Collapse of Thomas Cook to cost taxpayers at least £156m

TAXPAYERS WILL fork out at least £156m due to the collapse of Thomas Cook, a report by the Whitehall spending watchdog has found.

The National Audit Office said the Department for Transport (DfT) has agreed to pay an estimated £83m for the repatriation of the travel giant’s customers who were not covered by the Atol scheme.

Other Government costs include £58m in redundancy and related payments to Thomas Cook’s former employees, and at least £15m for liquidating the business.

The NAO added that “the final cost may not be known for some time”, partly due to invoices for repatriation costs still being received.

Labour MP Meg Hillier, who chairs the Commons’ Public Accounts Committee, said “lessons need to be learnt and future risks understood”.

She went on: “Government looks set to foot the bill, with industry off the hook. The resources to cover other airlines going bust is now very limited. New regulations are urgently required.”

When Thomas Cook collapsed last September, the DfT instructed the Civil Aviation Authority (CAA) to repatriate all 150,000 passengers who were overseas.

More than half – around 83,000 people – had not booked a trip with Atol protection, meaning they were not automatically entitled a free flight home.

A spokeswoman for the department said: “Due to the unprecedented scale of the operation, other airlines did not have enough capacity those abroad.

“Without this effort, stranded passengers couldn’t be guaranteed a safe journey home, causing stress and disruption to families, which would have had a knock-on effect on the wider economy with so many employees abroad.”

The NAO report warned there could be further costs to taxpayers if another large travel company to repatriate collapses in the near future. That is because the Government has agreed to stand behind the fund that covers Atol-protected passengers if it runs out of money. The CAA told the NAO that the exposure to the fund of the Thomas Cook repatriation and refunds will be £481m and “there will be relatively limited resources left” once all costs have been met.