Boris Johnson defends refusal to give Thomas Cook a taxpayer bailout

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- Honeymooners 'devastated' after Maldives trip with Thomas Cook cancelled

Boris Johnson defended his refusal to bail out Thomas Cook, warning that state intervention risked creating a "moral hazard" in future cases of companies on the brink.

The Prime Minister has come under fire from Labour and the unions for failing to step in to save the collapsed tour operator.

"It is perfectly true that a request was made to the Government for a subvention of about £150 million," the Prime Minister told reporters.

"Clearly that's a lot of taxpayers' money and sets up, as people will appreciate, a moral hazard in the case of future such commercial difficulties that companies face."

Other ministers suggested the sum requested by Thomas Cook was up to £250 million.

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Passengers of British travel group Thomas Cook queue at Son Sant Joan airport in Palma de Mallorca on September 23, 2019. - British travel group Thomas Cook declared bankruptcy on September 23, 2019 after failing to reach a last-ditch rescue deal, triggering the UK's biggest repatriation since World War II to bring back stranded passengers. The 178-year-old operator had been desperately seeking £200 million ($250 million, 227 million euros) from private investors to save it from collapse. (Photo by JAIME REINA / AFP) (Photo credit should read JAIME REINA/AFP/Getty Images)
John Garret from Boston Ma., who was supposed to be flying to Malta, takes a photo of the empty Thomas Cook check in desks in Gatwick Airport, England Monday, Sept. 23, 2019. British tour company Thomas Cook collapsed early Monday after failing to secure emergency funding, leaving tens of thousands of vacationers stranded abroad. (AP Photo/Alastair Grant)
John Garret and Ajouline Chaffee from Boston Ma., who were supposed to be flying to Malta, speak to the media near the empty Thomas Cook check in desks in Gatwick Airport, England Monday, Sept. 23, 2019. British tour company Thomas Cook collapsed early Monday after failing to secure emergency funding, leaving tens of thousands of vacationers stranded abroad. (AP Photo/Alastair Grant)
A security person stands next to the entrance of the German headquarters of travel company Thomas Cook in Oberursel near Frankfurt, Germany, Monday, Sept. 23, 2019. Thomas Cook declared bankruptcy. (AP Photo/Michael Probst)
People walk past a closed Thomas Cook travel shop in London, Monday, Sept. 23, 2019. British tour company Thomas Cook collapsed early Monday after failing to secure emergency funding, leaving tens of thousands of vacationers stranded abroad. The British government said the return of the 178-year-old firm's 150,000 British customers now in vacation spots across the globe would be the largest repatriation in its peacetime history. (AP Photo/Frank Augstein)
A Thomas Cook plane on the tarmac at Gatwick Airport in Sussex, England Monday Sept. 23, 2019. British tour company Thomas Cook collapsed early Monday after failing to secure emergency funding, leaving tens of thousands of vacationers stranded abroad. (Steve Parsons/PA via AP)
A Thomas Cook aircraft parked at Manchester Airport as the 178-year-old tour operator has ceased trading with immediate effect after failing in a final bid to secure a rescue package from creditors. (Photo by Peter Byrne/PA Images via Getty Images)
An airport worker speaks with passengers of the British travel group Thomas Cook at Son Sant Joan airport in Palma de Mallorca on September 23, 2019. - British travel group Thomas Cook declared bankruptcy on September 23, 2019 after failing to reach a last-ditch rescue deal, triggering the UK's biggest repatriation since World War II to bring back stranded passengers. The 178-year-old operator had been desperately seeking £200 million ($250 million, 227 million euros) from private investors to save it from collapse. (Photo by JAIME REINA / AFP) (Photo credit should read JAIME REINA/AFP/Getty Images)
British Government officials speak with passengers of the British travel group Thomas Cook at Son Sant Joan airport in Palma de Mallorca on September 23, 2019. - British travel group Thomas Cook declared bankruptcy on September 23, 2019 after failing to reach a last-ditch rescue deal, triggering the UK's biggest repatriation since World War II to bring back stranded passengers. The 178-year-old operator had been desperately seeking £200 million ($250 million, 227 million euros) from private investors to save it from collapse. (Photo by JAIME REINA / AFP) (Photo credit should read JAIME REINA/AFP/Getty Images)
A British Government official (C) speaks with passengers of the British travel group Thomas Cook at Son Sant Joan airport in Palma de Mallorca on September 23, 2019. - British travel group Thomas Cook declared bankruptcy on September 23, 2019 after failing to reach a last-ditch rescue deal, triggering the UK's biggest repatriation since World War II to bring back stranded passengers. The 178-year-old operator had been desperately seeking £200 million ($250 million, 227 million euros) from private investors to save it from collapse. (Photo by JAIME REINA / AFP) (Photo credit should read JAIME REINA/AFP/Getty Images)
MANCHESTER, ENGLAND - SEPTEMBER 23: Passengers disembark a Thomas Cook aircraft at Manchester Airport on September 23, 2019 in Manchester, United Kingdom. The collapse of the 178-year-old travel firm triggered a massive repatriation effort, as the British Civil Aviation Authority chartered aircraft to bring around 150,000 travelers back to the UK. The firm's closure also jeopardized 22,000 jobs worldwide, including 9,000 in the UK. (Photo by Christopher Furlong/Getty Images)
Passengers walk by the British travel group Thomas Cook's counter at Son Sant Joan airport in Palma de Mallorca on September 23, 2019. - British travel group Thomas Cook declared bankruptcy on September 23, 2019 after failing to reach a last-ditch rescue deal, triggering the UK's biggest repatriation since World War II to bring back stranded passengers. The 178-year-old operator had been desperately seeking £200 million ($250 million, 227 million euros) from private investors to save it from collapse. (Photo by JAIME REINA / AFP) (Photo credit should read JAIME REINA/AFP/Getty Images)
A British Government official speaks with passengers of the British travel group Thomas Cook at Son Sant Joan airport in Palma de Mallorca on September 23, 2019. - British travel group Thomas Cook declared bankruptcy on September 23, 2019 after failing to reach a last-ditch rescue deal, triggering the UK's biggest repatriation since World War II to bring back stranded passengers. The 178-year-old operator had been desperately seeking £200 million ($250 million, 227 million euros) from private investors to save it from collapse. (Photo by JAIME REINA / AFP) (Photo credit should read JAIME REINA/AFP/Getty Images)
A British Government official speaks with passengers of the British travel group Thomas Cook at Son Sant Joan airport in Palma de Mallorca on September 23, 2019. - British travel group Thomas Cook declared bankruptcy on September 23, 2019 after failing to reach a last-ditch rescue deal, triggering the UK's biggest repatriation since World War II to bring back stranded passengers. The 178-year-old operator had been desperately seeking £200 million ($250 million, 227 million euros) from private investors to save it from collapse. (Photo by JAIME REINA / AFP) (Photo credit should read JAIME REINA/AFP/Getty Images)
TOPSHOT - A British Government official speaks with passengers of the British travel group Thomas Cook at Son Sant Joan airport in Palma de Mallorca on September 23, 2019. - British travel group Thomas Cook declared bankruptcy on September 23, 2019 after failing to reach a last-ditch rescue deal, triggering the UK's biggest repatriation since World War II to bring back stranded passengers. The 178-year-old operator had been desperately seeking £200 million ($250 million, 227 million euros) from private investors to save it from collapse. (Photo by JAIME REINA / AFP) (Photo credit should read JAIME REINA/AFP/Getty Images)
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Moral hazard is the concept that firms will take increased risks if they believe that they will be protected from the consequences, for example through a state bailout.

