Jeremy Corbyn ditches plan for maximum wage cap
Jeremy Corbyn has ditched his plans to put a legal limit on how much people can earn - just hours after floating the idea.
The Labour leader said this morning that he supported a "maximum earning limit" to reduce wage inequality in the UK.
He expanded on the idea in a keynote speech on Brexit this afternoon, but crucially stopped short of proposing a total ban on excess pay.
Instead, he suggested a range of proposals, including forcing bosses of firms which carry out government work to limit their pay to 20 times that of their lowest earners.
He also suggested increasing income tax on the top 5% or 1% of earners, or cutting the taxes of firms which limit their executives' salaries.
"Twenty years ago the top bosses of the FTSE 100 companies earned just under 50 times their average worker, today that figure is now 130 times,” Mr Corbyn told an audience in Peterborough.
“Last year alone, the top bosses got a 10% pay rise, far higher than those doing the work in the shops, in the call centres, in the warehouses.”
He added: "There are many options. But what we cannot accept is a society in which a few earn the in two and a bit days, what a nurse, a shop worker, a teacher do in a year. That cannot be right.
"This is not about limiting aspiration or penalising success, it’s about recognising that success is a collective effort and rewards must be shared.
"We cannot have the CEO paying less tax than the cleaner and pretending they are worth thousands times more than the lowest paid staff.
Shadow Work and Pensions Secretary Debbie Abrahams refused to back the idea of pay caps when questioned today.
She told Radio 4’s World at One Labour would take into account the analysis of Richard Murphy, an economist who used to advise Mr Corbyn and who today called the plan “absurd”.
Shadow Energy Secretary Barry Gardiner meanwhile said a wage cap was not a method to reduce inequality he would “personally favour”.
Former Labour economic advisor Danny Blanchflower took to Twitter to brand the plan “totally idiotic”, while Labour peer Stewart Wood, who was one of Ed Miliband’s key policy advisors, said a wage cap would be “unworkable”.
Mr Murphy - who is credited with inspiring Mr Corbyn's early economic policies - branded the wage cap idea "absurd" and "a nightmare to enforce".
In a blog post on his website he explained many high incomes are from rents, investment, interest and other sources.
"I too am concerned about income disparities. But this suggestion is absurd," he wrote.
Mr Murphy said a better way to tackle the issue would be to charge capital gains at income tax rates and to impose a 50% income tax rate, among other suggestions.