Thomas Cook

– in the House of Commons at 1:49 pm on 25 September 2019.

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Photo of Grant Shapps Grant Shapps The Secretary of State for Transport 1:49, 25 September 2019

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.[This section has been corrected on 30 September 2019, column 9MC — read correction] 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——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.

Photo of Andy McDonald Andy McDonald Shadow Secretary of State for Transport 2:03, 25 September 2019

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.

We are somewhat reassured that there is provision to return holidaymakers to the UK, but sadly there is no provision for the return of Thomas Cook’s staff. The unions Unite and the Transport Salaried Staffs Association have valiantly fought for their members, while this Government have done nothing. Can the Secretary of State guarantee that all staff will be repatriated? Can he say what provisions he is putting in place to ensure that customers who have lost their planned holidays are fully compensated and able to make alternative arrangements at no expense to themselves?

The Government learned nothing from the Monarch collapse two years ago. Monarch cost taxpayers £40 million in repatriation costs and Thomas Cook looks set to cost a similar amount or more, not to mention redundancy and future welfare payments. Can the right hon. Gentleman give us an estimate of what the total costs are likely to be? Monarch was the victim of financial engineering by Greybull Capital two years ago, and of conflicts of interest with the company’s administrator. Similarly, the collapse of Thomas Cook raises major questions about the accounting of the firm by PwC and EY, never mind the bonuses paid to senior executives. On that point, will the Secretary of State make it clear to those executives that they should return their undeserved and unwarranted multi-million pound bonuses, including that of Peter Fankhauser, who has had £4.6 million in bonuses since 2014?

I say again that the Government have not acted to protect the public interest, and that nothing has been learned or done to improve how our insolvency arrangements deal with such exceptional and complex circumstances. What is more, the ATOL fund has been much reduced by the Monarch fiasco and has had to rely on insurance to make up the shortfall. Does the Secretary of State believe that the reforms of ATOL enacted by his Government have been effective? The Government must confirm that they will immediately guarantee the workers full compensation for unfair dismissal, given the lack of proper consultation, and that those workers will not have to pursue the matter through the courts. Can he confirm that they will be relieved of that burden and stress?

In a further sad development, we also learned today that Northern Ireland’s last manufacturer, Wrightbus, has gone into administration with the loss of 1,400 jobs. In July, the Prime Minister said that

“we will do everything we can to ensure the future of that great UK company.”—[Official Report, 25 July 2019; Vol. 663, c. 1496.]

Is it not the case that this Government are guilty of the industrial neglect of this country? In contrast to other countries, UK Ministers have stood by and let some of our great companies wither and die. This Government are engulfed by inertia and incompetence. They are not a functioning Government, because of the Brexit chaos and Prorogation paralysis that they have brought upon themselves. The people of Britain are paying a high price for their inadequacy. They have failed to reform insolvency rules and failed to improve financial reporting. This is a colossal failure of political leadership from this Government. They were warned, but they did nothing. That is a shameful failure to fulfil their duties and their responsibilities.

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

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.] Rachael Maskell asks what difference that makes. The difference is that it was a profitable business, unlike the business here.

It is also the case—this is where I think there will be a degree of agreement—that German insolvency rules allow for administrations to take place, and then for aircraft to carry on being used and for other buyers to come in during the administration process. That is not something that our current rules on airline liquidation and insolvency allow for.

The hon. Gentleman rightly pointed out that the previous Secretary of State said he wanted to do something about that and commissioned a review. So that we are all clear on the timeline, that review reported on 9 May 2019. It suggested that we should have rules that are not dissimilar to the German rules to allow our airlines to trade in administration. That would make repatriation massively easier, because we could use those airlines. I entirely agree with the hon. Gentleman on that. Perhaps he did not hear me mention it during my statement, but we need a new Session of Parliament to introduce that primary legislation in order to bring that in. We are very happy to have a new Session of Parliament. If we get agreement, perhaps that is something we can progress.

I believe that, given the number of people and the number of lives that have been affected by this situation, we should be working together cross-party to get this job done. I welcome the hon. Gentleman gesturing that he will provide support to sort out this problem, because that would clearly be in everybody’s interest.

The hon. Gentleman referred to whether foreign Governments were prepared to ride to the rescue. I confirm that I received no approach from the Turkish Government and that the only contact via the Spanish Government was not a viable plan and came so late in the day that the company was already starting its administration proceedings. There was no viable plan out there at the time.

I agree with the hon. Gentleman that the ATOL system should be reformed. As he rightly pointed out, although the funds are limited because of Monarch, ATOL itself is reinsured to cover most of that cost. Finally, on a point of accuracy, he mentioned that £40 million has been spent on Monarch. In fact, we think that the final cost was £50 million.

Photo of Shailesh Vara Shailesh Vara Conservative, North West Cambridgeshire

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?

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

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.

Photo of Alan Brown Alan Brown Shadow SNP Spokesperson (Transport), Shadow SNP Spokesperson (Energy)

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 welcome the update on the holidaymakers in Cuba, but are any other holidaymakers effectively being held to ransom or captive? What discussions are the UK Government having with foreign Governments when such ruthless actions are taken?

Thomas Cook vouchers are now worthless. When will the Government finally implement the scheme to protect vouchers and gift cards when companies become insolvent?

What actions are the Government taking to support the 13,000 employees who are still abroad?

Finally, I have constituents who have lost their jobs. Can the Secretary of State look my constituents in the eye and honestly say that there is nothing more the Government could have done to save their jobs?

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

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 were 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.

I think that covers the majority of the questions that I had not previously answered.

Photo of Andrew Jones Andrew Jones Conservative, Harrogate and Knaresborough

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?

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

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.

Photo of Lisa Forbes Lisa Forbes Labour, Peterborough

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. 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?

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

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 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 Lisa Forbes and my hon. Friend the Member for North West Cambridgeshire.

Photo of Robert Halfon Robert Halfon Chair, Education Committee, Chair, Education Committee, Chair, Education Committee

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?

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

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.

Photo of Lilian Greenwood Lilian Greenwood Labour, Nottingham South

I begin by welcoming the tremendous efforts of the Civil Aviation Authority, staff across Government and others to repatriate and support the many thousands of stranded holiday- makers, but I ask the Secretary of State to provide clarity on two points in relation to his previous answers. Can he confirm that all Thomas Cook staff will be helped to return home? He referred to some of them, which I do not understand. Why not all of them?

