Miliband faces India media flak

Mr Miliband has urged movement to solve the Kashmir issue

The Indian media have continued their assault on UK Foreign Secretary David Miliband following his comments on the Kashmir issue.

Mr Miliband, who visited India and Pakistan last week, said in a UK newspaper article that solving the dispute would help tackle extremism.

India blames Lashkar-e-Taiba militants, who have fought Indian rule in Kashmir, for the November attacks on Mumbai.

But Delhi sees Kashmir as an "internal" issue separate from tackling terrorism.

Warning shot

On Monday the Hindu's editorial said Mr Miliband's visit was an "ill-conceived foray" and criticised the linkage of the Mumbai attacks with the divided region of Kashmir.

"Such ham-handedness plays into the hands of those who are in denial and rationalise violent extremism by finding 'just' causes for it," it wrote.

The foreign secretary was very open and honest about his views, which are those of the British government Spokeswoman for David Miliband

The editorial in the Asian Age said: "Such appeasement of terrorism is startling... What next? That the chief imam of London's Finsbury Park Mosque should be elevated to the House of Lords?"

The Pioneer accused Mr Miliband of "domestic grandstanding and ideological posturing that only left his Indian hosts convinced of Whitehall's marginal status in international politics".

A number of Indian newspapers at the weekend quoted officials as criticising Mr Miliband's "aggressive" attitude in meetings.

In his article in the Guardian, Mr Miliband said resolving the Kashmir dispute would help deny extremists in the region one of their main calls to arms and allow Pakistani authorities to focus more effectively on tackling the threat on their western borders.

India's foreign ministry reacted strongly, saying India did not need unsolicited advice on internal issues.

The main opposition Bharatiya Janata Party described the visit as a "diplomatic disaster".

The BBC's Jill McGivering says Indian officials may be firing a warning shot, reminding the West that foreign attempts to engage with - or interfere in - the dispute about Kashmir are unwelcome.

India has long resisted attempts to internationalise Kashmir, which it sees as a bilateral affair.

A spokeswoman for Mr Miliband was quoted in the UK's Independent newspaper on Sunday as saying: "The foreign secretary was very open and honest about his views, which are those of the British government. He delivered the same message in New Delhi as he did in Islamabad."

Jobs 'to be promoted in UK first'

Unions say current rules on advertising are often ignored

Employers will be forced to publicise skilled job vacancies on the Jobcentre Plus network before advertising them abroad, the Home Office has said.

This follows concerns that some firms are effectively hiding jobs from UK workers such as builders and nurses by promoting them only in trade magazines.

Home Secretary Jacqui Smith said the greater exposure would give UK workers the "first crack of the whip".

But the Tories said this was pointless without an annual cap on immigration.

The group affected by the government's change will be "tier two'' immigrants, who include primary school teachers, some categories of nurses, hotel managers and construction workers.

Employers currently have to advertise a job nationally for two weeks before looking for workers from overseas.

Skill levels

The time limit drops to one week where a salary of more than

Phillips clears police of racism

By Dominic Casciani BBC News home affairs

Interview with Trevor Phillips

The police should no longer be accused of institutional racism, the UK's equalities chief has said.

In a speech marking 10 years since the Stephen Lawrence murder report, Trevor Phillips said the UK and the police have changed massively.

He said that Britain is "by far the best place in Europe to live if you are not white".

But Mr Phillips also criticised Prince Harry's use of the word Paki to describe a fellow officer.

In a wide-ranging speech on Monday, the Equalities and Human Rights Commission chief said the UK is now a much changed place at ease with racial diversity - even if problems still remain.

Different approach

He said the accusation of institutionalised racism levelled against the Metropolitan Police by the Macpherson Report into Stephen Lawrence's death was no longer appropriate.

Today Britain is by far - I mean by far - the best place in Europe to live if you are not white Trevor Phillips

"The use of the term was incendiary," he said. "It rocked the foundations of the police service and caused widespread anguish in government.

"Today most people would argue that despite the controversy, on balance the positive changes provoked by Macpherson have outweighed the cost of the political turmoil.

"But does this mean that I believe that the Met, or any force for that matter, should be pilloried with the single blanket accusation of being institutionally racist? I don't think so. That would imply that nothing has changed.

"Would the police deal with Stephen Lawrence's murder differently today? Evidence from the murder of Anthony Walker in Merseyside in 2005 indicates they would."

