Last week Labour leadership frontrunner Jeremy Corbyn sought to challenge those who labeled him ‘anti-business’, launching a website that pointed to his plans for a freeze in business rates, support for the self-employed and more infrastructure spending as evidence he cared about the performance of UK Plc.
But he’s got plenty of other plans that suggest otherwise. As well as increasing corporation tax, it seems he’s also keen to introduce a cap on the pay that Britain’s top bosses can earn.
‘Why is it that bankers on massive salaries require bonuses to work while street-cleaners require threats to make them work?’ the Islington North MP asked in an interview with Scottish newspaper The Herald. ‘It’s a kind of philosophical question really. There ought to be a maximum wage. The levels of inequality in Britain are getting worse.’
Corbyn didn’t specify any further about how such a system would work. Some campaigners have suggested the pay of chief execs should be restricted to a certain multiple of the average pay earned by their company’s staff, but others have as far as suggesting arbitrary nominal limits like £500,000 or £1m. His suggestion follows a report by the High Pay Centre that suggested the bosses of Britain's biggest businesses were earning an average of 183 times more than the average worker - although it also suggested their pay had fallen over the last five years.
It should go without saying that any such intervention would seriously damage the economy. Big cheeses who work their butts off and create vast amounts of shareholder value would soon depart for less interventionist shores, and the companies they work for would likely be hot on their heals – depriving us of not just tax revenues but jobs too.
Some industries, from financial services to Premiership football, would be brought to their knees. Good riddance, some might think, but the tax revenues they want to spend need to come from somewhere. On the other hand they could always print the money, as Corbyn’s plan for a ‘People’s Quantitative Easing’ effectively amounts to - because that’s obviously worked out so well in the past.