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Labour has declared war on fatcat businessmen like disgraced retail tycoon Sir Philip Green – and pledged to ­introduce tough new laws to regulate bosses’ behaviour.

Thousands of workers were left heartbroken when high street chain BHS was plunged into ­administration earlier this year.

Now Shadow Chancellor John McDonnell – whose mother proudly worked for BHS for 30 years – has announced that any Labour ­government will bring in measures to protect employees and pensioners.

The proposed “Philip Green law” would stop bosses taking out massive loans while paying themselves hefty dividends.

Thirty BHS stores closed today and the rest are due to close in the next four weeks.

(Image: Reuters)

Mr McDonnell said the firm had fallen victim to “ruthless ­exploitation”, adding: “My mum worked for BHS behind the counter.

“It was a good company and it treated her well, the sort of company you were proud to work for.

"If my mum was alive now she’d say that this has been an absolute disgrace.”

BHS made after-tax profits of £208million from 2002 to 2004 but paid out nearly double that – £423million – in dividends.

Mr McDonnell said this could only have been done by the company taking on extra debt then using it to pay out dividends instead of investing it.

(Image: REUTERS/Bobby Yip)

And he vowed that the new law would stop companies being used as “debt cash cows” in this way.

It would not allow borrowing to be taken on to finance a dividend if doing so would increase the company’s debt by an excessive amount.

Mr McDonnell said: “We want to make sure no one else can undermine a company that has had decent working conditions and pay for its workers.

“A company that was respected in the wider community and was one of the foundations of the high street.

"It’s been brought about by exploitation of the company – ­ruthless exploitation.

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“The report wasn’t a surprise but it was shocking – the sheer scale of what went on, the abuse of the company and the destruction of what was a British institution.”

Referring to Labour’s proposed new law, he said: “It will block companies being treated as debt cash cows.

“And we’ll change company law to stop borrowing to be taken on by firms to finance a dividend if it raises their debt by a certain amount.

"That’ll stop directors using company debt to finance dividends when it damages the companies’ long-term futures.

“But most of all it will protect employees and their pensions.”

(Image: PA)

A scathing report by the Work and Pensions Committee saw MPs blame Sir Philip Green, his successor Dominic ­Chappell and “hangers-on” for putting 11,000 jobs at risk.

They pointed out that Sir Philip’s 15-year spell at the helm of BHS saw ­“significantly” more money leave the company than was invested in it.

The report – attacked by the tycoon as “biased and unfair” – also alleges that he and his family extracted more than £300million from the business before it was sold to Chappell, a bankrupt ex-racing driver, for £1.

It said: “The truth is that a large proportion of those who have got rich or richer off the back of BHS are to blame.

"Sir Philip Green, Dominic Chappell and their respective ­directors, advisers and hangers-on are all culpable.”

(Image: Getty)

Sir Philip hit back by saying the report process had been “biased and unfair” and that its outcome was “predetermined”.

Mr McDonnell, who is helping to run Jeremy Corbyn ’s leadership campaign, said the proposed new law would become a key part of a new left-wing strategy to be unveiled over the coming weeks.

He said: “We want to transform society. The one we want to create is fairer, more equal and more ­democratic.

“It’s based on a ­prosperous economy where the prosperity is shared by all.”

Mr McDonnell said that leadership contender Owen Smith’s latest raft of policies were similar to Mr Corbyn’s.

(Image: PA)

He said: “Owen is bringing forward policies Jeremy and I have advocated for the last 10 months.

“The issue there is, why would people have confidence in Owen Smith campaigning on policies which are ours anyway?”

Allegations of anti-Semitism and rape or death threats have swirled round the Labour Party.

Latest polls show that, although Mr Corbyn remains popular among Labour voters, the rest of the ­electorate do not believe he could win a general election.

And Labour are currently trailing by 12 points.

But Mr McDonnell believes the recent attempted coup is behind the poor polling.

(Image: Getty)

He added: “A few months ago we moved ahead of the Tories in the polls – three or four points.

“We were winning by-elections, mayoral elections.

“We matched Ed Miliband at his highest in terms of performance at the local government elections.

“We were laying the foundations – exactly according to plan – of ­electoral success to come.

“There’s been a battering partly because of the attempted coup.

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“MPs have been rushing to the media telling them that Jeremy is not capable of leading the party and all the rest of it.

“I’m amazed they haven’t done more damage.

Mr McDonnell added that once the leadership contest is over, Labour will be best placed to take advantage of the changing culture in world politics.

He said: “We now have mass movement politics taking place. It’s not the party machines that win elections any more.

“People have seen through it – spin doesn’t win.

"I think Jeremy is a ­reflection of the new modern politics that we have. And on that basis I think we’ll win the election."