Jeremy Corbyn u-turns on plan for national maximum wage branded "totally idiotic"

"I would like to see a maximum earnings limit, quite honestly, because that would be a fairer thing to do. We cannot set ourselves up as being a sort of grossly unequal, bargain-basement economy on the shores of Europe," he told BBC Radio 4’s Today programme.

Read more: Labour accused of rehashing rejected tax plans for council elections

He first raised the plan for a pay ceiling in an interview with The Herald in August 2015 as he bid for the Labour leadership. Mr Corbyn said at the time: “Why is it that bankers on massive salaries require bonuses to work while street-cleaners require threats to make them work?...There ought to be a maximum wage. The levels of inequality in Britain are getting worse."

In a range of media interviews to what some have called a “relaunch” of his leadership, Mr Corbyn suggested a pay cap would be "somewhat higher" than the £138,000 he earned as an MP and Leader of the Opposition.

But shortly after he aired the view as business leaders warned the proposal was a "non-starter", a party spokesman suggested the leader had "misspoke" after being asked about a "cap" during the radio interview.

Tory HQ said it had been "Jeremy Corbyn's day of chaos".

Read more: Labour accused of rehashing rejected tax plans for council elections

Danny Blanchflower, a former adviser to the Labour leader and ex-Bank of England Monetary Policy Committee member, said the idea of a pay ceiling was "totally unworkable".

He tweeted: "Corbyn max wage lunatic idea would generate a huge brain drain as smart people move abroad shows how out of touch he is,” adding: "If I was still an adviser I would have told him it's a totally idiotic unworkable idea."

Alex Rowley, the Scottish Labour deputy leader, was much more guarded, describing the idea of a limit on maximum earnings as "interesting" but conspicuously failed to say if the party in Scotland supported it.

Oliver Parry, the head of corporate governance at the Institute of Directors, said that while big companies needed to address public concerns about executive pay, a maximum earning cap was a "non-starter".

"Politicians simply do not know the right level of pay for the heads of multinational companies, and no successful economy operates with this level of intervention by government," he explained.

However later, during a question and answer session following his speech in Peterborough, the Labour leader changed tack and suggested there were better ways of curbing executive pay than having a national maximum wage.

Read more: Labour accused of rehashing rejected tax plans for council elections

"You could set a limit on top pay; it is probably better to look at the ratio issue because that would then indeed encourage wage rises lower down and ensure a better sharing of the resources and profits in an organisation."

Mr Corbyn then said that the party was looking at the issue as just a consultation proposal to see “whether we could use it in company law, whether we could use it in statutory law or whether it's something we could ensure is introduced voluntarily”.

In his speech, the Leader of the Opposition stressed how there were "many options" for dealing with the issue.

These, he explained, could include a government-backed kitemark for companies with agreed pay ratios between the highest and lowest earners or a requirement for executive pay to be signed off by remuneration committees on which workers had a majority.

Other proposals were a lower rate of corporation tax for firms that did not pay any more than a set multiple of the lowest earner or a new top rate of tax for those on the highest five or one per cent of earnings.

"This is not about limiting aspiration or penalising success; it's about recognising that success is a collective effort and rewards must be shared," declared Mr Corbyn.

"We cannot have the CEO paying less tax than the cleaner and pretending they are worth thousands times more than the lowest paid staff," he added.