Former Sunderland chief Irene Lucas explains why she has bought 555 Thomas Cook branches and believes in ‘benevolent capitalism’

“We are now up to about 2,333 ex-Thomas Cook staff and it’s still not enough,” says Irene Lucas as she describes how her firm has launched a campaign to take on a further 1,500 employees.

Such a rapid expansion would be remarkable for any businessperson, let alone one who has spent most of the past decade seeking to withstand austerity and the resulting job cuts. Ms Lucas, of course, has long been a prominent manager in local government, serving as chief executive at South Tyneside MBC and, latterly, Sunderland City Council, and having also held a top Whitehall role. But her local government career has always sat alongside her dual role with family firm Hays Travel, which she currently chairs.

Saving Thomas Cook

Irene Hays – to use the married name she uses for her business career – and her husband John, the firm’s chief executive, were thrust into the national spotlight when Hays Travel emerged as the saviour of Thomas Cook employees. After the venerable travel company collapsed in September, Hays bought its network of 555 branches in a move that bemused those who believe the high street is dead and digital is the only future.

Ms Lucas has had her work cut out as the company seeks to integrate its new staff. “I like ‘demanding’ – I always have,” she tells LGC.

Her Sunderland-based firm uses the same “one team” philosophy she espoused in local government, she says. Customer service, reception and payroll staff have all been “mobilised” to bolster its stretched recruitment team.

“If I wanted to I could pay a big dividend but we don’t take big salaries and we haven’t paid ourselves a dividend for 11 years”

While paying “huge tribute” to Thomas Cook, Ms Lucas insists there are strong reasons why Hays will be more successful. First, it offers more choice. Whereas the former firm directed customers to its own products, “for all of those lovely people who joined us from Thomas Cook it felt like a breath of fresh air to sell all the products they liked that match what the customer wants,” says Ms Lucas.

Unlike Thomas Cook, Hays sells holidays at the same price in branches as online. Ms Lucas says most customers typically research prices online before visiting a branch for “the reassurance we’ll give them”. She detects “a bit of a resurgence in interest in face-to-face transactions” in the travel industry, justifying why Hays branches typically employ more staff than those of Thomas Cook did.

Meanwhile, the fact that “we’re not a corporate – it’s only me and my husband who own the company 100%” empowers Hays to act decisively at times of crisis, such as when repatriating customers in 2010 when the Icelandic ash cloud grounded flights. This gives it a strong reputation for reliability, she says.

Community values

The other thing that Ms Lucas says sets Hays apart is the fact it is rooted in the community. At Hays she has the same “sense of place and a sense of community” as she did as a council chief.

“I know this sounds really odd from a capitalist perspective but many of the things I believed in in local government I believe in in business. I call it benevolent capitalism,” she says.

Thus the firm had 336 apprenticeships before the Thomas Cook takeover, and has set up the Hays Travel Foundation charity supporting young people in arts, sport and academia. It also gives each branch £500 a year to spend on the community project of its choice.

“That’s part of John and my core ­values – we were both brought up in mining villages,” Ms Lucas says.

“There’s a whole movement against people on very high salaries in big companies,” says Ms Lucas. “Yes, I’ve got a big company and, yes, if I wanted to I could pay a big dividend but we don’t take big salaries and we haven’t paid ourselves a dividend for 11 years.”

As a private company Hays does not have to “drive the profits around paying the shareholders”, she says. This allows it to prioritise investment in training academies and apprenticeships.

Transferable skills

Ms Lucas says there are “huge overlaps” between the skills she uses today and used in local government, listing dealing with staffing, recruitment, technology, IT, telephony and transformational change challenges as common areas. However, although she is reluctant to use the word, Ms Lucas makes clear her disdain for bureaucracy that hinders business.

She tells an anecdote about how Hays required a licence from the Association of British Travel Agents to offer foreign travel soon after it was formed 40 years ago.

“The shop was in the back of my mother in law’s babywear shop. It was like a fish and chip shop counter and we’d got a garden trellis to divide the travel shop from the baby clothes and the pants and vests and so on,” says Ms Lucas. An inspector refused the licence on the grounds Hays lacked its own entrance.

“We wrote back to say it’s come to our attention that there’s a shop in London called Harrods and in the back there’s a travel agents called Thomas Cook, can you please tell us what the difference is?” After that Abta relented, paving the way for Hays to grow from sales of £812 in year one to £1.2bn last year.

“Some leaders in local authorities tell their people to be open and welcoming and others what you get is officers who are unnecessarily difficult”

Ms Lucas’s work overseeing the growth in Hays branches brings her into contact with many council landlords and makes her believe business-unfriendly attitudes are not extinct within the sector. “Business prevention officers would be a better description in some instances,” she says.

“It’s really stark – some leaders in local authorities tell their people to be open and welcoming and efficient to the private sector and others, maybe it’s just not top of their priorities and what you get is officers who are unnecessarily difficult.”

Ms Lucas says the profit motive means that in business, the attention given to the “commerciality of transactions is vastly more developed”, adding: “I really do think commerciality in local government is still incredibly benign relative to the private sector.”

Regulatory constraints

She also found public sector rules to be a hindrance when working for councils. Whereas if in a commercial procurement a bid comes close, she would tell the potential supplier to “sharpen their pencil” and return with a slightly better offer, soon resulting in a deal, in local government all bidders had to be given the same opportunity. The ensuing delay “puts cost in the system”, she says.

Ms Lucas also says that she was “incredibly frustrated” that in local government you “couldn’t reward people”.

“You couldn’t even take people out for pasta and pizza without it being under scrutiny,” she says. “It is the public purse and I understand that but in travel we reward our people by looking after them.” Hays was about to offer “a whole series of Christmas parties just to be able to say thank you to people”.

Asked if she had made a positive statement on the future of the high street, Ms Lucas replies: “I can’t think of a bigger one – I’ve just bought 555 branches. I just made a pretty darn big statement by spending all this blinking money!”