This was in addition to the government increasing its levy on banks to £2.5bn in 2011 - raising an extra £800m. The Bank of England will monitor whether loans targets are being met. Under the agreement banks will lend about £190bn to businesses during 2011 - including £76bn to small firms - curb bonuses and reveal some salary details of their top earners. Project Merlin was announced on 9 February 2011 by Chancellor of the Exchequer George Osborne. This tax was temporary and lasted only for one year, but some, including Ed Miliband, the leader of the Labour Party called upon the coalition government to extend this tax as a response to predictions that UK banks would pay out high levels of bonuses in 2011.
This tax was equivalent to a 33.3% income tax. In the 2009 Pre-Budget Report, the Labour Chancellor of the Exchequer, Alistair Darling announced a temporary tax on bankers' bonuses, which required banks to pay 50% of all bonuses above £25,000 as a tax. The government had been concerned about low levels of bank lending during the recession that followed the banking crisis and had also been critical of high levels of pay and bonuses in the financial sector. The Northern Rock bank had already been nationalised following its collapse in 2007, the government subsequently part-nationalised Bradford and Bingley, Lloyds Banking Group and the Royal Bank of Scotland. In October 2008, the Labour Government of the UK introduced a bank rescue package as a response to the Financial crisis of 2007-2010.
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