Published 22:08 IST, September 23rd 2019
Thomas Cook: Boris Johnson admits government refused bailout
On Thomas Cook's collapse, Boris Johnson admits that the government refused a bailout $150m tax. Britain will now pay bills and tickets of stranded customers.
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British Prime Minister Boris Johnson said on September 23 that the British Government did not agree to bailout $150m tax that was pending by Thomas Cook, which led to its collapse. He said that the Government will now buy the return tickets and pay the bills of the people stranded in a foreign land who were holidaying under the Thomas Cook group. About 150,000 British holidaymakers remain outside Britain as the 178-year-old travel company collapsed this week. The British Civil Aviation Authority, funded through payments made by all airlines to a shared emergency fund as part of their licenses to operate will make the payments. Johnson made the statement when he was emplane to New York to attend the UN General Assembly.
Why did Britain not give bailout to Thomas Cook?
Johnson said that Thomas Cook's request for a bailout was rejected due to the moral hazard it would create for other businesses to fail. It involves a lot of taxpayers money he added.
He also questioned the need for action to be taken against the owner of the companies who escape the responsibility of its customers. Responding to the situation, Johnson said that the Government's thoughts are with the customers of Thomas Cook and that it is a very difficult situation. He assured the stranded passengers that Britain will do its best to help them come back. Johnson concluded that the Government needs to look for ways in which operators, one way or another, can protect themselves from such bankruptcies in the future, hinting at action to stop a repeat of the fiasco.
Labour politicians and Trade Union condemn the Government's non-intervention
When Thomas Cook was on the brink over the weekend, some Labour politicians and trade unions had called for comprehensive government aid to save the famous firm and its thousands of staff – pointing to the multi-billion-pound bailout of the banks a decade ago. But despite coming under fire from Labour and the unions for failing to step in to save the collapsed tour operator, Johnson said it did not seem the government could have done more to help. This has laid bare differences in approaches between the Tories and Labour towards state intervention, with the shadow chancellor, John McDonnell, blaming the government’s ideological bias for its decision not to intervene. The decision of nonintervention was also condemned by trade unions, who insisted the cost of bringing stranded Thomas Cook customers home from holidays abroad would dwarf the amount of taxpayer support requested by the firm.
18:50 IST, September 23rd 2019