Yahoo News Should the Government have bailed out Thomas Cook?
Thomas Cook has collapsed leaving more than 150,000 UK holidaymakers stranded overseas.
The Civil Aviation Authority (CAA) has started the largest peacetime repatriation of Britons in a flight programme costing £100 million.
All bookings, including flights and holidays, with the company have been cancelled. It’s thought around a million customers have travel booked in the coming months.
Unions representing pilots, cabin crew and travel agency staff reacted with anger over the company’s demise, directing much of their criticism at the Government.
‘Stabbed in the back’
Union leaders said Thomas Cook workers have been “stabbed in the back” over the company’s collapse, with thousands now losing their jobs.
Brian Strutton, general secretary of the British Airline Pilots’ Association (Balpa), said: “The hopes of all Thomas Cook employees that their airline could survive has been brutally quashed this morning as they wake up to find they have no job.
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“While detailed plans to repatriate passengers have been carefully put together and ministers have and will continue to claim the credit for that, the staff have been stabbed in the back without a second’s thought.
“Despite continuing to keep Thomas Cook going in recent weeks with dignity and integrity while their own futures were being secretly decided we don’t even know if staff will get a pay cheque this month. It is despicable. Thomas Cook pilots and all staff deserve better than this.”
‘Moral hazard’
Boris Johnson defended his refusal to bail out Thomas Cook, warning that state intervention risked creating a “moral hazard” in future cases of companies on the brink.
The Prime Minister has come under fire from Labour and the unions for failing to step in to save the collapsed tour operator.
“It is perfectly true that a request was made to the Government for a subvention of about £150 million,” the Prime Minister said.
“Clearly that’s a lot of taxpayers’ money and sets up, as people will appreciate, a moral hazard in the case of future such commercial difficulties that companies face.”
Other ministers suggested the sum requested by Thomas Cook was up to £250 million.
Moral hazard is the concept that firms will take increased risks if they believe that they will be protected from the consequences, for example through a state bailout.
But shadow chancellor John McDonnell blamed the Tory Government’s “ideological bias” against state intervention for the decision not to intervene.
“The Government’s intervention could have enabled us to just stabilise the situation, give a breathing space so that there could be proper consultation with the workforce in particular about how to go forward,” he told the BBC.
