The latest development in relation to Project Merlin is the threat by the Business Secretary Vince Cable that if there is no evidence of the banks having made a significant effort to achieve the lending targets agreed with the Government, it will revisit its stance on taxation of banks.

Accusations of "empty rhetoric" have followed from the Unions. It is difficult to disagree. Whilst the Business Secretary's speech to the Business, Innovation and Skills Committee on Wednesday acknowledged the inherent conflict between the requirement for banks to ease lending constraints, whilst also exercising caution in their lending criteria, there is little evidence of anyone trying to get to grips with these two apparently irreconcilable objectives.