In the four and a half months since the airline insolvency review reported, what action have the Government taken to implement its recommendations?

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

First, with regard to the repatriation of staff, it is not the case that all the staff necessarily want to come straight back. Aircrew, for example, have been or are being repatriated, but many others are still assisting with the operation on the ground in many different locations, and we are hugely grateful to them.

The next two weeks are critical. The largest group of people, the 150,000 holidaymakers, is so large that there is no way to get them back other than chartering aircraft to fly them back. The number of other people involved is of a size at which commercial flights can be used to return them.

We are urgently addressing not only the cabin crew and that side of things but the other employees and the scheduling for when they need to get back. I have been clear with the CAA that it should offer them every possible assistance along the way.

Sorry, I have forgotten the hon. Lady’s second question.

Photo of Lilian Greenwood Lilian Greenwood Labour, Nottingham South

If they are important, what have you been doing in the past few months?

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

I did not come into this job until 23 July. Some recommendations of the airline insolvency review have already been taken into account and, indeed, used in this particular case, but we also require primary legislation and I am happy to have cross-party discussions about that.

It is not, as one might imagine, quite as simple as it seems. There are ideas around, including allowing what happens in Germany, where the airline is run in administration, and, separately, the interaction between ATOL and a proposed additional charge per flight of perhaps 50p or so for every flight taken, regardless of whether it is to a holiday destination. There are different ideas to be worked through; discussions are ongoing and I am keen to accelerate them.

Photo of Huw Merriman Huw Merriman Conservative, Bexhill and Battle

I find this situation maddening, because two years ago, during the statement on Monarch, I welcomed the then largest peacetime repatriation effort—I welcome the current largest peacetime repatriation effort, too—and I called for reform, so that we had an insolvency regime for airlines similar to the chapter 11 arrangement in the United States and the regimes in Germany and Italy. I was told by the then Secretary of State that the Government would consider that. Two years on, we have had a review but not delivered anything. Rather than repeat what has happened before, will the current Secretary of State make sure that we reform the sector, so that jobs are not put at risk, holiday experiences are not ruined and taxpayers’ money is not lost? It is all about actions, not words.

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

In simple terms, yes. As I mentioned, the review reported on 9 May, and I have been in my post since 23 July. However, the answer is yes, we will get on with it.

Photo of Luciana Berger Luciana Berger Independent, Liverpool, Wavertree

Further to the important question from Huw Merriman, will you indulge me, Mr Speaker, by allowing me to repeat three important sentences in the statement the Secretary of State shared with the House? It says:

“our efforts will turn to working through the reforms necessary to ensure passengers do not find themselves in this position again. We need to look at all the options, not just ATOL, but also whether it is possible for airlines to be able to wind down in an orderly manner and look after their customers themselves without the need for Government to step in. This is where we will focus our efforts in the weeks and months ahead.”

Exactly the same words were used in the response to the collapse of Monarch in October 2017 given by the previous Transport Secretary, Chris Grayling.

Photo of Luciana Berger Luciana Berger Independent, Liverpool, Wavertree

He is not here, but the House has heard everything the current Secretary of State said. Frankly, it is appalling that, two years on, we find ourselves in exactly the same position. What has happened to the Government’s plan, and what could have been done to ensure that the devastating impact on staff and holidaymakers, as well as the cost to this country, did not happen again?

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

I reject the assertion that nothing has happened. The airline insolvency review required time—in fact, the final version was published only on 9 May. A few months later, we are getting on with it. I will ensure that we work on this, and I hope we can do so on a cross-party basis. It is not quite as simple as one might imagine, because there are multiple facets to address, not one single thing to be done, but the hon. Lady has my undertaking that we will get on with this.

Photo of Owen Paterson Owen Paterson Conservative, North Shropshire

I thank my right hon. Friend for his statement. I especially liked the passage on employees, having received a call today from a constituent who was a senior employee of Thomas Cook Airlines and has been made redundant. He is, quite rightly, seriously aggrieved that directors of Thomas Cook Airlines are continuing to function as directors of Thomas Cook Condor, and to be remunerated. My right hon. Friend mentioned in his statement that our right hon. Friend the Secretary of State for Business, Energy and Industrial Strategy has asked for a report from the Financial Reporting Council. Will he commit to looking at the relationships between Thomas Cook Airlines and Thomas Cook Condor, and the propriety of directors continuing to receive compensation while other employees are all being made redundant?

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

It is for the official receiver to do that work. The official receiver has the powers of the Company Directors Disqualification Act 1986, and will no doubt use them. I should say that we know, rightly, about all the payments to executives because of the transparency established, also rightly, over the past few years to ensure that, among other things, shareholders can see and hold CEOs to account.

Several hon. Members:


Photo of John Bercow John Bercow Chair, Speaker's Committee on the Electoral Commission, Speaker of the House of Commons, Chair, Speaker's Committee for the Independent Parliamentary Standards Authority, Chair, Commons Reference Group on Representation and Inclusion Committee, Chair, Speaker's Committee for the Independent Parliamentary Standards Authority, Chair, Speaker's Committee on the Electoral Commission, Chair, Commons Reference Group on Representation and Inclusion Committee

Order. To this point, the erudition of questions has been equalled only by their length. Unfortunately, there is a premium on time, as we have other matters with which we have to deal, so I appeal to colleagues to cast aside pre-written scripts and to confine themselves to single sentence—preferably short sentence—questions, without preamble, so that we can make progress.

Photo of Rachel Reeves Rachel Reeves Chair, Business and Trade Committee, Chair, Business and Trade Committee, Chair, Business, Energy and Industrial Strategy Committee

The BEIS Committee believes that Thomas Cook’s directors and auditors have serious questions to answer. In the past five years, £20 million in bonuses has been paid to directors, and the company has now gone under with debts of more than £3 billion. Will the Secretary of State for Transport confirm that the directors of Thomas Cook will not be able to continue as directors at any other firm until the Insolvency Service has completed its investigation? Will the Government commit to replacing the FRC with a regulatory framework that holds directors to account, as our Committee has called for?

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

I think I answered the first question about the Insolvency Act and the Company Directors Disqualification Act. As the hon. Lady knows, it is for the official receiver to do that part of the work, and I cannot pre-empt it. She tempts me to stray into other areas, which are a long way from the transport brief, so I think I had better not answer now.

