19 November 2012 Last updated at 09:23 ET

Silk report: UK government to 'seriously consider' tax proposals

Welsh Secretary David Jones (l) said the report from Paul Silk (r) would be taken 'very seriously indeed' by the UK government

Serious consideration will be given to a report calling for Wales to have its own tax system, the UK government says.

The Silk Commission's report says a referendum should be held on allowing the Welsh government to vary income tax.

Welsh Secretary David Jones said work would begin straight away to decide which, if any, of the report's proposals are introduced.

But he denied it was part of a slide towards ever greater devolution.

He said an analysis of the Silk report would start immediately and that his department had already spoken to the Treasury and First Minister Carwyn Jones.

The report says the Welsh and UK governments should share responsibility for income tax rates, but only if voters consent to the changes in a referendum.

The Conservative-Liberal Democrat coalition in Westminster promised to set up an inquiry into how the Welsh government is funded.

The Silk Commission began its work following the Yes vote in the referendum in March last year to give the assembly more law-making powers.

David Jones was asked if it was part of a "slippery slope" towards ever greater devolution.

But he said: "I don't think it can be suggested that there is anything that has been sprung upon the Welsh people. They were always aware that this was part of the process."

He hailed a "very thorough piece of work" from the all-party Silk Commission. Whitehall and Cardiff would look at the proposals "to decide which if any are appropriate to take forward", he said.

"We are taking it very seriously indeed," he added.

"It's a powerful piece of work which we will be giving very careful scrutiny to."

The Welsh government welcomed a recommendation to give it powers to borrow money.

First Minister Carwyn Jones said: "I have long argued that there would need to be a referendum before powers to vary income tax rates were devolved and I am glad to see that the commission has endorsed this view.

"We will look carefully at the proposal to move towards devolution of some powers over income tax - provided the people of Wales have the final say."

'Balanced'

At a press conference in Cardiff Bay, commission members repeatedly stressed they had produced a "balanced" report.

The commission's Labour member Sue Essex, a former Welsh finance minister, said: "This is not a pie in the sky thing we are talking about. It's possible, it's doable in Wales."

Her party's shadow Welsh secretary Owen Smith recently said that income tax powers "probably oughtn't be devolved right now" and warned they could leave Wales worse off.

After the report was published on Monday, he said it was right to recommend a referendum.

"In assessing those recommendations, we will need to test not only whether the proposals are in the financial interest of the Welsh people but also whether they pass the test of enabling an equitable and sustainable financial settlement for the whole of the UK," Mr Smith said.

Nick Bourne, the former leader of the Conservatives in the assembly who sits on the commission, said his party would get on board with the proposals.

"It's good for Wales, it's good for the United Kingdom. Why wouldn't they be comfortable with this?" he said.

Tory finance spokesman in the assembly, Paul Davies, said: "We believe that this5 is a comprehensive package of reforms to make the Welsh government more accountable for its decisions."

Welsh Liberal Democrat leader Kirsty Williams said: "We have been arguing for greater devolution for over a century. This is the latest step in our long campaign for a federal UK.

"It will strengthen Wales and help make a real difference to the lives of people across the country."

Plaid Cymru said the report does not go far enough.

Party finance spokesman Ieuan Wyn Jones said corporation tax should also be devolved - something the commission rejected unless the tax was devolved to Scotland and Northern Ireland.

"Currently we have little or no room to manoeuvre within the straightjacket of a block grant," Mr Jones said.

'Bureaucracy'

David Lermon, director of the Institute of Chartered Accountants in England and Wales, said: "We are more cautious about the recommendations relating to the partial devolution of income tax.

A referendum is recommended before income tax varying powers are devolved to the assembly

"They will inevitably introduce greater complexity and bureaucracy into the UK tax system, two qualities that the tax system already has in abundance."

The Federation of Small Businesses (FSB) applauded a call for the full devolution of business rates.

FSB Wales head of external affairs Iestyn Davies said: "It is now imperative that this recommendation is acted upon to pave the way for a fairer, more progressive and wide-reaching change for the business community in Wales."

The Electoral Reform Society suggested the current 60 assembly members might not be enough to scrutinise the Welsh government if it got tax powers.

Steve Brooks, Director of the Electoral Reform Society Wales, said: "We need a strong National Assembly that's able to hold the government's feet to the fire, and scrutinise how taxes are raised, public money is spent, and laws made."

Spencer Birns, head of commercial operations at Cardiff Airport, said: "The ability to control long haul air passenger duty rates is just one tool in the armoury we have to improve air passenger services to and from Wales and increase passenger traffic."

