Thomas Cook news: Labour accuses government of 'ideological bias' to block intervention stopping travel company collapsing

Labour has accused the government of allowing “ideological bias” to block state intervention which could have stopped travel company Thomas Cook from going to the wall.

Prime minister Boris Johnson confirmed that the company asked the government for a “subvention” of about £150 million to keep it going, but said this was refused because of the “moral hazard” that it might encourage other firms to behave recklessly.

But shadow chancellor John McDonnell said that action by Mr Johnson’s government could have provided a “breathing space” to allow jobs and holidays to be preserved.

And Labour’s business spokeswoman Rebecca Long-Bailey said the government should now take an equity stake in the failed travel firm to give it a chance of survival.

Transport secretary Grant Shapps said that spending taxpayers’ money on keeping Thomas Cook afloat was “not a goer”.

"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 they idea of just spending taxpayers' money on that just wasn't really a goer,” Mr Shapps 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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Mr McDonnell said it was the Conservatives' "ideological bias" that prevented action.

“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."

Ms Long-Bailey said: “Thanks to the government’s failure to act, staff employed by Thomas Cook may face redundancy while holiday-makers risk being left stranded overseas.

“The government must stop its recklessness and step in to avert this crisis by taking an equity stake”

Former business minister and Change UK leader Anna Soubry, a leading supporter of the People’s Vote campaign, said Thomas Cook's management had made clear that uncertainty surroujnding Brexit was a factor in its financial woes.

“The devastating news about Thomas Cook is a sobering reminder about how the Brexit crisis is already impacting the real world away from the machinations of party-political conference season," said Ms Soubry.

"Brexit has been a significant factor in the travel firm’s collapse and a warning that things could get a lot worse for many companies if Boris Johnson gets his way.

“The company’s crash into administration means thousands of families now face a Christmas blighted by unemployment and fears about paying rent, mortgages and household bills. Many thousands more will have had their hopes for a special holiday ruined. These are the real-world costs of Brexit."