Several hon. Members:


Photo of Jeremy Lefroy Jeremy Lefroy Conservative, Stafford

Is there any way the disgraceful hiking of prices—often double or triple—by other providers can be looked at under competition regulation?

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

My hon. Friend will be interested to hear that I put those questions to the CAA just yesterday, and asked it to investigate for me. The CAA believes that automatic pricing kicked in and was then quickly overridden. I mentioned in my statement that some airlines have done the opposite—Easyjet actually cut its prices by 15% for Thomas Cook passengers—and I am grateful to them and to the airlines that have lent their aircraft.

Photo of Lucy Powell Lucy Powell Labour/Co-operative, Manchester Central

With more than 3,000 Thomas Cook employees in Greater Manchester, our economy is being hit particularly hard. May I press the Secretary of State on what has been done in the past four or five months, when the warning signs were all there but people could still buy package holidays 24 or 36 hours before the collapse? Should we not be doing more when the warning signs are so clear?

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

I do have a lot of sympathy with the hon. Lady’s comments. To me, the process of knowing that an airline is struggling and having Operation Matterhorn underway without being able to say anything, lest it precipitate collapse, is highly unsatisfactory. Many hon. Members have mentioned the need to have a route out of this situation—one that includes administration, so that there is no instant collapse and there is a much better and more controlled path for everyone, including employees. I agree absolutely with the hon. Lady, and we will get something done about this.

Photo of Antoinette Sandbach Antoinette Sandbach Independent, Eddisbury

Will the Secretary of State join me in praising Thomas Cook employees who turned up for work on Monday to help to repatriate passengers? Will he make sure that the inquiries by the Insolvency Service take in the impact on Thomas Cook of the 20% depreciation in the pound against the euro, to help an assessment of whether other travel industry firms based in the UK are vulnerable to those currency movements?

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

My hon. Friend is right about the extraordinary work done by employees who know they have lost their job still working, even today, and by those who are uncertain about their future in many foreign and British locations. I pay tribute to them on behalf of the whole House, I am sure.

Many factors led to the collapse of Thomas Cook. Management, which has been mentioned many times, makes a large contribution, but so do other factors, including a very hot summer last year, which stopped people from going away, following the wrong business model, and the growth of the internet—problems that stretch back way before any of us in this House voted to have a referendum on Brexit.

Photo of Clive Betts Clive Betts Chair, Levelling Up, Housing and Communities Committee, Chair, Levelling Up, Housing and Communities Committee

The Secretary of State says we need to legislate to reform the travel industry, and we need a new Session of Parliament to do that. Will he guarantee the presence of a Bill to that effect in the Queen’s Speech?

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

Although I do not want to reveal the contents of the Queen’s Speech, I hope the hon. Gentleman will appreciate that I have hinted broadly at where we want to go. With the reassurance of those on the Opposition Front Bench, I think he will have his asks answered.

Photo of Henry Smith Henry Smith Conservative, Crawley

Will the Transport Secretary join me in paying tribute to airlines such as Virgin Atlantic and EasyJet and to travel operators such as TUI, which have reached out to former Thomas Cook employees offering employment? I encourage the Government to get on with changing insolvency law and adopting a system similar to chapter 11 protection, which has saved so many US airlines.

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

My hon. Friend is absolutely right. He mentioned some airlines, and I should mention British Airways, TUI, Virgin, EasyJet and Ryanair. All of them, and others, have been incredibly helpful. It is also worth mentioning that many of them are very profitable; there is nothing systemic in the British business that is causing a problem, and most of these British airlines are doing very well. I have already answered the point about chapter 11 or an equivalent.

Photo of Ronnie Cowan Ronnie Cowan Shadow SNP Spokesperson (Infrastructure)

I have two constituents who are stuck in Mexico. They were told they were on a flight; when they turned up for it, they were told they were not. They face the real possibility of no accommodation and no flights. They are tired, they are anxious and they are running out of money. What have the Government done under Operation Matterhorn to help people stuck in transit who are trying to get home?

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

It is hugely distressing to hear about people who are stuck. The CAA is actively monitoring anyone who calls in—the line is there, and the website is there—and even people who post on social media. If the hon. Gentleman would like to get assistance for his constituents, I will make sure that he is able to hook up with the CAA to get the message through. It should be said that I do not know his constituents’ particular circumstances, or whether they are under ATOL—in other words, whether their hotel is automatically being paid for, although it looks like it is not—but every effort is being made to bring people home. I hope the hon. Gentleman will understand that hiring 45 aircraft, when the 737 Max is out of commission and the market is therefore restricted, has made this an enormous project. Sometimes that has meant that we have had the wrong size aircraft for the number of passengers. However, the hon. Gentleman’s constituents, if they are stuck, will be given every assistance, and I think he and I can help get them that assistance.

Photo of Nigel Mills Nigel Mills Conservative, Amber Valley

Given that we cannot distinguish in this situation between passengers on a package holiday booking and passengers on a flight-only booking, does the Secretary of State agree that we should now bring flight-only bookings into the ATOL regime so that we have a fair contribution from those passengers and airlines?

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

It is not quite the case that we cannot distinguish, although I take my hon. Friend’s point. We can distinguish between the two, but there is a strong argument for making sure that, when someone books a flight one way or the other, it is insured and that the cost does not ultimately fall on the taxpayer.

Photo of Kevan Jones Kevan Jones Labour, North Durham

The directors have walked away with millions while hard-working employees of Thomas Cook, such as Jemma Lynch in my constituency, who contacted me at the weekend, have lost their jobs. Will the Secretary of State outline how she and others can contact the Department for Work and Pensions for the help that has been outlined? Secondly, will he comment on the pensioners in receipt of pensions and on the future pension arrangements for those who have already paid into the pension schemes?

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

On the pensions front, I think there are four different Thomas Cook pensions, the largest of which is a £1 billion fund. That will now be handled through the usual insolvency pension fund process. It is, of course, a worrying time for everyone involved. With regard to the constituent the hon. Gentleman mentioned, the DWP is ready for her to make contact through the rapid response unit. If there are any difficulties, will the hon. Gentleman please alert me? I will make sure that the Business Secretary and the taskforce are immediately switched on to any problem that occurs. We are very keen to get realtime feedback on this.