Eighteen-year-old Anthony Walker was killed with an ice axe in a park at Huyton in July 2005. Two men were convicted of his murder.

Det Ch Supt Peter Currie, who led the investigation into the racist murder, was later awarded the Queen's Police Medal.

Mr Phillips called for a national debate on equality, saying the agenda must shift from single issues, such as racism or age, and a red-tape box-ticking culture that has developed around racism law.

In its place must come a broader drive for equality, based on forthcoming reforms, which ensures anyone from any background has the same chances in life as anybody else.

'One of the boys'

Mr Phillips' speech highlights data and surveys indicating that younger people are increasingly relaxed about ethnic diversity because they have grown up with it.

In contrast, he turned to Prince Harry's recently-revealed casual use of the word "Paki" while an officer cadet.

"Few of us feel that Prince Harry is some kind of racist or homophobic bigot, however ill-judged his choice of fancy dress costume, however crude and offensive his remarks," Mr Phillips said.

"But we can see he likes to be one of the boys. And as one of the boys, he operates by the unwritten code of his environment - a code that didn't once cause him to question whether calling fellow officers 'Paki', 'raghead' or 'queer' was insulting or inappropriate.

"Our nation is changing dramatically. We are becoming more diverse by the day. The trend is clear: the younger you are, the less prejudiced you are."

Pickles 'to be new Tory chairman'

Mr Pickles ran the successful Crewe and Nantwich by-election

Eric Pickles is set to be Conservative Party chairman, as David Cameron continues to reshuffle his front bench.

Mr Pickles, who had been shadow communities secretary, swaps roles with Caroline Spelman, the BBC understands.

Mr Cameron has already announced he is bringing former chancellor Ken Clarke back as shadow business secretary.

Chris Grayling is set to be shadow home secretary, Alan Duncan shadow Commons leader and Theresa May shadow work and pensions secretary.

Clarke 'delighted' at appointment

Ken Clarke: Was chancellor during the 1990s

Former chancellor Ken Clarke has said he is "delighted" to be rejoining the Conservatives' front bench team, as shadow business secretary.

He said he would be helping to offer a "credible alternative government" in his job shadowing Lord Mandelson.

Party leader David Cameron earlier welcomed his return, calling him a "big figure" with "great experience".

His return comes despite pro-European views at odds with many Tories - including the party leadership.

Mayor in hotel expenditure debate

Mr Johnson said he did not believe the payments broke any rules of conduct

Boris Johnson has said he will pay back taxpayers' money spent on his hotel room at the Tory Party conference if he has broken official rules.

The London mayor spent almost

Jobless total will rise - McNulty

Mr McNulty said he expected unemployment figures to get worse

Employment Minister Tony McNulty has said unemployment figures have "a ways to go before we reach the bottom".

Speaking to the BBC before monthly labour market figures on Wednesday, Mr McNulty predicted they would "still be going in the wrong direction".

Figures suggest the unemployment total rose by 137,000 to 1.86 million, in the three months to October.

Since then, Grattan, Barclays, South West Trains, JCB and Jaguar are among firms to have announced job cuts.

In an interview with BBC One's Politics Show, Mr McNulty was asked if the jobless figures could reach 3m in 2009.

He said he was "not in the game of making predictions", but added: "One thing I will say clearly... have we reached the bottom of this? No we haven't.

"Unemployment is a lagging indicator, so the figures that come out this Wednesday will be for last December and I do fear they will still be going in the wrong direction."

Jobs 'summit'

Asked if it was near the bottom, he said: "I don't think it is at the moment... I think it's got a ways to go before we reach the bottom."

At a "jobs summit" last week, Prime Minister Gordon Brown promised to help 500,000 people into work or training - by offering employers

Beckett talks of housing 'upturn'

Concern about inflationary bubble in prices once economy picks up

Housing Minister Margaret Beckett has said that there is anecdotal evidence of a "bit of an upturn" in interest among homebuyers.

She told the Sunday Times there were "indications of certainly a maintenance of customer interest, possibly even a bit of a pick-up".

One poll suggests the number of buyers registering with estate agents has risen to its highest level since 2006.

But Tory frontbencher William Hague said she was "divorced from reality".

In her interview, Mrs Beckett said she was concerned about "inflationary pressures" if demand picks up before housing supply increased and warned: "When the upturn comes, there will probably be a mad rush."

'Pick-up'

Earlier this week the Royal Institute of Chartered Surveyors warned that property sales had fallen further in the three months to December - to their lowest level since 1978.

