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Thomas Cook Didn’t Have to Happen

Thomas Cook didn't have to collapse - but the government refused to take the steps necessary to avoid the chaos, and now wants to kick the crisis into the long grass.

While the Conservatives gathered for their Manchester conference, angry Thomas Cook workers protesting outside told their heartbreaking stories.

On the day they should have been paid their monthly salaries, they were instead unable to pay bills and mortgages, losing house purchases, cancelling weddings and worried that they might not be able to feed their children.

Today they take those messages to Parliament, handing in a petition with over 50,000 signatures at Downing Street and the Department for Business, Energy and Social Strategy (BEIS), which calls for a full inquiry into the collapse of the 178-year-old travel company and for the former directors to pay back their bonuses. They will then lobby their MPs.

The Tories face serious questions about the collapse of Thomas Cook, a profitable airline and yet another high street name which has lost, overnight, thousands of jobs.

While Unite has been working around the clock to support its members, to provide legal advice and to help match them with jobs in other airlines, the contrast with Thomas Cook airlines in Germany, Scandinavia and the Balearics is stark. They are all still flying.

This could have been the situation in the UK. When Grant Shapps, Secretary of State for Transport, claimed that keeping the company viable would have been “throwing good money after bad,” he failed to mention the March 2019 Airline Insolvency Review established by his department which made recommendations that would have avoided the disaster at Thomas Cook.

It called for a special administration regime “to allow airlines to operate in administration,” as they do in other countries. This would have enabled Thomas Cook to repatriate stranded passengers and crew. The immediate grounding of the airline also meant that none of the five offers made to purchase it could be advanced – offers that could have saved jobs as well as providing finance.

Thomas Cook has now joined the long list of businesses this government has allowed to collapse. This appalling political failure – further evidence of the total absence of an industrial strategy – has sent Thomas Cook workers to the dole queue while their colleagues in other countries have been able to continue working. The UK government has failed to learn the lessons of the collapse of Monarch or indeed of Carillion.

There was no intervention, no ministerial meetings with the firm’s directors and apparently no knowledge of the millions they were paying themselves. This goes to the heart of what’s wrong with our corporate governance culture.

As one Thomas Cook worker said to me: “We weren’t asking for a bailout, we just wanted assurances. Someone has made a political decision – vandalism is the only way I can describe it.”

Unlike those other European governments, ours was incapable of understanding the circumstances that Thomas Cook was facing. We can only speculate as to whether this was ideology, ignorance or indifference. This was a profitable airline, a viable airline, whose directors have turned down five offers for that part of the business simply because they would have made the rest of the company unviable.

“Throwing good money after bad” is spending over £600 million in taxpayer money on the biggest repatriation exercise since the Second World War, along with meeting redundancy payments for thousands of workers and the legal fees associated with defending protective award claims for failure to inform and consult.

Keeping the company viable while solutions were found would have cost a fraction of all that, as proven by the saving of Belfast’s Harland and Wolff shipyard, through the strength and resolution of the workers not to allow it to go to the wal when those in power would have let the vulture capitalists strip it bare.

Neither does the government see that the collapse demonstrates yet again that the UK’s financial regulatory systems are broken beyond repair and need radical overhaul. Reform of accountancy and auditing practices are urgently needed.

We have learned of growing concerns about Thomas Cook’s accounts, which included large amounts of “goodwill” on the balance sheet, while its lawyers were billing the firm weekly to ensure they were paid in the run up to insolvency, just as Carillion’s auditors were being paid daily. All the signs were there.

But when we met with the Business Secretary Andrea Leadsom last week at the Thomas Cook task force meeting, she made it clear that an investigation into what could have happened to prevent the collapse would not be on the agenda.

We were, however, able to appeal to her to at least ensure that the thousands of Thomas Cook workers who lost their jobs overnight would be paid their wages and swiftly receive redundancy payments. Assurances were given that there will be a full inquiry by the Departments of Transport and BEIS.

Her announcement that the Official Receiver will conduct a “fast paced” review into the collapse of Thomas Cook is, however, too little too late and will provide scant comfort for those who’ve lost their jobs or their holidays. After all, the Official Receiver’s report into the collapse of Carillion is not expected before the beginning of 2021, three years after the company folded.

So we must look for solutions that can make a difference.

Unite welcomed Labour’s frontbench call the weekend before Thomas Cook’s collapse for “all viable options to be explored,” which would include “the government considering stepping in and taking an equity stake to avoid the crisis.”

We have also supported Labour’s plans for radical corporate governance reform. These include mandatory employee board representation and mandatory worker share schemes for all companies, public or private, with over 250 workers.

These would provide the checks and balances workers need to prevent any more Thomas Cooks and Carillions that are in the pipeline. They are an absolute priority to ensure that workers are not dumped on the scrapheap in the future, without warning, their skills and talents wasted, their lives devastated.

As for the Tories, they would be wise to stop attacking Labour’s plans and make good on the recommendations of the insolvency review, and on what appear to be long-forgotten earlier commitments to bring forward meaningful corporate governance reforms of their own, before it’s too late. Until they do, we will raise the slogan, at today’s lobby of parliament and in the days and weeks to come: Pay Up and Never Again.