The chancellor of the Exchequer has said rewarding excessive bonuses in the banking sector has got to stop.

Responding yesterday to national newspaper reports that Royal Bank of Scotland, of which the public owns 70%, is to give staff £1 billion in bonuses, Alistair Darling said on the BBC's Andrew Marr Show: "There's nothing wrong with a bonus system that rewards success. There is everything wrong with a system that has over the years been rewarding failure and encouraging the excessive risk-taking that has caused all the problems across the world. That has go to stop."

He added: "No one associated with these losses should be allowed to walk away with large cash bonuses. There are cases where it is right to reward people for doing well. What has gone wrong is the incentives in the system skewed things so we got into the difficulties we are in today.

Darling would not confirm how much would be paid in bonuses to Royal Bank of Scotland staff.

But shadow chancellor George Osborne, also speaking on the Andrew Marr Show, said: "At a time like this cash bonuses for people who have been involved in the higher echelons of a bank is simply unacceptable. The party is over."