GEORGE OSBORNE will today call on the Treasury and Financial Services Authority to stop high street banks paying out cash bonuses of more than £2,000.<br /><br />Retail banks such as state-owned Lloyds Banking Group and Royal Bank of Scotland must be banned from paying out cash bonuses, he will say, to allow profits to be pumped into new lending. Instead Osborne will argue high street banks should only pay “significant” bonuses in shares.<br /><br />The shadow chancellor will argue that while banks in the UK must “remain competitive and retain their most talented staff,” they should pay those senior staff who have earned bonuses “in the form of new equity capital,” or shares in the business. His plans do not apply to investment banks like Goldman Sachs. <br /><br />The Tories say this new policy could create £20bn of new lending which would give credit to businesses and consumers, but Treasury officials argue Osborne’s policies are riddled with “hypocrisy,” and that his party had not got behind government plans designed to support UK business.<br /><br />Osborne is also set to warn that a year on from the bail-out of the banks, the economy remains “starved of credit and starved of confidence”. <br /><br />His comments come after the Centre for Economics and Business Research said City bonuses would hit £6bn this year, up from £4bn in 2008, thanks largely to rising profits.