Photo of James Cartlidge James Cartlidge Conservative, South Suffolk

Like many colleagues, I have a Thomas Cook branch, in Sudbury, in my constituency, which has closed, and I am grateful to the Secretary of State for the work he will be putting in place to support redundant staff. However, does he agree that the biggest cause of the collapse was the unsustainable debt that the company had, which came from a merger strategy that was completely flawed? Does he agree that those who oversaw those mergers, who would have earned handsomely from them, and those who have run this company into the ground must be held to account?

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

I entirely agree with my hon. Friend. Look, companies do sometimes go bust. The problem here is that they are going bust leaving a massive number of people and leaving this country with an enormous problem to resolve. That is why he is right about everything he has just said.

Photo of Daniel Zeichner Daniel Zeichner Labour, Cambridge

Airports such as Stansted have really stepped up in terms of helping people come home, but they also offer job opportunities. Can I have an assurance from the Secretary of State that every Thomas Cook employee will be made aware of the opportunities that are available at airports such as Stansted?

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

The hon. Gentleman is absolutely right. Stansted and, in fact, all the other airports—I have been in touch with many of them—have been very forthcoming with their assistance. Stansted is building a science, technology, engineering and maths college, with lots of job opportunities. The hon. Gentleman has made the point, which is on record, that Thomas Cook employees, who are losing their jobs, will no doubt find some of those travel-related jobs very interesting.

Photo of Douglas Ross Douglas Ross Conservative, Moray

Moray had two Thomas Cook branches prior to the collapse—one in Buckie and one in Elgin. I have been in discussions with the Business Secretary over the last few days, but can the Secretary of State reiterate what the Government are doing to support, advise and help former employees of this company, not only in high streets across Moray and the United Kingdom but abroad?

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

Yes, absolutely. This Jobcentre Plus rapid response service is absolutely set up, ready and mobilised to assist. As I said in a previous response, if any of my hon. Friend’s constituents walk in and find that that is not the case, I will certainly want to know about it, so that we can work on the cross-Government taskforce to ensure people are getting the help they need.

Photo of Wera Hobhouse Wera Hobhouse Liberal Democrat Spokesperson (Environment and Climate Change), Liberal Democrat Spokesperson (Transport)

Following the closure of 588 Thomas Cook outlets, including the one in Abbeygate Street in Bath, what are the Secretary of State and the Government doing about halting the further decline of the high street?

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

My right hon. Friend the high streets Minister has already been in contact with me about the further hole that this leaves in our high streets. He has a number of fantastic programmes, and the local authorities of many of us in the House will be bidding under them to enhance and improve high streets. As this latest collapse has shown, our high streets are dramatically changing as people need to come to the high street for an experience or a service that they cannot get elsewhere, including perhaps online. My right hon. Friend will be very happy to speak to the hon. Lady about that.

Photo of Richard Graham Richard Graham Conservative, Gloucester

I welcome the action taken on the priorities, which are to repatriate customers as soon as possible and to help innocent staff, such as those at Thomas Cook in Gloucester, to get new jobs as quickly as possible. However, does my right hon. Friend agree that, as well as carrying out an investigation into the corporate behaviour, the directors’ decisions, the future protection for pensioners and so on, his Department should also look at the aviation sector, and at great British strengths in general, to see whether parts of that sector—particularly package tour operators—have not adjusted to changing circumstances as quickly as they should and to see what more can be done?

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

My hon. Friend is absolutely right: there are very profitable parts of this sector. One large British airline has just made record profits, which shows that there is money to be made in the sector. However, I would not want to be in the position of dictating to the sector how it runs its businesses—some will succeed, and some will not. What I am passionately interested in is that, when they do go wrong, as has been discussed, the problems do not fall on the taxpayer’s shoulders.

Photo of Alison McGovern Alison McGovern Chair, Speaker's Advisory Committee on Works of Art, Chair, Speaker's Advisory Committee on Works of Art

I can tell the Secretary of State that my constituents are not happy with the Government’s response. However, at the heart of this problem is a company that was signed off by auditors last year. The Government know that the audit system is not working well, and they had the Kingman review look into this issue and make recommendations. In terms of the cross-Government arrangements the Secretary of State is speaking about, what have the Government done to reform audit, alongside the recommendations that they themselves asked for?

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

The hon. Lady is well versed in these matters, and she will know that there are moves afoot to change the process. We have expressed concerns ourselves over the audit approach in this country. I do not want to completely jump to conclusions; because someone reads something in the weekend paper, that does not always mean that it is true. I read that repatriation would cost the taxpayer £600 million, but that is not the case. We do need to allow the process to work its way through. I know that the hon. Lady is actively involved in ensuring that the way that auditing takes places in this country is changed and improved. The taskforce will no doubt work on that as well.

Photo of Alan Mak Alan Mak Conservative, Havant

I thank the Secretary of State for the support he has given to Thomas Cook employees in my constituency. Can he reassure me that British officials at embassies and missions around the world are also working hard to provide support where needed?

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

I must pay tribute to the extraordinary work that has been done in the foreign missions around the world. We are very grateful to the Foreign and Commonwealth Office staff, without whom we could not carry out that work. I also want to put on record my thanks to the surge staff from HMRC and the Civil Aviation Authority who have been absolute troopers in airports across the world.

Photo of Lisa Nandy Lisa Nandy Labour, Wigan

Thousands of people in Greater Manchester, including many in Wigan, have lost their jobs, but the Scandinavian and German subsidiaries of Thomas Cook are still flying. The Government have failed not just to provide the financial assistance that would have been necessary to keep those companies going, but to bring forward legislation that would enable those airlines in the UK to continue flying in protective administration. It did not have to be like this. This Government have barely brought anything to this House in recent months. They do not need a Queen’s Speech to do that; they should do it right now.

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

The hon. Lady confuses two points. It is absolutely true, as I have said many times, that we need a new administration regime, but the fundamental difference that she refers to in the Scandinavian and German examples is the profitability of the underlying business there due to the different influences in their particular markets and the way that the businesses have been run at that sub-level.

Photo of Kevin Hollinrake Kevin Hollinrake Conservative, Thirsk and Malton

Does my right hon. Friend agree that we should always be cautious about bailing out private sector businesses, particularly ones that are £1.9 billion in debt and struggle to make money even in a good year? We should also look at our competitions policy and try to avoid businesses getting so big that when they fail, they have a widespread effect on UK consumers.