But shadow chancellor John McDonnell blamed the Tory Government's "ideological bias" against state intervention for the decision not to intervene.

"The Government's intervention could have enabled us to just stabilise the situation, give a breathing space so that there could be proper consultation with the workforce in particular about how to go forward," he told the BBC.

"To just stand to one side and watch this number of jobs go and so many holidaymakers have their holiday ruined, I just don't think that's wise government."

Union bosses also condemned the Government's refusal to act, claiming that the cost of the exercise to bring stranded holidaymakers' home would dwarf the amount of taxpayer support requested by the firm.

Manuel Cortes, leader of the Transport Salaried Staffs Association, said the Government had chosen "ideological dogma over saving thousands of jobs".

"There remains the question of repatriating 150,000 British holidaymakers and the cost to the public purse of doing so," he said.

"You don't have to be a mathematical genius to know it would have been cheaper and more cost effective to save what is a cornerstone of the British high street."

Unite general secretary Len McCluskey said: "The Government's 'do nothing' attitude has left workers and customers high and dry while landing taxpayers with a bill of hundreds of millions of pounds."

Thomas Cook ceases trading
Closed check-in desks at Gatwick Airport in Sussex (Clive Marshall/PA)

But Transport Secretary Grant Shapps said the repatriation operation would cost £100 million, less than the sum requested by Thomas Cook.

"The company were asking for up to £250 million, they needed about £900 million on top of that and they've got debts of £1.7 billion, so the idea of just spending taxpayers' money on that just wasn't really a goer," he told ITV's Good Morning Britain.

"I think the problem of putting money into it, apart from the fact governments don't usually go around investing in travel companies, is that it may have just stretched things out for a couple of weeks and we could have been exactly where we started."

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