But it noted inquiries from new buyers rose for the second month in a row, driven by lower interest rates and cheaper homes.

Here they are, when tens of thousands of people are losing their jobs, talking about green shoots and housing booms William HagueConservatives

Mrs Beckett told the Sunday Times: "We're hearing indications of certainly a maintenance of customer interest, possibly even a bit of a pick-up."

She added: "Some people have been saying the appetite to buy has gone through the floor, but clearly we've had this anecdotal evidence of a bit of an upturn in interest."

But Conservative frontbencher William Hague likened the comments to business minister Baroness Vadera's remarks earlier in the week that she could see "a few green shoots" of economic recovery.

"I think the problem here is that these ministers are clearly divorced from reality," he told Sky News.

"Here they are, when tens of thousands of people are losing their jobs, talking about green shoots and housing booms. I don't think they really understand what is going on out there."

The Liberal Democrats' housing spokeswoman Sarah Teather also said it was an example of "another minister engaging in some seriously wishful thinking".

"Nobody should talk the economy down but for the housing minister to talk of formulating strategies for dealing with the next housing boom when people are struggling to keep up with their current mortgage payments and many are losing their homes is insensitive in the extreme."

The Nationwide building society says house prices fell by 15.9% last year, taking the average price down to

Plans to widen motorways 'axed'

Ministers say using the hard shoulder offers a greener alternative

Transport Secretary Geoff Hoon has suggested plans to widen the M6, M1, M62 and M25 will be dropped.

He said a trial on the M42, using the hard shoulder at busy times, had shown it was possible to ease congestion without concreting over more land.

Mr Hoon told Sky News it also meant increasing capacity without the "difficulty and expense" of widening.

He announced plans to roll out use of the hard shoulder across the core motorway network on Thursday.

The Observer reported that plans to widen more than 220 miles of the M6, M1, M62 and M25 had been scrapped in a

Morgan still to quit in autumn

Rhodri Morgan also backed UK government action on the banking system

First Minister Rhodri Morgan has said the economic downturn will not affect his decision to stand down in the autumn.

He told the BBC Politics Show that by later this year the Welsh assembly government would have everything in place to tackle the recession.

Mr Morgan was asked whether he still intended to stand down on or around his 70th birthday in September.

There has already been speculation over his successor as Welsh Labour leader.

Asked about his plan to step down in the autumn, he replied: "Yes that's my intention - I think by the autumn, everything that we could possibly do to try to shorten the recession, or make the recession shallower, will have been put in place.

"That's not to say that the recession will have come to an end but all the machinery of government will have been put in place.

Carwyn Jones is seen as a front runner to succeed Rhodri Morgan

"And will have a much better impression of whether President Obama's arrival has restored confidence to the US economy - the big swing economy - and we'll have a pretty clear picture of the way forward by then".

Mr Morgan has previously said he would stand down around his birthday on 29 September, unless the calling of a general election by Gordon Brown forced him to delay his plans.

There has been much speculation about who will take over.

Rhondda assembly member Leighton Andrews ruled himself out of the running for top job before Christmas.

But earlier this month Carwyn Jones - the Bridgend AM and Counsel General in the assembly government cabinet - gave his strongest indication yet that he plans to run for leader of the party in Wales.

Mr Jones told party supporters that Labour needed a new narrative and focus on the future, rather than the past.

He also said that Wales needed the "Calzaghe spirit" where it was punching above its weight in the world.

'Very precarious'

Speaking in Llanelli, Mr Jones did not formally declare that he was a candidate for the party leadership, but the breadth of the speech, both in terms of Welsh Labour and the future of Wales, left few in any doubt that he intends to mount a bid.

Mr Morgan told The Politics Show that it was important that workers and companies in trouble did their best to take up the training packages and opportunities that the assembly government were offering.

He said that the economy was in "a pretty serious situation" but that people should not "overdo the negativity".

He also backed the moves that the UK government were taking on the banking system.

Mr Morgan rejected claims from the Liberal Democrat's Treasury spokesman, Vince Cable MP, that the UK government was not being tough enough with the banks.

"Well, that's a good popular thing to say to win votes but that might prejudice what is a very precarious edifice," he said.

"Our banks are in a very precarious position at the moment - and [you have to be careful] on making judgements on how far you can push them on freeing up the credit. These are really matters for Treasury civil servants who are burning the midnight oil along with [the Chancellor] Alistair Darling".

