Thomas Cook Customers

Bill Esterson Excerpts

Tuesday 5th November 2019 Commons Chamber

[Bill Esterson (Sefton Central) (Lab)]

As your next-door-but-one constituency neighbour, Mr Speaker, may I congratulate you on your election?

I thank the Secretary of State for her statement. She is right to raise these matters today, because they raise serious questions that will need far more attention in the new Parliament, whichever Minister is at the Dispatch Box. I also have some questions today to take this forward.

In her statement, the Secretary of State mentioned a “high aggregate amount”. Can she tell us more about what that is? On the question about audit, to which I will return shortly, will she tell us why no regulation was in place to ensure that this serious weakness did not materialise? I should also like to put on record my thanks to all those involved in bringing 140,000 holiday- makers home.

We welcome the fact that the online services have now been bought, and that shops in the constituencies of Members across the House are being reopened by Hays Travel, but why oh why did Thomas Cook have to close first, and why were the opportunities that were given to the shops and online services not given to the airline? Intervention to ensure the retention of those viable parts of the business would have been a major step towards addressing the serious weaknesses that the Secretary of State identified in her statement. The Government were told at the time that parts of the business were successful, and Hays Travel clearly agreed because it bought the shops. There is also value in the brand, which is why the online business has been recovered. Could the airline have been saved, as the ones in Germany and Scandinavia were, if the liquidation had been delayed?

Why did the Government not listen to those calling for intervention? Why did they not take a stake in the company, so that the shops and digital business could have been transferred while still trading and so that other parts of the business could have been saved? Let us remember that the Turkish and Spanish Governments wanted to step in. They saw the potential value, but our Government did not. Had our Government intervened, the hardship to which the Secretary of State rightly referred could have been identified and possibly avoided. Does she regret her failure to speak to the company and to intervene to protect the jobs and rights of workers? Had the company continued trading, with the Government holding a stake, the rights of workers would have been protected. It is good news that staff will now have jobs with Hays Travel, but will they be paid for the time since Thomas Cook closed? Will their rights from their years of service be protected? Are staff being TUPE-ed over, or not?

What can the Secretary of State tell us about her response to the warnings about auditor conflicts of interest? She mentioned audit responsibility and potential failure in her statement. Auditing conflicts of interest have been repeatedly identified at Carillion, at BHS, in the banks and now at Thomas Cook. Has she read the excellent report from the Business, Energy and Industrial Strategy Committee, and what is her response to its recommendations, including its calls for a new regulator and for the audit profession to be proactive rather than reactive? Why is the Secretary of State so resistant to change? The Competition and Markets Authority wants action; why does not she?

What action is the Secretary of State taking to address the scandalous payment of bonuses to executives who have profited at the expense of workers and customers and who presumably have direct responsibility for the appalling hardship to which she has referred? Analysis by Unite and Syndex shows that £188 million in bridging loans would have prevented the liquidation. That would have allowed profitable parts of the business to be sold while still trading, and for workers’ rights to be protected. This would have supported the wider economy and communities, too.

The Government should be a partner of business, not stand apart from it. That means intervening and providing support where intervention stands a chance of succeeding. The more evidence emerges about the Thomas Cook collapse, the more it appears that the case for intervention was there to be made. If they would not intervene at Thomas Cook, exactly when would the Government intervene?

If the Secretary of State wants to avoid hardship for those covered by insurance, she needs to change her approach and her attitude to intervention. When she referred to a drop in the ocean in responding to a question from the shadow Business Secretary, she demonstrated that she did not agree with her predecessor, who said that reforms were needed to ensure a strong level of consumer protection and value for money for the taxpayer. He was right, was he not?

The Secretary of State said that the Thomas Cook approach was unacceptable and that support must be given to those severely impacted by its closure through no fault of their own. I agree, but the Government have failed Thomas Cook. They sat back and let it fold. Only proper reforms will make sure that catastrophic failures of this type do not happen again.

[Andrea Leadsom]

I am glad that the hon. Gentleman recognises the Government’s efforts, particularly on the repatriation of customers stranded overseas and, of course, in the work, which I know through chairing the Government taskforce, to try to ensure that we get the best possible arrangements for Thomas Cook staff. He asks why the Government did not bail out Thomas Cook. He will be aware that, according to court reports, there was about £1.9 billion of debt on Thomas Cook’s balance sheet. It did approach Government looking for a loan facility of up to £250 million, but it is clear that, had the Government put that significant sum of taxpayers’ money into Thomas Cook, we would have ended up in the same position as we are in today. We would have had to repatriate those customers. We would have to have done exactly as we have done, but the taxpayer would have been £250 million worse off, so it was not an appropriate use of taxpayers’ money. It is very sad that Thomas Cook went bust, but it is not right that Government should just bail out every business. Businesses need to stand on their own two feet.

The hon. Gentleman made some very important points about regulation. I can tell him that I wrote to the Financial Reporting Council asking it to prioritise as a matter of urgency consideration of an investigation into the audit of Thomas Cook’s 2018 accounts, as well as the conduct of its directors. He asked why the Government did not foresee this.

It was never envisaged that a UK tour operator would fail to insure itself fully to cover claims for personal accident or fail to ensure that it had ring fenced the funds to meet those liabilities so that they were safe if the company got into difficulty. The company has a legal obligation to cover personal injury claims arising from package holidays abroad, and that is why I have asked the official receiver to investigate, in particular, this aspect of the conduct of Thomas Cook’s directors.