Project Merlin Q&A: Small firms seem to be biggest winners

Q Is the deal what the government had hoped it might be in terms of curbing the bonus culture?

A Probably not. They have not been able to seriously reduce the bonus pool and only have limited publication of senior executive bonuses and pay at banks. The traders who receive the biggest bonuses and are the movers and shakers in the "casino culture" which led to the banking collapse will not have their bonuses published.

Q Is the lending agreement good news for businesses?

A The government has managed to get the banks to lend at least 190 billion next year to businesses, a rise of 11bn. On the face of it the biggest winners are small businesses which will be leant 76bn - an increase of 10bn on this year. However, business organisations have only given a lukewarm response, with some like the Institute of Directors arguing it will have little effect

Q Why was this quite so important?

A The problem of banks not lending to small- and medium-sized businesses has been seen as one of the main obstacles to economic recovery and growth. Meanwhile the government has been concerned about the impact of bankers receiving big bonuses at a time when people are losing their jobs or taking pay freezes.

Q Earlier this week the government increased its tax levy by 800 million to 2.5bn next year, was this bank bashing?

A The bankers thought it was and almost ditched Project Merlin as a result, but Labour claimed that it was a tax cut.

Q There was 200m for the Big Society Bank, what is this and will it give me some money?

A It is meant to help fund and support projects by community and volunteer groups. However, details of where and how the money would be allocated were sketchy last night.