Mayor blasts Heathrow vote ruling

Mr Johnson says runway won't be built

Mayor of London Boris Johnson has accused the prime minister of not having the "guts" to let MPs vote on plans to build Heathrow's third runway.

Pledging to support a legal challenge, the Tory mayor said: "I have absolutely no doubt we are going to be successful. This runway will not be built."

Ministers say MPs never vote on "quasi judicial planning matters".

But that prompted a protest by Labour Heathrow MP John McDonnell who ended up being suspended during the debate.

The Conservatives, Liberal Democrats and up to 50 Labour MPs oppose the plans and there was some anger that there would be no Commons vote on them.

Security risks

Speaking to BBC One's Andrew Marr Show, Mr Johnson - who favours building a new airport in the Thames estuary - said: "They haven't got the guts to call a Parliamentary vote on this matter."

He challenged the prime minister to turn up to a public debate on the third runway in Hillingdon - the borough in which Heathrow is based - and claimed the vast majority of people in London were against it.

I am pleased about the decision that we have reached because I do believe it is the right way forward for the UK Geoff HoonTransport secretary

"They haven't even got the nerve to put it to a vote of the whole of Parliament, let alone in London."

He also said he would contribute

Police leaks to media 'damaging'

The committee was concerned at the handling of the Forest Gate arrests

Police forces are leaking information to the media "too frequently" and should put more "on the record," a report by a group of MPs has said.

The Home Affairs Committee said leaks, while not illegal, were "wrong" and damaged "the reputation of the police".

Leaks had occurred in several high-profile cases, including cash for honours and football bungs, it added.

The Association of Chief Police Officers said it was "committed to openness and accessibility".

Deputy Chief Constable Andy Trotter, ACPO lead on the issue, said police forces used the media to inform members of the public about their work and to seek help from them with the investigation of crime.

"We believe that wherever possible, briefings should be on the record and attributable, with an officer, who is clearly identified, complying with the policy of the senior investigating officer or whomsoever is in charge of the case," he said.

High-profile individuals

The committee pointed out that while it is not actually illegal for the police to leak information - except in cases involving the Official Secrets Act or where doing so compromises a serious crime investigation - the practice does breach discipline regulations.

It said it was never acceptable for the media to be given details of anyone under arrest before a charge is brought.

That person could turn out to be innocent and resulting press coverage could "unjustifiably taint individuals' reputations," it added.

The report said several complaints had been raised by high-profile individuals over such incidents.

Harry Redknapp and Lord Levy have both complained about police leaks

Ex-Portsmouth manager Harry Redknapp was angry that officers from City of London Police were accompanied by photographers from a national newspaper when they searched his property during an investigation into allegations of corruption in football.

The High Court subsequently ruled that the raid had been unlawful.

Former Labour fundraiser Lord Levy alleged that officers had tipped off the media about his questioning at a north London police station as part of the cash for honours case.

Ordinary individuals could also be affected, the MPs said, particularly during counter-terrorism operations.

Human rights organisation Liberty, which gave evidence to the committee, raised the case of Mohammed Abdulkahar and Abul Koyair who were arrested under terrorism legislation at their home in Forest Gate in June 2006.

Media reports at the time, citing unnamed sources, said police were looking for a "chemical vest" or "poison bomb," but no such items were found and both men were released without charge.

Liberty director Shami Chakrabarti said such incidents could damage efforts being made to improve community cohesion.

But former BBC journalist Professor Jon Silverman argued that there were some occasions where off-the-record briefings were in the public interest.

He said that in some cases they could actually be used to prevent the release of certain information at a crucial time in an investigation.

"There are cases where the police know... that journalists have got hold of information... and the off-the-record briefing is actually intended to draw journalists into a kind of circle and say, 'Look, it would be extremely unhelpful to publish this information at this stage for X, Y and Z reasons,'" he said.

Undercover Mosque

The report concluded that police should provide more on-the-record briefings and efforts should be made to ensure that the level of information provided is standardised across all forces.

Labour MP Mr Vaz said "While it may not always be illegal for police to leak to the media it is certainly wrong and can be very damaging to an investigation or to an innocent individual - remember we are talking often about people who have not been charged with any crime or wrongdoing.

"Almost as important, it damages the reputation and integrity of the police themselves.

