operation Matterhorn. The Government and the Civil Aviation Authority have run similar operations in the past and have been working hard to minimise the disruption to passengers and to try to assist Thomas Cook’s staff. Even with our preparations, and previous experience with Monarch, the task before us represents the largest peacetime repatriation ever undertaken in the UK. Some disruption and delay is therefore inevitable, and we ask for understanding, particularly for Thomas Cook’s staff, many of whom are still working, alongside the Government, to try to help ensure the safe return of their customers.

For example, the media reported on the situation in Cuba overnight. That aircraft has now left this morning, and all the passengers from Cuba who were scheduled to come home today are on that flight.

Normally, the CAA’s responsibility for bringing back passengers would extend only to customers whose trips are covered by the ATOL scheme. However, there would have been insufficient capacity worldwide in the aviation market to allow people whose trips were not covered by the ATOL scheme to book tickets independently and bring themselves home. Some passengers would have had to wait for perhaps a week or longer, and others would have suffered financial and personal hardship as they waited for another flight. In my view, that would have created further economic problems, with people unable to return to work and unable to be reunited with their families. With tens of thousands of passengers abroad and with no easy means of returning to the UK, I instructed the CAA to ensure that all those currently abroad were able to return, ATOL or non-ATOL.

Due to the size, complexity and geographical scope of the Thomas Cook business, it has not been possible to replicate the airline’s own flying programme and its schedule. In the case of the Monarch collapse back in 2017, the CAA was able to source enough aircraft of the right size and the right types to closely match the airline’s own aircraft. But Thomas Cook was a much bigger airline, and it also provided a global network of package holidays; as a result, this operation has been much more challenging. Some passengers will be travelling home on commercial flights, where other airlines have available seats. I know that the whole House would want to thank all the airlines and ground staff who have offered assistance to Thomas Cook passengers in this difficult situation.

I would like to update the House with the latest information and give hon. Members a sense of the scale of the operation that has been going on. We have put arrangements in place to bring back 150,000 people, across 50 different countries.[Official Report, 30 September 2019, Vol. 664, c. 9MC.] That requires over 1,000 flights by CAA-chartered aircraft over the next two-week period. Passengers will be able to complete their holidays, so that they should not be leaving early, and should return on the day that they were intending to.

So far, in the first two days of the operation, we have brought home nearly 30,000 of the 150,000 passengers, on over 130 dedicated CAA flights. We hope to repatriate a further 16,500 passengers today, on about 70 flights. I checked before I came to the House, and the operation is proceeding according to these amended schedules.

So far, 95% of people have been repatriated to their original point of departure. Again, we have not been able to bring everybody back to the airport from which they left, because of the difference in size and shape of available aircraft. In the first two days, we have therefore provided onward travel for 2,300 passengers, and have arranged an additional fight from Gatwick to Glasgow to relocate passengers who have flown back to the wrong airport because of that scheduling issue.

The CAA has reached out to over 3,000 hotels, issuing letters of guarantee to ensure that British holidaymakers can remain in the hotels in which they are booked, and that has been followed up by calls and contact from FCO officials.

Over 50 overseas airports are involved—around the Mediterranean, in north Africa and in north America—and 11 UK airports are engaged in this programme. There have been over 100,000 calls to our customer service centres, and on the first day alone there were over 2 million unique visitors to the CAA’s dedicated website—thomascook.caa.co.uk—with close to 7 million page views. In total, 10 Government Departments and agencies have been involved, including the Department for Transport, Foreign and Commonwealth Office, Department for Business, Energy and Industrial Strategy and Department for Work and Pensions, in London, and our extensive diplomatic and consular network in the affected countries.

I have been hugely impressed, as the programme has been rolling out in the past couple of days. The response from everyone involved, including Thomas Cook passengers, has been generally positive, with many praising the CAA, local staff and government officials, even though there has been considerable disruption. For example, people have not been able to check in in advance, as they are used to doing these days, but have instead had to queue to check in for every single flight. That has caused some of the queues that we see on television. The programme has, though, been generally well organised and all those involved have been extremely professional.

