The Full story: PM's Questions and Banking Statement
Prime Minister's Questions in full
By Gavin Stamp
Mr Osborne is outlining more details of the banks deal. We're going to wind up our live text coverage now - there'll be full reports, reaction and analysis on the BBC News website throughout the afternoon following what has been a busy couple of hours in the Commons. Join us again next Wednesday for Cameron v Miliband live.
Mr Osborne is now on to the meat of his statement. He says the agreement with banks will see them lend more, pay less in bonus, be more transparent over pay and make greater contribution to economic development in the English regions.
Mr Osborne says the government is "picking up the pieces" from the banking crisis. He outlines steps the government is taking to stiffen bank regulation and maximise the amount of tax the banks are paying. He says the bank levy will raise £10bn over the next four years.
Chancellor George Osborne begins his statement on bank lending and bonuses. He acknowledges that there are still "cries for retribution" from the banks after the 2008 financial crisis.
PMQ Review with James Landale, Jack Straw and David Willetts
Mr Benyon says he will take "no lectures" on flooding as 5,000 homes in his constituency were flooded in 2000. He says the government will seek to protect as many homes as possible
MPs from all parties are expressing concerns whether flood defence schemes will go ahead in their constituencies. George Mudie said Leeds city came "within a centimetre" of being inundated in 2000 and the city "cannot be allowed to be knocked out" by flooding. But Mr Benyon says the proposed Leeds scheme would cost £250,000 per household and would not be affordable.
Former Labour minister Ben Bradshaw questions how a cut in the number of flood defence projects going ahead in the next year can be squared with the prime minister's "clear assurance" that flood defence would be protected and funding maintained.
Mr Benyon says it is not realistic that all flood defence projects can go ahead but he believes that the "outcomes" for people in vulnerable areas will not be damaged. He says the Environment Agency is being asked to find 15% in efficiency savings as part of efforts to concentrate funding on frontline protection.
Labour's Mary Creagh suggests the government may be going further than the £160m budget cut to flood defence it announced in October's Spending Review and says those on low incomes are hit hardest by flooding and need special protection.
The BBC's deputy political editor James Landale says the government clearly has a job to do to explain what the Big Society is.
Environment minister Richard Benyon is now answering a question on flood defence spending. He says £2.1bn will be spent on measures to protect an extra 145,000 homes. He acknowledges that the overall budget will be cut by 8% over the next four years but that no projects currently under way will be cancelled.
The last question, by the way, was about votes for prisoners. Mr Cameron says he believes there is "no reason" why prisoners should get the right to vote and says he believes it is not something the public wants to see. He says Thursday's debate on the issue is likely to be lively.
The BBC's deputy political editor James Landale tells Daily Politics Julian Lewis was looking for reassurance on the replacement of the Trident nuclear weapons system. Labour's Jack Straw says it was significant that Mr Cameron included the word "full" in his answer saying he wanted a "full replacement of Trident".
Labour MP Ian Austin refers to figures suggesting half of donations to the Conservatives last year came from the City of London. But Mr Cameron said Labour's new shadow chancellor, Ed Balls, was City minister when the banks nearly collapsed. "Great pick," he says. And that's the session ended for the week.
Labour's Jim Cunningham accuses the government of cutting the allowances and pensions of armed forces personnel. Mr Cameron says he does not agree with this and says he is determined to give serving personnel a "good deal" on pay and welfare.
Labour's Angela Smith brings up government plans to sell-off forests in England and Wales, saying it shows the coalition knows the "price of everything and the value of nothing". Mr Cameron says no decisions have been taken and a consultation is underway. But he says he wants to dispel myths about the plans and public access will be protected.
Labour's David Cairns attacks the government for "rebranding" anti-social behaviour orders and control orders. He says cuts in police funding show the government is "soft on crime". Mr Cameron says Labour are in "total denial" about the need to reduce the deficit.
Tory MP James Clappison asks the prime minister about the deportation of foreign terrorist suspects after comments by Lord Carlile that the UK had become a "safe haven" for terrorists. Mr Cameron says he will do "everything he can" to keep the UK safe.