"The police above all must maintain the highest standards of probity and integrity and we welcome moves to enforce discipline on briefings and develop standard procedures for providing information to the media."

The committee also expressed its regret over the decision by West Midlands Police and the CPS to complain to broadcast regulator Ofcom about Channel 4 documentary "Undercover Mosque".

The MPs said it was not the role of police to enforce responsible journalism.

The Dispatches programme, aired in 2007, tackled claims of Islamic extremism in the West Midlands, but the police and CPS wrongly accused those behind it of distortion.

Both were eventually forced to issue an apology and pay

UK needs 'tougher market rules'

The banking collapse is an historical moment, says minister Ed Miliband

The global financial downturn has left the idea of unregulated markets in "profound crisis", Cabinet minister Ed Miliband has said.

The Energy and Climate Change Secretary told a Fabian Society conference in London tough regulation was needed to curb the excesses of the markets.

He likened the impact of the crisis on British domestic policy to the effects of the 9/11 attacks on foreign affairs.

He added that nationalising banks was now seen as the "mainstream consensus".

Mr Miliband, a former adviser to Prime Minister Gordon Brown when he was at the Treasury, said the banking collapse of 2008 would come to be seen as an "historical moment".

He compared it to the so-called 'winter of discontent' which paved the way for Margaret Thatcher's general election victory of 1979 and Conservative rule.

"This is no ordinary time because, in the same way that September 11 shook the foundations of a thesis about foreign policy... so the economic events we have witnessed have done the same to our domestic politics," he said.

'Massive bonuses'

He said the crisis had arisen out of the market system itself, blaming a combination of excessive lending fuelled by a lack of effective regulation, mainly in the US.

He added that this was made worse by a system of incentives and pay which encouraged the "most reckless and irresponsible behaviour".

He said: "Above all then, this is a moment of profound crisis for the idea that, in economics, as far as possible we should leave markets to their own devices; the idea that government is the problem not the solution."

Mr Miliband said the crisis had shifted perceptions across the political spectrum and the nationalisation of banks was no longer the solution of the far left.

"For a dynamic economy we need markets not unaccountable to government but regulated by them," he said.

Lord Mandelson questioned the wisdom of big City bonuses

Business Secretary Lord Mandelson told the conference Britain was likely to see the economy move away from a dependence on financial services.

He said problems in the financial sector were going to take more time and ingenuity to resolve.

"We've got to identify... what specialist businesses we are going to invest in, where are we going to make our contribution to the global economy," he said.

"We are going to have to find new competitive advantages in Europe. That's going to require both innovation and activism on the part of government."

Lord Mandelson also said there were "important questions" over massive bonuses in the financial services.

"Why have so many incentives for individuals in the financial services sector ended up destroying value rather than creating it?

"What does it mean for the valuable concept of earning your wage in society?"

But he added: "We shouldn't have a problem with high pay for high performance. I see nothing wrong at all in giving rewards for those where you are rewarding excellent performance."

Brown in UK naval offer for Gaza

Gordon Brown is anxious for the "appalling violence" to come to an end

Prime Minister Gordon Brown has offered British naval resources to help monitor events in the Gaza conflict and stop weapons being smuggled in.

He has had talks with Israeli prime minister Ehud Olmert and Palestinian Authority president Mahmoud Abbas.

He wants to help ensure protection and monitoring of the crossings into Gaza.

Mr Brown said: "I'm more hopeful that there will be a ceasefire. We will do everything we can to prevent the arms trading at the root of the problems."

He added: "I believe there is general understanding that the appalling violence should come to an end as quickly as possible.

"Germany, France and Great Britain have just sent a letter to Israel and Egypt to say they will do everything we can to prevent arms trafficking.

Britain will not be lacking in support. We're prepared to give to heal the suffering that is obvious in Gaza Gordon Brown

"I believe that will help get a solution to this crisis. If the ceasefire comes, we have people ready to bring supplies into Gaza. We're prepared to help move children, to take them out of the area so they can be treated elsewhere.

"We're also determined that we do everything in our power to deal with unexploded bombs so that people feel more secure in the Gaza area."

He promised that Britain would be increasing its humanitarian aid over the next five years.

"Britain will not be lacking in support. We're prepared to give to heal the suffering that is obvious in Gaza," he added.

The Palestinian health ministry in Gaza has told the BBC that 1,193 people have been killed, including 410 children and 108 women, since the conflict began on 27 December.

There were 5,300 people wounded, including 1,600 children, the ministry said.