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

My hon. Friend makes a very good point. We do get back to this fundamental point that I know is causing some concern on the Opposition Benches, which is that the underlying business has to be profitable; otherwise there is nothing to bail out—there is nothing to lend money to. When money is being lost at that rate, the idea that yet more taxpayers’ money is pumped into something that will lose it in a matter of weeks or months seems to me to be crazy.

Photo of Stewart McDonald Stewart McDonald Shadow SNP Spokesperson (Defence)

What advice does the Secretary of State have for my constituent, Alan Paterson, who is stuck right now in Ibiza? He did not realise that he was entitled to a repatriation flight home, and, as he wanted to get back for his new job this weekend, he spent hundreds of pounds on flights that he did not need to buy in the first place. KLM is now refusing to refund him that money. Does he agree that that is mean-spirited, and that it should not be profiting from this disaster?

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

I am very sorry to hear about his constituent’s situation. No airlines should be trying to profit out of this situation. As I have mentioned, the UK airlines in particular have really tried to assist once we got over this issue of some initial surge pricing that seemed to kick in. For the most part, they have been extraordinarily helpful, lending aircraft and cutting some of their prices. I am very concerned to hear about this KLM case.

Photo of Vicky Ford Vicky Ford Conservative, Chelmsford

We are living through a digital age, and businesses that do not adapt will struggle, but may I thank the Government for thinking about the people who have been affected here? What assistance is there likely to be for people who have bought flights or holidays that have not yet started?

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

A large number of people have bought holidays that are yet to start. If they were package holidays, they are ATOL-protected and people will simply get their money back. Those who have bought flights-only will not automatically get that money back, and will want to refer to their credit cards, debit cards, holiday insurance and, sometimes, an alternate travel agents from whom they have booked.

Photo of Anneliese Dodds Anneliese Dodds Shadow Minister (Treasury)

Yes, there are legal differences between the UK and Germany, but there is a big, big difference in political will as well. The Secretary of State keeps mentioning Air Berlin, so I have one little general knowledge question for him. The German Government loan that was provided to Air Berlin enabled its operations to be transferred in a planned manner into other companies. Has it, or has it not, been paid back?

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

The big difference with the airlines that are surviving or even sub-surviving within this group is their profitability. I think we have gone round this quite a few times. I am in agreement with the hon. Lady that we do need to have an airline administration system that enables airlines to continue flying, but those two differences—profitability and/or the ability to be in administration—are fundamental differences to the situation that existed here. This idea, which I think is the third option that she is trying to inject into this, that somehow for some crazed reason the Government would not want to do everything possible to try to save a 178-year-old British icon is completely ridiculous. Of course, we want to save it.

Photo of Paul Masterton Paul Masterton Conservative, East Renfrewshire

The Thomas Cook branch in Clarkston was operated by a small but excellent team who are now worried about their futures and it also occupied a key high street unit. I very much welcome the cross-departmental taskforce, but can the Secretary of State ensure that Members across the House continue to be updated as to its progress, so that we can continue to provide the best support and advice to our constituents?

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

I will ask my right hon. Friend the Secretary of State for Business, Energy and Industrial Strategy, who is part of the cross-departmental taskforce, to make sure that that happens and I will continue to take a keen interest in the matter myself.

Photo of Susan Elan Jones Susan Elan Jones Labour, Clwyd South

My constituents and many, many other constituents across the country have been affected by this awful situation. What I do not understand is the fact that this Government and the Opposition, and pretty much everyone, have recognised that we need new legislation. Why the heck do we have to wait for a new Queen’s Speech? Why can we not have emergency legislation next week?

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

This has been the most interesting part of this afternoon. As has been discussed, we have an airline insolvency review that has now reported, and there seems to be a very strong desire across the House to do something with that. So let us talk about it.

Photo of Mike Wood Mike Wood Conservative, Dudley South

Will my right hon. Friend work with other travel companies, as well as ministerial colleagues, to ensure that the skills of Thomas Cook employees up and down the country can be retained within the sector?

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

My hon. Friend will be pleased to know that the skills are in high demand and that many of the other travel companies are employing. Indeed, as we have heard from other hon. Members, both airlines as well as skill centres, such as those in Stansted, are actively reaching out. I am very hopeful that those who have lost their jobs through Thomas Cook will, in fact, be employed very quickly within the travel sector.

Photo of Kate Green Kate Green Chair, Committee on Standards, Chair, Committee of Privileges, Chair, Committee of Privileges, Chair, Committee on Standards, Chair, Committee on Standards

What discussions are the Government having with the commercial lending sector, both in relation to the very substantial debt that will be the legacy of this debacle, and to the personal debt of employees? Some of my constituents are extremely concerned about the attitude of their creditors to their mortgages and other loans.

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

My right hon. Friend the Business Secretary is writing to the lenders on this specific point, and so perhaps can provide more detail about what she has asked them to do at this Dispatch Box, or I will ask her to write separately. It is also the case that we will be looking to provide as much support as possible. It is important to remember that the deal that Thomas Cook was trying to arrange was actually with a Chinese company for £900 million, so the corporate funding issue is another interesting part that will, I know, be unpacked over time.

Photo of Andrew Bowie Andrew Bowie Conservative, West Aberdeenshire and Kincardine

On behalf of my constituents in Aberdeenshire, who have found themselves in difficulty of late, may I thank my right hon. Friend, all the staff at the Department for Transport and the CAA? For those people who might find themselves in difficulty after the two-week period of the official operation has ended, will he commit his staff at the Department for Transport and the CAA to continue their support for those who find themselves in difficulty in a fortnight’s time?

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

I should mention why it is a two-week period. It is actually because the holidays mostly coincide with those dates when people are coming back on the normal day of their holiday, after which point there would be sufficient capacity in the travel system to get people home on regular commercial flights. We will stand by people who have already booked, who are already out there, and who are perhaps on a two-and-a-half week holiday, to get them home by alternative means.

Photo of Stephen Doughty Stephen Doughty Labour/Co-operative, Cardiff South and Penarth

I have many constituents who are pilots. Two holiday reps who have been affected by this crisis have contacted me. Is the Secretary of State aware that some former and current employees until very recently of Thomas Cook are affected themselves, because employee holiday benefits do not appear to be covered by ATOL? I know of one constituent whose relative is now currently stuck in Turkey. They used employee holiday benefits and are not covered by ATOL. Will he look urgently at that matter, because it is a double whammy for the employees of Thomas Cook?