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19 November 2012 Last updated at 04:59 ET

Commission calls for Welsh government income tax powers

Paul Silk's commission says the Welsh government should control some taxes

The Welsh government should have the power to vary income tax by 2020, an influential report on the future of devolution has said.

The Silk Commission says a referendum should be held on whether Welsh ministers ought to have new powers over income tax rates.

Control over other smaller taxes should also be devolved, it says.

The changes would make the Welsh government responsible for raising around a quarter of its own budget.

Since 1999, most of the devolved administration's budget has come in an annual block grant from the Treasury, currently worth more than £15bn.

The 33 recommendations of the Silk Commission's first report would change the system dramatically, giving the Welsh government a further stake in the economy.

Referendum

Arguably the biggest change is a call to move to a system where the Welsh and UK governments share the yield from income tax by 2020. It would be conditional on both sides agreeing to changes to the funding system for Wales.

For example, on the 20p basic rate of income tax, 10p would go to the Treasury while the Welsh government would get the other half and would have powers to raise or lower it.

Because it represents such a "major" change, the commission proposes a transitional arrangement. This would "assign" a chunk of income tax receipts to the Welsh government, but without it having the power to vary rates.

Control of other smaller taxes, which Welsh Labour ministers want to see devolved, would also be transferred to Cardiff under the Silk recommendations. They are:

• the aggregates levy, which is a tax on the commercial exploitation of sand, gravel and rock.
• the stamp duty paid by house-buyers.
• landfill tax on licensed waste sites.
• and air passenger duty for long-haul flights.

The commission also recommends giving the Welsh government sole responsibility for business rates.

But it rules out devolving corporation tax unless it is also devolved to Scotland and Northern Ireland, national insurance, capital gains tax, VAT and fuel duty.

The proposal for a referendum on income tax would require legislation in parliament.

Combined with the effect of the smaller taxes, it would make the Welsh government responsible for raising around 25% of its budget. The rest would continue to come for the block grant.

First Minister Carwyn Jones has said powers to change income tax levels should not be devolved without a referendum.

Led by former assembly clerk Paul Silk, the commission was set up as part of the Westminster coalition agreement between the Conservatives and Liberal Democrats.

'Mature democracy'

He said: "Our proposals would provide the Welsh government with an important set of fiscal levers and would enable political parties in Wales to offer people real fiscal choices.

"What we are recommending is significant and historic. It will give Wales its own tax and borrowing system for the first time."

The report also says the Welsh government should have new powers to borrow money. The Treasury has agreed that Welsh minister should have limited borrowing powers.

The assembly is unusual, if not unique, in having law-making and spending powers, but not tax and borrowing powers, according to the commission's report.

It says the current arrangements "do not meet the requirements of a mature democracy and are anomalous in an international context".

Reforming the system would benefit Wales and the UK, it says.

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18 November 2012 Last updated at 21:55 ET

PM to crackdown on 'time-wasting' appeals

David Cameron has accused objectors of bringing 'hopeless cases' to review

The right to legally challenge government policies will be limited to help bolster the economy, David Cameron is expected to say later.

Opponents will have less time to apply for judicial review, face higher fees and will have their chances of appealing halved.

The minister will tell business leaders this is so "people think twice about time-wasting" to delay developments.

He will call for wartime thinking when "rules were circumvented".

Wartime spirit

In a speech to the CBI in London on Monday, Mr Cameron will say the country is in the "economic equivalent of war" and needs the "same spirit."

He will argue for less bureaucracy as the emphasis is put on the pursuit of economic growth.

The prime minister is expected to say the legal right to a judicial review of decisions, including major infrastructure projects, will be scaled back, insisting: "We urgently need to get a grip on this".

It is unclear yet how much the fees would rise by for review applications or how far the three-month time limit for applications might be cut.

But he will add that "instead of giving hopeless cases up to four bites of the cherry to appeal a decision, we will halve that to two."

Downing Street figures show more than 11,000 applications for judicial review were made in 2011, compared to just 160 in 1975. Around one in six applications were granted.

He is expected to accept the government is "too slow in getting stuff done," amid concern about interested parties and that civil servants in Whitehall must appreciate delays are felt in "businesses going bust, jobs being lost" and "livelihoods being destroyed."

He will draw an analogy with how the country responded to fighting Hitler.

"When this country was at war in the 40s, Whitehall underwent a revolution.

"Normal rules were circumvented. Convention was thrown out. As one historian put it, everything was thrown at 'the overriding purpose' of beating Hitler.

"Well, this country is in the economic equivalent of war today - and we need the same spirit. We need to forget about crossing every 't' and dotting every 'i' - and we need to throw everything we've got at winning in this global race."