Tory MP Julian Lewis suggests the plan to replace the Trident nuclear weapons system is being threatened by the Lib Dems' call for a delay in key decisions until after 2015. Mr Cameron says he is committed to replacing Trident to "keep our guard up".
David Cameron is asked about the referendum on the Westminster electoral system and whether it should only be binding if 40% of the electorate take part. Mr Cameron says he is primarily concerned about boosting the no vote against electoral change.
Labour MP Gisela Stuart asks what progress the coalition is making on its pledge to recruit 3,000 extra midwives. Mr Cameron says the government is putting more money into the NHS.
Ed Miliband says the government's cuts are making society "smaller and weaker". But Mr Cameron responds by saying Labour does not have a single answer to the UK's economic problems and reminds him Labour almost "bankrupted" the country. That's Mr Miliband's six questions over with
Ed Miliband says four libraries are being forced to close in Mr Cameron's own constituency. The prime minister says more community involvement should be encouraged and accuses the Labour leader of "jumping on every bandwagon".
David Cameron says the budget for Sure Start will actually rise and accuses Labour councils of taking "politically motivated" decisions about what services to cut.
Ed Miliband moves onto the wider issue of spending cuts, saying 250 Sure Start centres are set to close. Commons John Bercow, as he tends to do every week, intervenes to say the Commons has become "unacceptably rowdy".
Mr Cameron says the settlement with the banks to be announced later will result in an extra £200m going to voluntary groups through a new Big Society Bank
Ed Miliband says Mr Cameron should listen to experts who say spending cuts are "destroying" volunteering efforts.
Mr Cameron says all political parties support devolving power to communities and encouraging volunteering.
Labour leader Ed Miliband is on his feet for his first question. He asks Mr Cameron how "his Big Society is going"?
1202 The first question is from Lib Dem MP Roger Williams about whether changes to university funding will deter foreign students. David Cameron says foreign students are vital to British universities
We are under way with David Cameron paying tribute to British soldiers killed in Afghanistan
The BBC's Deputy Political Editor James Landale says he expects PM's questions to be dominated by the banks and the wider issue of the economy.
Another issue that could be raised at PM's questions is whether prisoners should have the right to vote. MPs are to debate the controversial subject tomorrow and Justice Secretary Ken Clarke has said it is nonsense to suggest that murderers and rapists will get the vote as a result of the UK complying with an EU ruling on the subject.
It has been announced a by-election will be held in Barnsley Central on 3 March. The former Labour MP Eric Illsley resigned the seat after pleading guilty to dishonestly claiming expenses.
Another issue that could crop up at PM's questions is tuition fees after it emerged that Oxford and Cambridge Universities are likely to charge the maximum £9,000 fee for students. David Willetts defends this but says it will only happen if the universities do more to widen access to poorer students and "do better on social mobility".
David Willetts says the government is being "tough" on the banks and is increasing the levy on their balance sheets by an extra £800m.
Labour MP Jack Straw tells Daily Politics he is sceptical about the commitment on transparency, saying the banks need to be much more open about what their top people are paid.
Universities Minister David Willetts says there will be a "significant" increase in bank lending next year and a "specific" commitment for the banks to supply more credit to small and medium sized firms. He tells the BBC's Daily Politics that more details of what top bank executives earn will also be made public.
1135Chancellor George Osborne is expected to make a statement to MPs on the banks at about 1300 GMT. Immediately after the end of Prime Minister's Questions, there will be an urgent question from shadow environment secretary Mary Creagh on the UK's flood defences. We'll keep the live stream running on this page so you can watch it all live.
Welcome to our weekly coverage of Prime Minister's Questions. Last week's encounter was a fairly low-key occasion focused on foreign affairs but expect more fireworks this time. The government is set to announce a long-awaited agreement with the High Street banks on lending and bonuses in the next two hours. Labour leader Ed Miliband may take the opportunity to pre-emptively attack the settlement.
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