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

Yes, that is right. The hon. Gentleman will know the strict rules that apply through the Insolvency Service on people’s redundancy pay, which cover the holiday element as well as the non-holiday element being tax free. If the hon. Gentleman wants to write a letter to me, I would be very happy to look into the case for his constituent.

Photo of Lisa Cameron Lisa Cameron Shadow SNP Spokesperson (Mental Health)

Will the Secretary of State pay tribute to Peel Park firm AGO Outsourcing in my constituency, which is very keen to offer job opportunities to the staff affected at the two stores in my area? It really is remarkable and we are so pleased that the company is doing that. East Kilbride is particularly affected by the situation, so I would be grateful if the Secretary of State would arrange for me to have a meeting with the taskforce to ensure that I can help people on the frontline.

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

I am very pleased to pay tribute to the employers in the hon. Lady’s constituency that are providing or offering employment. She is not the first Member this afternoon who has suggested that others are stepping in to offer employment. I would also be very happy to ask my right hon. Friend the Business Secretary to set up that meeting.

Photo of Bill Esterson Bill Esterson Shadow Minister (Business, Energy and Industrial Strategy), Shadow Minister (International Trade)

Those of my constituents who have lost their jobs tell me that the airline was indeed profitable, so why did the Government not intervene to ensure that the airline and any other parts of the business that were profitable—along with the jobs in those businesses—could have been saved?

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

I am interested to hear that the hon. Gentleman’s constituents say that, because the accounts clearly show that the company lost £1.5 billion within a six-month period alone, and then issued a further profits warning. There is obviously a lot of detangling of the business to be done. As the hon. Gentleman will understand, the Government are not in the business of running a travel company, but we do want to ensure that whatever went wrong here is properly investigated and we will certainly ensure that that happens.

Photo of Liz McInnes Liz McInnes Shadow Minister (Foreign and Commonwealth Affairs)

The Secretary of State talks about throwing good money after bad, but surely it would have been better for British business if Thomas Cook had been bailed out, rather than spending millions of pounds on repatriating holidaymakers.

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

I mentioned the £900 million Fosun deal that eventually fell through to indicate the extent of the money required just to keep the business afloat. That was the deal that was on the table while this was all going on. It then turned out, at the eleventh hour, that even Fosun was not happy to go with a deal, because it had concerns. A new number then started to emerge: an additional £250 million. Any rational person—including, incidentally, the accounting officers throughout Government —would have looked at the deal and refused to sign off such a payment. I am absolutely certain that anyone looking into this matter in detail will demonstrate that the deal would have been a very poor move for the taxpayer, and that it would probably have led us to exactly the position we are in today of repatriating 150,000 people—yet having spent up to £250 million of taxpayers’ money as well.

Photo of Paula Sherriff Paula Sherriff Shadow Minister (Mental Health and Social Care), Shadow Minister (Mental Health)

I have been contacted by a constituent—and I am aware of a small number of others—who has been contacted by a person purporting to be responsible for delivering refunds on behalf of Thomas Cook Group, asking for their credit card details. These people are adamant that they have not booked flights or holidays, and that they do not have any outstanding financial arrangements with the Thomas Cook Group. Is the Secretary of State aware of what appears to be a scam? If so, what is he doing about it?

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

The hon. Lady is right. I was made aware of this scam yesterday, and it is absolutely disgusting that it could happen at this time. We have issued messages through things such as Neighbourhood Watch’s Online Watch Link email system, which the hon. Lady will be familiar with, telling people to be on the lookout for these sorts of scams; obviously, to someone who did not actually even have a holiday booked, it is absolutely ridiculous.

Photo of Hannah Bardell Hannah Bardell Shadow SNP Spokesperson (Digital, Culture, Media and Sport)

My constituent, Mr Boland, lost his wife Elizabeth last year in Cuba on a Thomas Cook holiday. It now turns out that the cause of death was wrong on the death certificate, and for the last year I have been trying to get Thomas Cook to investigate the issue properly and to give due compensation. In the past day, I have been told that the company will not investigate because it has gone under and that the case is closed. I am sorry, but this is not good enough for my constituent. Will the Secretary of State meet me to discuss the issue?

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

That is obviously very distressing. I would be pleased to meet the hon. Lady and to take up the case with the Insolvency Service.

Photo of Julie Cooper Julie Cooper Shadow Minister (Health and Social Care) (Community Health)

I have constituents who are due to travel on their holidays in October—holidays provided by a third party, booked using Thomas Cook travel agency services—but who have found out this week that the final moneys have not been paid to the holiday provider and that there is going to be no holiday for them. Can the Secretary of State tell me what support will be available to people in that position?

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

Yes. That situation will depend on whether the holiday was in the end booked through an ATOL-protected scheme or not. From the hon. Lady’s description, it sounds like it may have been, but I suggest that she writes to me with the full details and I will ensure that the case is investigated.

Photo of Douglas Chapman Douglas Chapman Shadow SNP Spokesperson (Defence Procurement & Nuclear Disarmament)

In this House on 16 May, I raised the issue of the sustainability of Thomas Cook following a Brexit-related trading warning. The ministerial response at that point reeked of complacency on stilts. What discussions have taken place between the Government and Thomas Cook during this period, and what actions were agreed between the Government and Thomas Cook to avoid the company’s collapse?

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

The CAA holds a large part of the duty of ensuring the sustainability of an airline. In fact, it would have been responsible for renewing the airline’s licence at the beginning of October, so it was keeping a close eye on things. The Department will—latterly, as things got much more serious, particularly through the later profit warnings—have become increasingly involved. I was made aware at some point after I joined the Department of the difficulties that the company may have been in. Of course, everyone was hoping that the airline would be rescued, and there were very serious and full talks in place to rescue it. The problem for anyone commenting on such things is that they can precipitate exactly the thing they are trying to avoid.

Photo of Jo Platt Jo Platt Shadow Minister (Cabinet Office)

May I thank the Greater Manchester Mayor and the Greater Manchester Combined Authority for their work over the past few days, helping to signpost customers and staff stuck overseas? Like my colleagues, over the weekend I have been contacted by several Thomas Cook employees who are understandably distressed. Thomas Cook executives have taken home £20 million in bonuses over the last five years. Does the Secretary of State agree that this shows just how broken our system is?