Earlier this year the government published a new planning framework designed to streamline planning.

But a draft version of the framework was amended, amid fears from countryside groups that swathes of green belt land were being put at risk.

Elsewhere at the conference Labour leader Ed Miliband is also due to make a speech in which he will warn Britain is "sleepwalking" into leaving the European Union, a move which could undermine the UK's economy and leave it "voiceless and powerless".

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15 November 2012 Last updated at 01:00 ET

BBC crisis: Lord McAlpine 'anger' over abuse claim

Lord McAlpine said he would have told Newsnight that the allegations were "complete rubbish"

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Crisis at the BBC

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• Crisis at the BBC: Media reaction

A former senior Tory has told of his anger after a BBC Newsnight report led to him being wrongly implicated in child abuse allegations.

Lord McAlpine told BBC Radio 4's The World at One he should have been contacted beforehand.

He said about being wrongly under suspicion: "You just think there's something wrong with the world."

Some of those involved in deciding to run the report on care homes in north Wales face disciplinary measures.

'Extremely bad'

Lord McAlpine told The World at One: "Of course they [the BBC] should have called me and I would have told them exactly what they learnt later on."

He continued: "That it was complete rubbish and that I'd only ever been to Wrexham once in my life. They could have saved themselves a lot of agonising and money, actually, if they'd just made that telephone call."

The peer was asked about London Mayor Boris Johnson's comment that to call someone a paedophile was to "consign them to the lowest circle of hell - and while they're still alive".

He replied: "Absolutely. I think it describes pretty much what happened to me in the first few days of this event.

"It gets into your bones. It gets into, it makes you angry. And that's extremely bad for you to be angry. And it gets into your soul and you just think there's something wrong with the world."

Lord McAlpine's solicitor Andrew Reid said he was hopeful an agreement would be reached with the BBC on Thursday - but that his client was aware that any payment would ultimately come from licence fee payers.

Acting director general Tim Davie took charge of the BBC following the resignation of George Entwistle in the wake of the Newsnight broadcast.

Mr Davie has vowed to "get a grip of the situation".

An inquiry into the Newsnight broadcast - conducted by Ken MacQuarrie, director of BBC Scotland - has identified "unacceptable" failings and said basic journalistic checks were not completed.

A summary of the findings has been released by the corporation, which said the full report would be issued after the completion of disciplinary proceedings.

It added that "there was a different understanding by the key parties about where the responsibility lay for the final editorial sign off for the story on the day".

The head of BBC Northern Ireland, Peter Johnston, said he had a role in the decision-making of the Newsnight report but was not considering his position.

A BBC spokesman confirmed Mr Johnston's involvement "in decisions about the BBC Newsnight report".

Three Conservative MPs called for funding to be withdrawn from the Bureau of Investigative Journalism (BIJ) which was involved in the Newsnight investigation into the historical north Wales child abuse allegations.

Chain of command

Mr Entwistle resigned after eight weeks as BBC director general, following the Newsnight report.

The BBC's director of news, Helen Boaden, and her deputy, Steve Mitchell, have been asked to "step aside" pending an internal review into the way abuse claims about Jimmy Savile were handled.

The corporation said it found that neither Ms Boaden nor her deputy Mr Mitchell "had anything at all to do with the failed Newsnight investigation into Lord McAlpine".

But they were in the chain of command at the time Newsnight dropped an earlier investigation into abuse claims against former BBC presenter Jimmy Savile.

They have removed themselves from making decisions on some areas of BBC News output while a separate inquiry, chaired by former head of Sky News Nick Pollard, is held into that decision.

The BBC said once the Pollard Review reported, Ms Boaden and Mr Mitchell "expect to then return to their positions".

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14 November 2012 Last updated at 21:49 ET

Syria conflict: David Cameron to hold security talks

Aid agencies estimate that hundreds of thousands of people have been displaced by the fighting

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Syria conflict

• Credible alternative?
• Can US reshape opposition?
• A new normality in Damascus
• Ceasefire in name only?

Prime Minister David Cameron is to chair the National Security Council later to discuss the conflict in Syria.

Senior UK ministers will consider military, humanitarian and diplomatic options for dealing with the violence and the growing refugee crisis.

The prime minister visited a refugee camp on the Jordanian border last week.

BBC political editor Nick Robinson said the situation was reaching what one Downing Street adviser called the "something must be done stage".

The prime minister, his deputy Nick Clegg, Chancellor George Osborne and the foreign and defence secretaries are all expected to attend the meeting.

