Jeremy Corbyn pledges ‘fat cat tax’ on big businesses paying £330,000 salaries

A levy of up to five per cent will be aimed at big businesses, city banks and Premier League clubs

Jeremy Corbyn has vowed to introduce a swingeing ‘fat cat tax’ on big businesses to punish them for awarding sky-high salaries.

Labour would slap a levy of 2.5 per cent on earnings above £330,000 and of five per cent on pay above £500,000, with the cash raised used to rescue public services.

Today’s election manifesto also vows a dramatic expansion of childcare, which would be made available to all two-year-olds until they start school, for 30 hours a week.

As expected, the 45 per cent income tax rate would kick in at salaries above £80,000 – not £150,000 – and people earning above £123,000 would pay 50 per cent.

And Labour is saying it would “consider the option of a more federalised country”, in response to growing devolution to Scotland, Wales and Northern Ireland.

Answering questions about the strikingly different offering to past Labour manifestos, Mr Corbyn said: “What we are proposing is a rebalancing of the economy.

“Every other country in the world asks why does Britain invest so little and pay itself so little, while it allows such grotesque levels of inequality to get worse.”

The most eye-catching policy added since last week’s leak of the draft manifesto is the proposal for a “fat cat tax” aimed at big businesses, city banks and Premier League clubs.

Labour says it would discourage excessive pay and is needed to reduce rising inequality which is damaging society.

The party stressed it would hit employers - rather than workers - and be calculated by adding together salary, shares, bonuses and pensions.

Companies are expected to have to pay £4,250 extra for every worker receiving £500,000 in pay and perks. For a person earning £1m a year, that could rise to £29,250.

On childcare, Labour will pledge £5bn a year to create a universal service, extending the 30 hours-a-week - currently only promised to working parents - to every family, even if neither parent is in work.

Labour said an additional 1.3m kids across Britain will benefit from the policy if the party wins the election on June 8.

A further £2.7bn of capital spending will be invested into nurseries over the course of the Parliament “to ensure the places exist to meet demand”.

The manifesto attempts to tackle the thorny issue of immigration, proposing – when free movement of EU citizens ends – a mix of “employer sponsorship, work permits, visa regulations”.

It calls for water privatisation to be reversed through a system of “regional public ownership” – although John McDonnell, the Shadow Chancellor, stumbled badly on the cost of the policy earlier.

One other surprise was a hint that Labour would review council tax, and “consider new options, such as a land value tax”.

The manifesto stated Labour’s commitment to renewing Trident, but a line that the party would be “extremely cautious” about using nuclear weapons has been dropped.

As expected, Labour would build one million new homes, end “the scandal” of zero hours contracts and recruit 10,000 extra police officers, as well as 3,0000 more fire officers

And the document pledges to work with the Northern Ireland Assembly to extend right to legal abortion

Labour would also consider wealth taxes and employer care tax to fund social care, the manifesto says.

Both the pledges that “Labour will scrap tuition fees” and “put passengers first” by renationalising the railways were met with huge cheers and applause.

Mr Corbyn also attempted to set out Labour’s different approach to Brexit as one “which puts jobs first” – while arguing the EU exit was inevitable, “because that is what the British people voted for”.

It would be very different to the Tory approach which was in the “interests of the City of London and risks making Britain a low-wage tax haven”, he said.