Labour leader says cap on earnings is needed to address inequality and avoid UK becoming ‘bargain basement economy’
Jeremy Corbyn has called for a maximum wage for the highest earners, saying he fears Brexit will see the UK become a “grossly unequal, bargain basement economy”.
The Labour leader would not give specific figures, but said radical action was needed to address inequality. “I would like there to be some kind of high earnings cap, quite honestly,” he told BBC Radio 4’s Today programme on Tuesday.
When asked at what level the cap should be set, he replied: “I can’t put a figure on it and I don’t want to at the moment. The point I’m trying to make is that we have the worst levels of income disparity of most of the OECD countries.
“It is getting worse. And corporate taxation is a part of it. If we want to live in a more egalitarian society, and fund our public services, we cannot go on creating worse levels of inequality.”
Corbyn, who earns about £138,000 a year, later told Sky News he anticipated any maximum wage would be “somewhat higher than that”.
“I think the salaries paid to some footballers are simply ridiculous, some salaries to very high earning top executives are utterly ridiculous. Why would someone need to earn more than £50m a year?”
The Labour leader, who is an Arsenal fan, said he thought his team’s manager, Arsène Wenger, “would probably like it very much indeed, he’d probably like there to be a maximum wage cap on the whole of the Premier League”.
Corbyn said he believed taxpayers would ultimately benefit from job creation as a result of lower executive pay.
“They would have less of their enormous pay levels and more would go back into the company and our society as a whole,” he said. “Economic development does benefit the taxpayer because more people work and get jobs and pay taxes. It’s something we’re looking at and learning from others.”
In a speech later on Tuesday, Corbyn will claim that Britain can be better off outside the EU and insist that Labour has no principled objection to ending the free movement of European workers in the UK.
However, his preference for a maximum income law will overshadow the announcements for the party’s policy on Brexit, even though Corbyn had expressed his view on the issue before, during his leadership campaign.
“It’s a kind of philosophical question really. There ought to be a maximum wage. The levels of inequality in Britain are getting worse,” he told the Herald in 2015.
Corbyn stressed he was not announcing a specific policy on a law to limit income, but said he had “got a view on it”.
Pressed again, he said: “I would like to see a maximum earnings limit, quite honestly, because I think that would be a fairer thing to do. Because we cannot set ourselves up as being a grossly unequal, bargain basement economy on the shores of Europe.
“We have to be something that is more egalitarian, gives real opportunities to everybody and properly funds our public services.”
On immigration, asked about proposals from the backbenchers Emma Reynolds and Stephen Kinnock for a two-tier system, with easier paths for skilled migrants and caps on unskilled migrants, Corbyn told Sky he had not formed an opinion yet on their idea.
He hinted, however, that the UK might have to make some form of deal with Europe on migration if it wanted to preserve single market access. “I’m saying let’s deal with the issues of exploitation, but also recognise in the article 50 negotiations, Britain is a major trading partner and that is going to have to continue, otherwise jobs are at stake.”
Earlier, he told Good Morning Britain that his planned speech on migration was not a “sea change” in his previous thinking, but aimed at giving “clear definition that we protect the working conditions and wage levels that are here” for any migration system post-Brexit.
“Some companies – particularly in the construction industry – are making a fortune out of getting rid of workers in this country on one set of pay and conditions and bringing in others to replace them,” he said, during his GMB interview. “That creates awful tensions in those communities.”
In his speech in Peterborough, a marginal Tory seat that voted heavily to leave the EU, Corbyn will say his party wants “managed migration” and to repatriate powers from Brussels that would allow governments to intervene in struggling industries, such as steel, which is prohibited by state aid rules.
Corbyn will say Labour is not wedded to freedom of movement for EU citizens as a point of principle. “But nor can we afford to lose full access to the European single market on which so many British businesses and jobs depend. Changes to the way migration rules operate from the EU will be part of the negotiations,” he will say.
“Labour supports fair rules and reasonably managed migration as part of the post-Brexit relationship with the EU.”
Kinnock said he welcomed Corbyn’s comments about the principles of free movement. “The Labour party exists in order to shape and regulate markets so that they serve the common good, and a properly regulated labour market can only exist if it is supported by a system of managed migration,” he said.
“For all of us who believe that migration benefits our country, the core question is how to rebuild public confidence in it. I hope that Jeremy and his team will now look at the two-tier system that Emma Reynolds and I have proposed as the right policy through which to realise our shared values and aims.”
Caroline Lucas, the co-leader of the Green party, said Corbyn’s stance on free movement was a “capitulation to the Tories”.
Her party also criticised Corbyn’s ideas for an earnings cap, with the co-leader, Jonathan Bartley, calling it an “unproven, blunt instrument which may not even help in reducing the gap between rich and poor”.
Danny Blanchflower, a former member of Corbyn’s economic advisory committee, said he would have advised the Labour leader against the scheme. In a tweet, the former member of the Bank of England’s monetary policy committee said it was a “totally idiotic, unworkable idea”.
Former Labour MP Denis MacShane welcomed the idea, however, saying he had first proposed the idea of a maximum wage bill in the House of Commons 23 years ago.
However, other Labour MPs expressed reservations, including Owen Smith, Corbyn’s challenger in the summer leadership contest. The former shadow work and pensions secretary said Corbyn was “right to challenge gross inequality in earnings, but comprehensive and progressive reform of our tax system is the way to fix it”.
Reynolds also expressed some uncertainty. “I’m not sure that I would support that,” she told BBC News. “I would like to see the detail. I think there are other ways that you can go about tackling income inequality… Instinctively, I don’t think [a cap] probably the best way to go.”