Sorry George - Yes they should be paid bonuses

George Osborne told the Guardian today that the Tories would put a stop to bonuses in the banking sector. He described bonuses paid to bankers as "unacceptable" and suggests that the Conservatives would legislate to stop them.

Although I agree with George Osborne's plans for reforming the way we regulate the banking sector, abolishing the tripartite system of regulation which allowed us to slip in to this mess in the first place, on this occasion, I'm sorry, but I don't agree with the Shadow Chancellor.

When it comes to banks such as RBS and Lloyds which had to go cap-in-hand to the government for tax-payers' money, I agree there is no room for bonuses. Employees at these banks, especially top executives, should be subject to similar pay restraints that exist in the public sector. But why should staff at Barclays and HSBC have to suffer?

Earlier this month both Barclays and HSBC reported profits of around £3 billion each. Surely, in times of economic hardship, two of our leading banks making profits is a good thing? It seems not; if Mr Osborne were to get his way, they would have to suffer the state's interference too. But why should they?

After all, neither Barclays nor HSBC had to resort to asking the government to bail them out in those dark days when our banking sector seemed on the verge of collapsing. And, despite hard economic times, they're making profit. Why, therefore, should employees at those firms be rewarded with bonuses? Isn't the whole point of bonuses to reward success?

The backlash against Mr Osborne's proposals from the business world has been harsh. And no wonder. There was a time when the Tories were the friends of business. People knew they could trust the Conservatives when it came to supporting our financial services sector. This announcement from Mr Osborne, which stinks of unhealthy state interference, puts that reputation and the Tories' relationship with the City at risk.