SHAREHOLDERS in companies that refuse to pay staff the living wage should have their dividends withheld, Jeremy Corbyn will suggest today.

The Labour leader, who is addressing the Fabian Society’s new year conference in London, will hit out at “hoary Tories” determined “to shrink the state, to shrink fairness.”

He will praise the contribution of trade unions and suggest that executive pay should be held in check by ratios ensuring it rises in accordance with how much each company pays its lowest-paid employees.

Mr Corbyn’s suggestion for enforcing the living wage will be seen as one of the most radical policy proposals since he was elected leader in September.

He is expected to say: “Everyone benefits when companies succeed. One proposal is pay ratios between top and bottom, so that the rewards don’t just accrue to those at the top.

“Of the G7 nations only the US has greater income inequality than the UK — pay inequality on this scale is neither necessary nor inevitable.

“Another proposal would be to bar or restrict companies from distributing dividends until they pay all their workers the living wage.

“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.”

A report by the High Pay Centre last August found that the chief executives of Britain’s top firms earn a whopping 183 times more than the average full-time worker.

The TUC has called for “modern wage councils” to set higher minimum wages “where employers can afford to pay more.”

Mr Corbyn will add: “Too much of the proceeds of growth have accumulated to those at the top.

“Not only is this unfair, it actually holds back growth — as OECD research has found. A more equal society is not only fairer, it does better in terms of economic stability and wealth creation.”

The conference is also being addressed by Labour rightwingers including Chuka Umunna, Dan Jarvis, Rachel Reeves and Progress director Richard Angel.