Jeremy Corbyn warns businesses over 'unfair' pay

A Labour government could ban companies from paying dividends to shareholders unless they pay workers the living wage, Jeremy Corbyn has said.

He said in a speech to a think tank too much profit from economic growth had gone to those at the top of society.

The Labour leader was explaining his strategy to tackle pay inequality and "institutionalise fairness" in Britain.

He later told the Unite union in Scotland the Tories wanted to "tip the scales further" in favour of bosses.

Liberal Democrat leader Tim Farron said Mr Corbyn "seems committed on ripping apart our business sector in pursuit of an egalitarian fantasy". A Conservative Party spokesman called Labour a "clear threat to our economic security".

Addressing the left-of-centre Fabian Society, Mr Corbyn said: "Only profitable employers will be paying dividends; if they depend on cheap labour for those profits then I think there is a question over whether that is a business model to which we should be turning a blind eye."

Mr Corbyn repeated his promise to renationalise the railways

CBI chief of staff Matthew Fell said: "The idea of politicians stepping into the relationship between a private company and its shareholders would be a significant intervention, and not one that we would support."

Almost six million workers in the UK are currently paid less than the living wage - an informal benchmark promoted by the Living Wage Foundation, which is currently £8.25 an hour and £9.40 in London.

The government has announced a compulsory National Living Wage for people over 25 starting at £7.20 an hour in April this year, with a target of reaching more than £9 an hour by 2020.

'Holds back growth'

Mr Corbyn said imposing "pay ratios" between those at the top and those at the bottom of a company's pay scale could be another option for creating a fairer society.

He said: "A more equal society is not only fairer, it does better in terms of economic stability and wealth creation."

The Labour leader also used his speech to attack the Conservatives, accusing them of "running the state into the ground" for ideological reasons.

"Their concept of fairness is of a very different order to ours," he said. "Fairness for only a few is not fairness, but privilege."

In his address to Unite's Scottish conference in Glasgow, Mr Corbyn repeated his call, saying companies should "pay the living wage to the workers first and the dividend later on".

He also said a future Labour government would repeal the Trade Union Bill currently going through Parliament, and extend employees' rights.

Living wages: How does it add up?

• The living wage is an informal benchmark, not a legally enforceable minimum level of pay. It is currently set at £8.25 an hour, and £9.40 in London

• The national minimum wage is the compulsory minimum level of pay set by the business secretary each year on the advice of the Low Pay Commission. It stands at £6.70 an hour for adults aged 21 and over, and £5.30 for those aged 18 to 20

• In the last Budget the government announced a new compulsory National Living Wage would come into force from April 2016. It will be paid to workers aged 25 and above. It will be set initially at £7.20 an hour and is intended to exceed £9 an hour by 2020

Mr Corbyn repeated his promise to renationalise the railways, which he said would bring down fares.

And he said the way to cut energy bills for consumers and transition to carbon-free energy was to restore "democratic control" of the energy companies.

'Difficult process'

Seema Malhotra, shadow chief secretary to the Treasury, told the BBC Mr Corbyn was not announcing "something that is Labour policy" adding "it was an idea" to provoke debate.

Mr Corbyn had said party members and supporters would decide whether his proposals were worth adopting.

"Our... membership has doubled since that [general election] defeat in May; our party is in a process of regenerating - a difficult process of adjustment for us all at times, but a huge opportunity to breathe life into all sections of the party and draw on the collective wisdom of all."

BBC News politics reporter Matt Cole said the speech was a way for Mr Corbyn to regain the political initiative following the shadow cabinet reshuffle over which three of his front-bench team resigned.

He said the "most eye-catching plan", the proposals on dividends, received a warm welcome from Labour supporters happy to move on from what may have seemed like unending internal party rows.