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

As the hon. Lady knows, I share her concerns. I do not want to abuse Mr Speaker’s counsel, so I refer the hon. Lady to my previous comments and will have the Insolvency Service look fully into the situation.

Photo of Gavin Newlands Gavin Newlands Shadow SNP Spokesperson (Sport), Shadow SNP Spokesperson (Northern Ireland), Shadow SNP Spokesperson (Wales)

About 250 Thomas Cook staff based at Glasgow airport in my constituency, along with countless others in shops across Renfrewshire, have lost their livelihoods; my thoughts are very much with them. Can the Secretary of State tell us whether, in taking his deeply disappointing decision not to intervene, he asked his Department and other Departments to calculate not only the cost of Operation Matterhorn itself, but the related costs, including out-of-work benefits, the loss of tax revenue to the Exchequer and the wider economic impact of the collapse?

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

As the hon. Gentleman will know, there are pretty strict rules involved in when the state can and cannot intervene in private businesses. If it intervened all the time, other much more successful businesses would be disadvantaged and those employments could be affected. As I mentioned briefly earlier, an accounting officer would not have signed off that kind of intervention because it simply would have represented a big problem for the state, and we almost certainly would have ended up having to repatriate people in any case, as we are today.

Photo of Jim McMahon Jim McMahon Shadow Minister (Housing, Communities and Local Government) (Devolution)

Three thousand people in Greater Manchester—the loyal workforce of Thomas Cook—are affected by this situation, and we are disgusted by the greediness of the directors and management of the company. The Secretary of State mentioned that the Turkish Government did not make an approach, and that the Spanish Government did but were too late. Why were the UK Government not proactive? Why did they not pick up the phone and make the call to those Governments?

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

Let me explain so that the House fully understands the situation. This is a private company that was getting on with trying to put together its own rescue deal, which—just to be clear—the British Government would absolutely want it to do. As I said before, why on earth would we want to lose a landmark British company? Of course, we would not want to do so. But it is for the directors of that business properly to organise for its rescue. Had any kind of substantial plan been put to us by the company, or by other interested parties or countries, we would have been very interested in it, but the truth is that no viable plan was put forward.

Photo of Chris Ruane Chris Ruane Shadow Minister (Wales)

I thank the Minister for his answers to questions about Thomas Cook workers who work abroad, but they were a little bit woolly, so let me ask him specifically: can he give a cast-iron guarantee that not one of those workers will be left stranded abroad, and that each and every one of them will be paid in full for the hours that they have worked since the company was declared bankrupt?

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

I have tried to be as clear as I can about Thomas Cook workers abroad. I have asked the CAA to work on the matter urgently. Obviously the first priority is getting 150,000 people home. In terms of getting the employees home, we are obviously not going to leave people stranded. As regards pay, that is very tightly set out under legislation in an insolvency situation, and that is exactly what will be followed.

Photo of Gavin Shuker Gavin Shuker Independent, Luton South

When Monarch collapsed in my constituency, we learned that many people with sector-specific skills, such as pilots, cabin crew and so on, could walk into a new job, but those who were lower-paid with less sector-specific skills really struggled. What is the Secretary of State doing on that particular issue? If his honest answer is that it had not occurred to him, will he look at it urgently?

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

It absolutely has occurred to us. There are 630 jobcentres and the Rapid Response Service, alongside the National Careers Service. They are already working with local partners in all the different areas to try to ensure, through the national employer partnership teams, that people get back into employment. I have already mentioned some of the other support to do with childcare and the tools needed when people are going for interviews. We absolutely stand behind that. I say to the hon. Gentleman and everyone in this House that, at a time of record employment and record low unemployment, I hope that people find that that support helps them into another job very quickly.

Photo of Mary Glindon Mary Glindon Shadow Minister (Environment, Food and Rural Affairs) (Farming and Rural Communities)

Given the importance of the rapid response teams, will the Secretary of State say what extra Government resources they are receiving so that they can fully support these unemployed workers?

Photo of Luke Pollard Luke Pollard Shadow Minister (Environment, Food and Rural Affairs) (Fisheries, Flooding and Water)

I used to work for Thomas Cook and ABTA doing holiday protection, so I know that the ATOL scheme covers repatriation and also refunds. The Secretary of State has set out the repatriation costs. Will he set out how much the refunds cost is, because I understand that it is nearly £1 billion? Is that a figure he recognises?

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

I know that the hon. Gentleman has considerable expertise in these areas. The answer to his question is that £420 million is the projected cost of future bookings through the ATOL system, insured or through its funds.

Photo of Chris Matheson Chris Matheson Shadow Minister (Cabinet Office)

Over the weekend I was contacted by numerous constituents, most of whom work out of Manchester airport. The message that they were giving me was that trading could have continued, if not a bail-out but a £200 million line of credit guaranteed by the Government had been extended. Is that correct, and if so, why was it not extended?

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

We have this slightly strange situation where everyone is acknowledging how badly they think the company may have been run and expressing concern about the decisions that have been made and the directors, but at the same time saying, please bail out this failing—what people think is a failing—organisation. The simple answer is that if we thought that it was possible, we absolutely would have done something.

Photo of Justin Madders Justin Madders Labour, Ellesmere Port and Neston

My constituents who have lost their jobs are absolutely furious at the sight of directors waltzing off to Germany with their jobs intact, as I am sure the Secretary of State can understand. I hope that in due course the directors disqualification proceedings come in. In the meantime, people need the statutory payments due to them as soon as possible, so can he assure me that the Redundancy Payments Office is sufficiently well resourced?

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

Yes, I absolutely can. In fact, early indications are that the first payments will start flowing this Friday the 27th.

Several hon. Members:


Photo of Chris Stephens Chris Stephens Shadow SNP Spokesperson (Fair Work and Employment)

Going back to the question of the £250 million, will the Secretary of State confirm that that was for credit purposes—that it was effectively in order for Thomas Cook to be able to say to the bank that it had that reserve fund of £250 million?

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

Yes. The problem was that it was never apparent that there was a package to sit behind that that somebody putting money in would support—in other words, that it was not necessarily going to save the company even then.

Photo of Mike Amesbury Mike Amesbury Shadow Minister (Work and Pensions) (Employment)

Penny Jepson has lost her job after working for Thomas Cook for 16 years—one of 9,000 people. She is concerned about the inept response from the Government. It is costing an absolute fortune to repatriate people. Why not simply invest in this company via a bridging loan?