Thirteen Israelis, mostly soldiers, have been killed during the campaign.

GAZA CRISIS BACKGROUND In depth: Gaza conflict Q&A: Gaza conflict Who are Hamas? Middle East conflict: History in maps

Israel's military carried out 50 air strikes in Gaza overnight as its cabinet prepares to vote on a proposal for a unilateral ceasefire.

Palestinians say a tank shell hit a UN school in northern Gaza, killing at least two people sheltering there. Israel says it is checking the report.

The UN Relief and Works Agency (Unrwa) said Israel's actions in Gaza should be investigated as possible war crimes.

Mr Brown's announcement followed an agreement signed between the US and Israel on Friday.

The deal called for expanded intelligence cooperation to prevent Hamas smuggling weapons into the Gaza Strip.

Israel has accused Hamas of using tunnels between Gaza and Egypt to smuggle arms. The Egyptian government has said the tunnels are mainly used for food while most arms are being smuggled into Gaza by sea.

The Prime Minister announced the move as thousands of people gathered to demonstrate against the continuing Israeli attacks.

Rallies in Birmingham and London saw thousands of people calling for an end to the conflict.

Clegg voices school leaver fears

Nick Clegg says the PM's jobs initiatives have been 'pointless'

School and college leavers aged 16-24 will "bear the brunt" of Gordon Brown's "economic mismanagement", Liberal Democrat leader Nick Clegg has said.

He accused the prime minister of "pointless initiatives" and warned against a "poisonous legacy" of unemployment for the next generation.

At a one-day conference in London he also outlined plans for better college funding and to tackle student debt.

Last week Mr Brown announced a scheme to create 35,000 more apprenticeships.

But the prime minister's efforts will not create a single new permanent job, Mr Clegg added.

Today's school leavers could be the first generation in living memory "to end up worse off than their parents", he claimed.

'On the scrapheap'

According to the Lib Dem leader, two million young people who grew up under a Labour government live in poverty and are now being "hit hard by the recession".

He added: "After having already suffered under Gordon Brown's failure to sort out our education system, this generation now bears the heaviest brunt of his economic mismanagement.

"We have to make sure this recession does not leave a poisonous legacy for teenagers and young adults. We must not allow a whole generation to end up on the scrapheap of long-term unemployment."

We cannot always prevent people losing their jobs but we can help people finding their next jobs Gordon Brown

He also questioned the effectiveness of Mr Brown's efforts to boost the economy - including a

Brown urges banks to 'come clean'

Gordon Brown is looking at a number of options to help the banks

The prime minister has demanded that banks admit how many "toxic assets" they have on their balance sheets.

Gordon Brown told the Financial Times the banks had to "come clean" about these bad debts so that people could trust them again.

He refused to rule out further bank nationalisation plans or injecting taxpayers' money into the sector.

The government is expected to unveil new measures next week to stimulate lending to major businesses.

Mr Brown said: "One of the necessary elements for the next stage is for people to have a clear understanding that bad assets have been written off.

"We have got to be clear that where we have got clearly bad assets, I expect them to be dealt with."

Mr Brown said unless this issue was resolved there was a risk of banks retreating into "financial isolationism" where big banks retrench from the global market into their domestic markets.

He said Royal Bank of Scotland (RBS), which is 60% part-nationalised, had begun retreating from investing overseas - but international co-operation was essential if the global credit market was to be revived.

It's the same problem of access to the banks and to funding Gordon Brown UK 'bad bank' plan to boost loans Read Robert Peston's blog How would a 'bad bank' work?

On Friday Mr Brown and Chancellor Alastair Darling took part in discussions with the Governor of the Bank of England, Mervyn King, and Financial Services Authority chairman Lord Turner of Ecchinswell.

The meeting came as it emerged the government was considering plans to use billions of pounds of taxpayers' money to create a "bad bank" which would buy up the "toxic assets" from the banks - leaving them free to lend again.

However, the BBC's business editor Robert Peston says that the "bad bank" may yet fail to be born, because "there are huge difficulties in valuing the assets to be placed in them and in defining the assets that may be placed in them".

The move comes as it was reported that shares in major UK banks fell sharply.

On Friday it was announced that Barclays was worst hit, down 25%, while RBS closed 13% lower.

Among the other proposals being considered are plans to ring-fence those assets on banks' balance sheets.