Despite these robust plans and their success so far, this is an incredibly distressing situation for all concerned. One of my top priorities remains helping those passengers abroad to get back to the UK and do so safely, but in addition to supporting passengers, we have been working across Government to ensure that the 9,000 former Thomas Cook employees in the UK and those overseas receive the support that they need. The decision by the Thomas Cook Group’s board has been deeply upsetting for employees, who are losing their jobs. DWP’s Jobcentre Plus rapid response service is in place, helping workers get back into employment. The Jobcentre Plus rapid response managers across the UK are ready to engage with the liquidators to start that vital work. Special arrangements are in place for UK employees who are owed redundancy pay and notice pay by their insolvent employer: the redundancy payments service in the Insolvency Service can pay statutory amounts owed to the former employees through the national insurance fund. I want to say more about that later, but I will do so in answer to questions.

My colleague the Secretary of State for Business, Energy and Industrial Strategy is establishing a cross-government taskforce to address the impact on employees and local communities. That will help to overcome barriers to attending training, securing a job or self-employment, such as by providing child care costs, tools, work clothes and travel costs.

My colleagues and I have been in contact with those Members whose constituencies will have been hardest hit by these job losses, and have given assurances that we will work with the industry to offer what support we can. In fact, pretty much every hon. Member’s constituency is affected in some way, even if only through the number of people working in a single shop location.

My right hon. Friend the Secretary of State for Business, Energy and Industrial Strategy has written to the Financial Reporting Council to ensure that it prioritises, as a matter of urgency, an investigation into both the causes of the company’s failure and the conduct of its directors and auditors.

I am also aware of the duty that this Government have to the taxpayer, and while affected passengers have been told they will not have to pay to be flown back to the UK, we have entered into discussions with third parties with a view to recovering some of the costs of this large operation. Around 60% of passengers have ATOL protection, and the CAA’s air travel trust fund will contribute proportionately to the costs of the repatriation, as well as refunding ATOL future bookings. We will also look to recoup some of the costs from the relevant credit and debit card providers and travel insurers, and will look to recover costs from other travel providers through which passengers may have booked their Thomas Cook holiday. We are also in discussion with the Official Receiver to understand what costs can be recouped through the company’s assets.

The final cost of the operation to repatriate Monarch passengers back in 2017 was about £50 million, including ATOL contributions. The repatriation effort for Thomas Cook is now known to be about twice the size and is more complicated, for reasons that I have explained.

I have also seen it suggested in the press that the Government should have avoided the collapse with a bail-out of up to £250 million for the company and shareholders. Given the perilous state of the business, including the company’s own reported £1.5 billion half-year loss which was reported in May and followed by a further profit warning in November, this simply was not the case, with no guarantee that an injection would have secured the future of the company. Our concern was that if we put in £250 million, we would risk throwing away good money after bad and still having to pay the cost of this repatriation. It is quite clear that in the last several years the company ran into a number of problems by trying to expand itself through investing more in the high street rather than less, while the entire market was moving in the opposite direction.

The loss of an iconic British brand with a 178-year history—one of the oldest travel companies in the world—is an extremely sad moment. However, this should not be seen as a reflection on the general health of the UK aviation industry, which continues to thrive. Passenger numbers are actually up, and people are traveling more. However, the truth is that the way people book their holidays has changed an enormous amount over the years, but it did not change as much within the company. None of this should distract us from the distress experienced by those businesses reliant on Thomas Cook, by passengers and by Thomas Cook employees who, as I have said, have worked above and beyond, particularly in recent days during this distressing situation.

We have never had the collapse of an airline or a holiday company on this scale before, but we have responded swiftly and decisively. Right now, our efforts are rightly focused on getting those passengers home and looking after those employees who have lost their jobs, but we also need to understand whether any individuals have failed in their duties of stewardship within the company. Our efforts will then turn to working through the reforms necessary to ensure that passengers do not find themselves in this ridiculous situation again. We need to look at the options within ATOL, and also to ascertain whether it is possible for airlines to be wound down in a more orderly manner. They need to look after their customers, and we need to be able to ensure that their planes can keep flying so that we do not end up having to set up a shadow airline for no matter what period of time. This is where we will focus our efforts in the next couple of weeks, but in order to do this we will require primary legislation and, dare I say it, a new Session of Parliament.

