Three words, Jeremy: Government Procurement Agreement

Corbyn said Labour would stop firms with pay ratios of more than 20:1 getting government contracts. He said:

“Another advocate of pay ratios was David Cameron. His government proposed a 20:1 pay ratio to limit sky-high pay in the public sector and now all salaries higher than £150,000 must be signed off by the Cabinet Office.”

Labour will go further and extend that to any company that is awarded a government contract.

As with Donald Trump a few weeks ago, where to start? Well, let's discounting the fact that we're still inside the EU and this measure would be deemed illegal as discriminatory and violating the principle of competition.

Even by waving away that pesky EU law the same provision would fall foul of the Government Procurement Agreement on similar grounds.

The consequence of such policy would simply be arbitrage (ie, creation of shell companies where public contracts would be routed or the use of subsidiaries) and increased complexity for public procurement.

And if is such a great idea, why is it apparently restricted to *firms*? Why not cover all potential economic operators irrespective of their legal structure. After all the pay ratio issue is not exclusive to private sector.