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

I know the hon. Gentleman has heard this answer before, but Governments are not about running travel companies, obviously. If there was any way in which we thought a short-term guarantee or loan would have kept the company going, it would have been a serious prospect, but I am afraid that there was never a serious plan brought to us on that front.

Several hon. Members:


Photo of Stephen Lloyd Stephen Lloyd Independent, Eastbourne

Is the Secretary of State aware that scam telephone artists are fanning out across the country phoning people offering a refund if they provide their bank details? People will lose money. Will he publicise the fact that the public should be aware of this?

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

I certainly will. The hon. Gentleman’s question has helped to highlight the issue, and I will do my best to do the same.

Photo of Meg Hillier Meg Hillier Chair, Public Accounts Committee, Chair, Public Accounts Committee

It would be helpful if the Secretary of State could set out the cost to the taxpayer of Operation Matterhorn so far and what likelihood there is, realistically, of getting money back from individual people’s travel insurance.

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

Broadly speaking, we know that the previous Monarch operation was £50 million, and this issue is probably about twice the size, so that indicates a cost of some £100 million.

Photo of Patricia Gibson Patricia Gibson Shadow SNP Spokesperson (Consumer Affairs)

My constituents in Largs and Saltcoats will be keen to make sure that outstanding wages are paid to them. What words of advice does the Secretary of State have for the other airlines that are clearly and ruthlessly profiteering on the back of this collapse?

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

There were some early examples of what looked like incredible surge pricing, and that is very unwelcome. We contacted the airlines through the CAA. Most of them have overridden that system, as I mentioned. Some of them are undercharging and others have lent their planes. I would therefore be interested to see any ongoing examples that I can ask the CAA to investigate.

Photo of Tulip Siddiq Tulip Siddiq Labour, Hampstead and Kilburn

The EU package travel directive protects those who are travelling if their package holiday has been cancelled. Does the Secretary of State believe that we should be retaining this protection for future generations of travellers?

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

Yes, absolutely, or even enhancing it.

Photo of John McNally John McNally Shadow SNP Spokesperson (Environment)

I would like to make the Secretary of State aware that one of my constituents has had three emails today wondering why he has cancelled his direct debit for his Thomas Cook holiday next year.

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

Again, I am very happy to look into any individual circumstances that the hon. Gentleman might write to me about.

Photo of Ruth George Ruth George Labour, High Peak

There are many young, vulnerable travel reps stuck abroad. The Secretary of State’s statement that he is talking to the CAA about their position does not offer them much reassurance when they will have no right to continue working in the EU after 31 October. What will he do to make sure that he can give them the assurances they need that their costs of coming home will be paid?

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

It is important not unnecessarily to worry people who are already in a very distressing situation. This will be done well before 31 October, given that we are not even into October yet and this operation is going to run for another 12 days, plus time to bring people home. The two issues are not connected. I absolutely want to reassure anyone working for Thomas Cook, “We absolutely are with you.”

Photo of Martin Docherty Martin Docherty Shadow SNP Spokesperson (Industries of the Future and Blockchain Technologies)

The Secretary of State has sought to assure my constituents in the Vale of Leven and in Clydebank, and in offices across the UK, that their pensions are fine and that employment opportunities are available for the future. Nevertheless, can he take a step forward and also assure them that if they need to claim universal credit they will not need to wait six weeks for it; and more specifically, for those abroad who are UK nationals, that Thomas Cook has paid their national insurance contributions, allowing them to claim social security when they return home?

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

As I said, the pension set-up is very clearly described through the usual channels. It depends on whether somebody is retired, what stage they are at and so on. With regard to universal credit, if people go in for it now, they can get an advance payment on it.

Photo of Ian Murray Ian Murray Labour, Edinburgh South

What discussions has the Secretary of State had with the travel insurance sector to ensure that individual claims can be put in easily and no obstacles will be put in the way of settling those claims?

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

We will absolutely put every pressure on to make sure that these claims are settled as quickly as possible. Along with my right hon. Friend the Business Secretary, we are on the case.

Photo of Alison Thewliss Alison Thewliss Shadow SNP Spokesperson (Treasury), Shadow SNP Spokesperson (Housing, Communities and Local Government)

I appreciate what the Secretary of State has said about employment opportunities, but my constituent, a Thomas Cook employee of 17 years, is pregnant and worried about her prospects for future employment. Is there anything specific he can say to assist my constituent at this time?

Photo of Grant Shapps Grant Shapps The Secretary of State for Transport

As I say, I am very heartened by the fact that we live in a time of high employment levels that will give the hon. Lady’s constituent the very best opportunity. Also, the sort of bespoke arrangements being made through Jobcentre Plus should enable her constituent—I would be grateful to the hon. Lady for keeping me posted on the case—to find herself in new work. I would be very happy to follow up the case with the hon. Lady.

Photo of Brendan O'Hara Brendan O'Hara Shadow SNP Spokesperson (Inclusive Society)

Can Thomas Cook employees, including those in my constituency—particularly, in the towns of Dunoon and Helensburgh—be assured that there is absolutely nothing more the Secretary of State could have done to help? If he was given the chance again, would he follow exactly the same path as he has done?

Photo of Antoinette Sandbach Antoinette Sandbach Independent, Eddisbury

At the start of this session, the Secretary of State gave the impression that primary legislation could not be introduced in this House without a further Prorogation of Parliament and a Queen’s Speech. I seek your guidance on whether that is, in fact, the correct position.

Photo of John Bercow John Bercow Chair, Speaker's Committee on the Electoral Commission, Speaker of the House of Commons, Chair, Speaker's Committee for the Independent Parliamentary Standards Authority, Chair, Commons Reference Group on Representation and Inclusion Committee, Chair, Speaker's Committee for the Independent Parliamentary Standards Authority, Chair, Speaker's Committee on the Electoral Commission, Chair, Commons Reference Group on Representation and Inclusion Committee

In procedural terms, there is no bar to the introduction of primary legislation in the course of the current Session, if the Government are minded to schedule it. I think, to be fair to the Minister, what he was probably driving at is that the Government have to take a holistic view of a wide range of potential legislative options, and that the best or most propitious time for considering the inclusion of a new measure might be in the context of the Gracious Speech. I am sure that that is what the Secretary of State meant to say, and as he did not quite get round to saying it, I know that he will be inordinately and probably permanently grateful to me for saying it on his behalf. We will leave it there for now.