In what has been a challenging time, I want to put on record my appreciation for the work of all those involved in this effort, particularly Richard Moriarty, the chief executive officer of the CAA. He and his team, and my officials in the Department for Transport, have done an extraordinary job so far. I am also grateful for the support of others, including the Mayor of Manchester, who has acknowledged the Government’s repatriation effort and its work with all the agencies involved in helping to get people home. This has been an unprecedented response to an unprecedented situation, and I am grateful to all the parties who have stepped in to support these efforts. I commend this statement to the House.

I would like to thank the Secretary of State for giving me timely advance sight of his statement; that is a welcome change. What I do not welcome is the collapse of Thomas Cook, which is a tragedy for the 178-year-old business, its customers and its staff. The travel company went under because successive chief executives failed to steer the group effectively or to evolve the business. Thomas Cook had five offers for its airline business, yet these were rejected by the board. I, too, would like to pay tribute to Richard Moriarty and his team at the Civil Aviation Authority for the work done yet again to repatriate holidaymakers. I applaud their sense of public service and duty.

Aviation is a fiercely competitive industry that has lost services because of terrorism and Brexit uncertainty. The Government’s dithering on their aviation strategy has only added to these difficulties. In May, speaking on airline insolvencies, the Secretary of State’s predecessor said that the Government

“will work swiftly to introduce the reforms that are needed to ensure a strong level of consumer protection and value for money for the taxpayer.”—[Official Report, 9 May 2019; Vol. 659, c. 33-34WS.]

This was misleading. The Government have done nothing to protect consumer or taxpayer interests. The Government have sat back and let the company fold.

Yesterday, Governments in Scandinavia stepped in to back Thomas Cook subsidiaries in that region. The German Government also stepped in with a loan of €380 million for the Thomas Cook subsidiary Condor, to help that company to survive. The chief executive of Thomas Cook Airlines, Christoph Debus, has seamlessly just gone to work for Condor, and jubilant scenes of the survival of the subsidiary are doing the rounds on social media. Can the Secretary of State tell the House what steps his Government took to enter into a joint investment with other interested nation states? It is reported that the Governments of Spain and Turkey were understandably willing to do this, but seemingly the UK Government were not.

Let me see what we can deal with here. It is true, as the hon. Gentleman outlined, that the world has changed. In 2007, Thomas Cook bought MyTravel just as the internet was starting to take off. In 2016, when the high street was clearly struggling because the internet had taken off, it bought the high street shops of Co-op Travel, further expanding its problems and its massive debt to £1.7 billion. I agree with him that this was, in the end, a very poorly run business that was going in the wrong direction at the wrong time.

The hon. Gentleman made a very sensible point in his query about the return of the bonuses that we have all been reading about. I have described how my right hon. Friend the Secretary of State for Business, Energy and Industrial Strategy has written to the Insolvency Service. Under the Insolvency Act 1986, the official receiver has the power to require the return of bonuses in certain circumstances. I absolutely agree with the hon. Gentleman that that needs to be fully looked into, including the role of the auditors.

That is where we agree. Where we disagree is that it is not the case that this situation is somehow unique to Thomas Cook. As I mentioned, airlines elsewhere in the sector are in good health. Many of them have been very helpful in bringing Thomas Cook passengers home over the past couple of days and have offered extraordinary help, even lending aircraft and, in the case of one well-known airline, cutting prices for Thomas Cook customers, rather than charging more. However, in response to what the hon. Gentleman said about this insolvency, it is only right to point out that Germania, a German airline, went bust; Primera Air, a Danish airline, went bust; Air Berlin, a German airline, went bust; as did Cobalt Air of Cyprus and FlyVLM of Belgium. This is not a UK issue; this is an issue where some airlines manage to do the right things and succeed, and others do not.

