Tuesday 10 January 2017 11:26 am

Jeremy Corbyn's salary cap is “bananas” says free marketeers

Labour leader Jeremy Corbyn has been blasted by free-market think tanks for his suggestion of a maximum wage in the UK.

Corbyn made the suggestion on Radio 4 this morning, although he did not specify what the maximum salary allowed in the UK should be.

The Labour leader claimed that income disparity in the UK is growing, with the cap floated as a response.

Corbyn's proposal has gone down like a bag of cold sick among free marketeers – The Adam Smith Institute branded the suggestion “bananas”.

Read More: Labour is collapsing because it’s losing the battle of ideas

Adam Smith Institute executive director Sam Bowman said workers want their firms to be led by talented chief executives with strong experience.

“The strategic decisions that top bosses make affect every part of their firm, and multinational corporations are right to spend what it takes to attract the best business leaders to Britain,” Bowman said.

"If you're a worker for a FTSE 100 firm, this is bad news: your job security and wages will suffer if your company isn't led by the best people in the world.

“If you're saving for a pension, this is bad news: the value of your savings will suffer as British firms become less productive, starved of global top talent. If you rely on the NHS or other public services, this is bad news: tax revenues will fall as these highly-paid executives move abroad. If we want Britain to boom, we need to let business hire who it wants and pay them what it wants."

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Institute for Economic Affairs director general Mark Littlewood added that a salary cap would effectively equate to a 100 per cent income tax rate.

“Surely by imposing a cap, Corbyn would incentivise the richest to leave the UK, depriving the British government of their sizeable tax contributions altogether. And what about capital gains – would the cap apply to that too?” Littlewood said.

“Given that Corbyn could not put a rough number on where the cap should be – other than confirming it would not affect his own salary – suggests he has not properly thought this proposal through.”