The government has already attempted to shore up the banks with a

Blears in Gaza extremism warning

By Dominic Casciani BBC News

Protests: Tensions are running high, say Muslim groups

The UK government is failing to get its position over Gaza across to British Muslims, a cabinet minister has said.

Communities Secretary Hazel Blears told the BBC the UK faced a "worrying time" amid fears that the war was radicalising some young people.

She said ministers needed to make sure that people "don't feel that there's hypocrisy and double standards".

Israel's response to Hamas rockets was "disproportionate" and there must be a ceasefire, ministers told the Commons.

In a debate on the conflict, Foreign Office minister Bill Rammell added that the government recognised Israel's right to self defence.

And he said Israel's action was an indictment of the "international community's failure over years and decades... to bring about a two-state solution".

Ms Blears told the Straight Talk programme the government understood Muslim anger over Gaza.

Senior Muslims have warned ministers that some young people could turn to extremism and violence, rather than conventional protest and pressure, because of the Gaza war.

They say ministers have not done enough to explain the UK's position and to help communities sideline jihadist recruiters. Top-level Whitehall meetings have been reviewing the government's preventing extremism strategy with officials concerned that hard-won gains could be rocked by the crisis.

Straight Talk with Andrew Neil, BBC News Channel Saturday: 0130, 0430 and 2230 Sunday: 0130, 1530 and 2230

"I think we are at quite a difficult time and it's very worrying," Ms Blears minister told the BBC's Straight Talk programme.

She said tensions "inevitably have arisen, particularly with Muslim young people because they are idealistic".

She said: "They are angry

UK demands quicker Mumbai probe

Mr Qureshi told Mr Miliband Pakistan would find the "full facts"

UK Foreign Secretary David Miliband has urged Pakistan to act more quickly against extremists in the wake of the attacks on the Indian city of Mumbai.

"The whole international community want Pakistan to go further and go faster," Mr Miliband said in Islamabad.

The Pakistani government responded by saying it would conduct an open inquiry into the attacks last month, which killed more than 170 people.

It says that it is determined to uncover the "full facts".

'Tenable evidence'

"I want the Pakistan government to take action because British people have been hurt... because terrorism from Pakistan is a threat to the stability of the whole region."

The fact remains that dastardly terror crimes have been committed in India. Therefore the perpetrators must face Indian justice Pranab Mukherjee,Indian foreign minister

He said that he believed the government in Islamabad "is serious in its commitment to prosecute those associated with the Mumbai attacks. Steps have been taken".

Mr Miliband met Prime Minister Yousuf Raza Gilani, Foreign Minister Shah Mehmood Qureshi and is also due to meet President Asif Ali Zardari.

"Pakistan remains determined to uncover the full facts pertaining to the Mumbai incident," a Pakistani foreign ministry statement said.

Mr Qureshi said that information provided by India - in addition to Pakistan's own investigations - would "establish legally tenable evidence to bring the perpetrators to justice".

Relations between the South Asian neighbours have been under severe strain since November's attacks, which India has blamed on Pakistan-based militants.

On Friday, Indian Foreign Minister Pranab Mukherjee said Delhi would "never give up the demand that the perpetrators of terror acts should be extradited to India".

He said only "transparent and verifiable [investigations] in Pakistan can unveil the full conspiracy".

'Official agencies'

Mr Miliband has also spent three days in India on his visit and gave a key speech at the Taj Palace hotel - site of one of the Mumbai attacks.

The BBC's Barbara Plett in Islamabad says that so far Mr Miliband's message has been very clear.

The Taj Palace attack - Mr Miliband spoke there on Thursday

He has disagreed with Indian accusations that Pakistan's state institutions were involved in the Mumbai attacks and has not supported Indian demands for the extradition of militant suspects.

But he has said there is no doubt the attack originated in Pakistan and he has repeatedly stressed that Islamabad must bring the suspects to trial and punish them if they are found guilty.

Our correspondent says that this seems to be the consensus among other countries India has approached, seeking international backing for its demands that Pakistan take action.

Delhi has blamed Pakistan-based militant group Lashkar-e-Taiba for the attacks on India's financial capital and believes "official agencies" played a part.

Both Lashkar-e-Taiba and the Pakistani government have denied any involvement.

On Thursday, Pakistan said it had so far arrested 71 people in a crackdown on groups allegedly linked to Mumbai.

Interior ministry chief Rehman Malik said officials had also shut several schools run by a charity linked to Lashkar-e-Taiba.