The hon. Gentleman rightly mentioned what has happened with Condor. Here, we will find partial agreement and partial disagreement. Condor was operating under a somewhat different business model. In Germany, people do not book holidays in quite the same way as they do in the UK, partly because UK citizens tend to use the internet in a different way and are much more becoming their own travel agents. With Condor, the business remained profitable. [Interruption.] The hon. Member for York Central (Rachael Maskell) asks what difference that makes. The difference is that it was a profitable business, unlike the business here.

On a point of order, Mr Speaker.

We cannot take points of order during a statement. Points of order will flow after either this statement or other statements at the discretion of the Chair.

The UK headquarters of Thomas Cook are based in my constituency. The collapse of the company has meant the loss of 1,200 local jobs. Our thoughts go out to all those people and to the thousands more across the UK who have been affected. Will my right hon. Friend join me in paying tribute to the many local organisations and companies that have come forward offering jobs to those who have been affected? The local newspaper, the Peterborough Telegraph, has been co-ordinating the activities. We have also seen acts of kindness. Peterborough United and Peterborough Phantoms, a local ice hockey team, are offering free tickets to those who have been affected. Does my right hon. Friend recognise that at this difficult time we need to appreciate and applaud the generosity that is coming through?

May I start by paying tribute to my hon. Friend, who has been working very hard through the last few difficult days with people from Peterborough who have found themselves without work? He has done tremendous work with his community to support all those who have lost their jobs. There are 630 jobcentres running the rapid response service that has been mobilised to pick up this issue for every single former Thomas Cook employee who has lost their job as a result of this appalling news. I should say that the best thing we can do is to make sure that we operate an economy where there is record high employment and record low unemployment, because that will give people the best opportunity to get back into a good job.

I thank the Secretary of State for advance sight of the statement. I pay tribute to the work of the CAA and to the Thomas Cook employees who have gone above and beyond to help stranded holidaymakers. I express my sympathies for all those who have lost their jobs.

Instead of the UK Government using the mantra that this is the biggest peacetime repatriation, they should be apologising for this collapse happening on their watch. The Secretary of State spoke of reforms and new legislation that are required to stop this happening again with another company, but why were lessons not learned from the collapse of Monarch just two years ago? What are the timescales for the new legislation? I point out that, procedurally, a new Session is not required for legislation. The Government could bring it forward if they wanted.

Will the Secretary of State explain the position with Spain and Turkey, and the fact that they were looking at ways to keep Thomas Cook trading, while the UK Government were not willing to? The German Government led the way in keeping Condor going.

The Secretary of State said that £250 million would have been good money after bad, but what discussions did the Government have with Thomas Cook and what financial appraisal did the Government make before saying that they could not fund that money? This is a Government who can find £100 million to advertise that Brexit is good for us. I think they should spend that money on supporting jobs instead.

Will the Secretary of State explain what impact Brexit had on the collapse of Thomas Cook, because it warned about the impact of Brexit? What impact did the collapse of sterling have on the company’s trading position? What assessment have the Government made of the pension liabilities of Thomas Cook? What plans do the Government have to curb outrageous executive pay, given that close to £50 million has been taken out of Thomas Cook in recent years?

I should have picked up the point about Thomas Cook employees abroad in answer to a previous question. We are actually bringing back some of those people, starting with the crews and the operational people. I think I am right in saying that yesterday we had brought back about 150 so far. We are not ignoring them, but we need to bring passengers back first. I have asked the CAA to be as flexible as possible in bringing back Thomas Cook employees, and the hon. Gentleman is right to remind me that I had not mentioned that before.

The hon. Gentleman asked a number of other questions that I have previously answered, and I do not want to go round in circles. The House must know that no Government would want to lose an iconic, 178-year-old famous British name. I hear people ask, “Why don’t you just put the money in?” All those people have to do is open the books to realise that there is a £1.7 billion debt, with £1.5 billion lost in six months alone, and that another profit warning had been issued.

I am afraid that this situation is entirely different from that with Condor, which is a fundamentally profitable airline, and it just would not be responsible to throw good money after bad. We would probably be back here in a very short time to offer a bail-out to get people home, rather than to bail out the company. This company just was not a going concern with which we could do that.

