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Public sector contract bosses may face multimillion-pound pay cuts under Labour

Bosses of defence giants and other firms with public sector contracts could face multimillion-pound pay cuts under Labour's plans to tackle "grotesque" inequality.

Shadow chancellor John McDonnell said Labour's plans would mean bosses at firms winning taxpayer-funded contracts could only be paid 20 times the salary of the lowest earner at a firm.

Bosses with salaries in breach of the ratio would face having their pay slashed over a transitional period as part of a plan to make sure people are "equitably rewarded".

On BBC Radio 5 Live's Pienaar's Politics Mr McDonnell was asked how the policy would hit Charles Woodburn, the new boss of defence giant BAE Systems who stands to earn a reported £7.5 million in pay and perks.

Presenter John Pienaar asked how long Labour would give Mr Woodburn to cut his pay by £7 million before BAE lost contracts.

Mr McDonnell said: "It would depend on the agreement that we have with that company and with their shareholders and with the workforce."

He added: "W e want to get to equitable pay. We want to address the grotesque inequalities that there are within our society, that actually do undermine in many ways the standing of those particular companies."

Mr McDonnell said firms would be able to keep their government contracts if they agreed to meet the 20:1 ratio.

"If they worked with us (on) a trajectory which addressed the problem they wouldn't lose the contract," he said. "We'd agree a transitional period with them."

He said there was a "general trend across society" and within the business world to address inequality, with shareholders expressing concerns about bumper pay packets at some firms.

Mr McDonnell said: "At the moment if you are the top executive in a FTSE 100 company you are paid 182 times more than the average worker in that company.

"That's grotesquely unequal."

The senior Labour figure, a close ally of Jeremy Corbyn, insisted that the party could turn around its poor opinion poll ratings after deputy leader Tom Watson warned that Theresa May's Tories could gain a "Margaret Thatcher-style majority" on June 8.

Mr McDonnell said: "We have lifted in the polls again, we are up to 32%, beyond what we got in 2015."

On Sky News' Sophy Ridge On Sunday, Mr McDonnell said: "I think we're going to win, I think the polls are showing that because our policies are so promising and on the basis of that you'll see Jeremy Corbyn in Number 10, full stop."

He insisted the leader's office was not behind the leak of the draft manifesto, saying the disclosure "caused a bit of a panic".

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