The hon. Gentleman asks sensible questions about whether other holidaymakers are being held to ransom or being held captive elsewhere in the world, and I am not aware of any other location in which that is the case at the moment. However, it is a live and moving situation, and under our direction the CAA has been issuing proactive letters to explain that holidaymakers’ bills will be settled in places where some hotels have not had bills settled for the past three months because of the company’s bankruptcy. I pay tribute to and thank our foreign mission in Cuba for proactively getting in touch with Ministers yesterday to resolve that appalling situation.

As somebody who worked in the travel industry for many years, I am saddened to see the demise of Thomas Cook, but it is also worth noting that the sector has seen some notable collapses over the years. The scale and complexity of this repatriation operation are significant, and I thank my right hon. Friend for his update. After this urgent work on repatriation has been completed, and because this sector is prone to significant collapses, may I ask him to focus on the industry structure and a sector insurance scheme that would protect passengers and taxpayers in the future?

My hon. Friend is absolutely right. The airline insolvency review, which reported in May, provides a few useful ideas about things that could be done, including some that require primary legislation and others that do not and on which we have already started to act. We cannot keep returning to this situation. It is terrible for passengers and for all those involved, and there is a problem in finding sufficient aircraft to solve this problem when it happens.

The Secretary of State will be aware that the hon. Member for Harrogate and Knaresborough (Andrew Jones) is a distinguished former Transport Minister. Indeed, I well recall that when he served as Parliamentary Under-Secretary of State for buses, being a man of the people as he is, he was wont to come to work on the bus, no doubt to the very considerable delight of his fellow passengers.

Following the sudden collapse of Thomas Cook, which was headquartered in Peterborough, and the loss of 1,200 jobs there, many of my constituents turned up for work only to find that their jobs were lost with Christmas fast approaching. The hon. Member for North West Cambridgeshire (Mr Vara) is absolutely correct that there has been an incredible outpouring of unity from individuals and businesses in Peterborough who have stepped up to show their support and solidarity at an extremely difficult and distressing time for so many in Peterborough.

Can the Secretary of State tell me what specific support the Government are giving to my constituents, who have mortgages and bills to pay and families to support, in finding alternative employment? What measures have they put in place to support the city’s economy as a whole, given the loss of so many good jobs?

The hon. Lady is absolutely right, including on the response in Peterborough, which I have been tracking closely through hon. Members, including my hon. Friend the Member for North West Cambridgeshire (Mr Vara) and others. A bespoke service will be available through Jobcentre Plus, and I have spoken at length to my right hon. Friend the Secretary of State for Business, Energy and Industrial Strategy, who is leading a cross-Government taskforce that is meeting again tomorrow afternoon to continue to work on the issues of helping people to find new jobs.

I mentioned in my statement the additional assistance that is available through retraining, or even simple things like childcare while people go for interviews and the like. It is heartening to know that jobs are available regionally, but it would be an economic shock to any region to lose 1,000-plus jobs. Through the various mechanisms, particularly the rapid response service, we are determined to support all the constituents of the hon. Member for Peterborough (Lisa Forbes) and my hon. Friend the Member for North West Cambridgeshire.

I thank my right hon. Friend for what he is doing, but my constituents have lost their jobs. The directors go back to their £1 million-plus houses, having taken £47 million in bonuses and wages over the past few years. My constituents worry about their jobs and their pensions. Should we not be seizing the assets of the directors who plundered this company and took it to ruin? Will he guarantee that my constituents’ pensions will be protected?

I understand my right hon. Friend’s concern, and I congratulate him on his work over the past few days with his constituents who have lost their jobs.

We have touched on this before, and there have been a lot of reports in the newspapers, but it is important to allow the correct channel, the official receiver, to do its job. I stress to the House that, under the Insolvency Act 1986, the official receiver, as liquidator, may seek to overturn a range of transactions made prior to the liquidation, which includes things like bonuses, although I think we need to leave it to due process to see whether that would be appropriate.

There is also the Company Directors Disqualification Act 1986, and I fully support that idea. As I said in answer to a previous question, the Government were concerned to ensure that we did not prop up an organisation that was already doing things wrong.