Among the options that could be discussed are a no-fly zone, supplying anti-aircraft weapons to Syria's opposition and encouraging other countries in the region to give arms, the BBC understands.

This week France became the first Western power to recognise Syria's opposition coalition as the sole legitimate representative of the Syrian people.

Syrian opposition groups struck a deal in the Qatari capital Doha to form a broad coalition to overthrow President Bashar al-Assad.

'Horrendous' suffering

The US and the UK have both signalled support for the coalition but stopped short of recognising it as a government-in-exile.

The Syrian Arab Red Crescent also this week estimated that 2.5 million people had been displaced within Syria, doubling the previous figure used by aid agencies.

Israel's military has said its tanks scored "direct hits" on Syrian artillery units after mortar shells fell near an army post.

It came after Israel fired warning shots after it said a Syrian shell hit another of its army posts on the Israeli-occupied Golan Heights.

When he visited the refugee camp, Mr Cameron said the UK was to begin talks with armed Syrian rebels in a bid to unite the opposition to President Assad.

The prime minister said the suffering of the refugees was "horrendous".

Opposition and human rights activists estimate that more than 36,000 people have been killed since the uprising against President Assad's rule began in March 2011.

Mr Cameron gave the go ahead for UK military action when it came to supporting rebels in the Libyan revolution in 2011.

British aircraft carried out 3,000 missions - 2,000 of them strike sorties, about one-fifth of the Nato total.

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14 November 2012 Last updated at 19:34 ET

Moderate drinking in pregnancy 'harms IQ'

Current government advice is to avoid drinking alcohol during pregnancy

Drinking one or two glasses of wine a week during pregnancy can have an impact on a child's IQ, a study says.

Researchers from Oxford and Bristol universities looked at the IQ scores of 4,000 children as well as recording the alcohol intake of their mothers.

They found "moderate" alcohol intake of one to six units a week during pregnancy affected IQ.

Experts said the effect was small, but reinforced the need to avoid alcohol in pregnancy.

Previous studies have produced inconsistent and confusing evidence on whether low to moderate levels of alcohol are harmful in pregnancy, largely because it is difficult to separate out other factors that may have an effect such as the mother's age and education.

But this research, published in the PLOS One journal, ruled that out by looking at changes in the genes that are not connected to social or lifestyle effects.

'Why take the risk?'

The study found that four genetic variants in alcohol-metabolising genes in children and their mothers were strongly related to lower IQ at age eight.

On average, the child's IQ was almost two points lower per genetic modification they possessed.

But this effect was only seen among the children of women who drank between one and six drinks a week during pregnancy and not among women who abstained when they were pregnant.

The researchers said although a causal effect could not be proven, the way they had done the study strongly suggested that it was exposure to alcohol in the womb that was responsible for the differences in child IQ.

Dr Ron Gray, from Oxford University, who led the research added that although the differences appeared small, they may well be significant and that lower IQ had been shown to be associated with being socially disadvantaged, having poorer health and even dying younger.

"It is for individual women to decide whether or not to drink during pregnancy, we just want to provide the evidence.

"But I would recommend avoiding alcohol. Why take the risk?"

A Department of Health spokesman said that since 2007 their advice had been that women who are trying to conceive or are pregnant should avoid alcohol.

But Dr Clare Tower, consultant in obstetrics and fetal maternal medicine, at St Mary's Hospital, Manchester, stressed that women who have had the occasional alcoholic drink in pregnancy should not be overly alarmed by the findings.

"Current UK advice is that the safest course of action is abstinence during pregnancy.

"The finding of this study would concur that this is undoubtedly the safest advice."

But she pointed out that another recent study had found no effect on IQ at five years.

"It is likely therefore, that any impact is likely small and not seen in all women."

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14 November 2012 Last updated at 19:35 ET

Petraeus scandal: Broadwell and Kelley's access revoked

Jill Kelley and her husband are said to have been close friends with Gen Petraeus and Gen Allen

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Petraeus Affair

• Who's who?
• Timeline: Petraeus scandal
• Is this sex scandal different?
• Cult of the US general

The US military has revoked access for two women at the heart of the scandal that led to Friday's resignation of General David Petraeus as CIA director.

Security clearance has been suspended for his ex-mistress, Paula Broadwell.

And Jill Kelley's pass at the Florida air force base where she organised social events has been frozen.

An FBI inquiry into Mrs Kelley's complaints of email harassment revealed that Mrs Broadwell and Gen Petraeus had been having an affair.

Mrs Broadwell, a 40-year-old married mother of two, had apparently sent the anonoymous emails to Mrs Kelley warning her to stay away from Gen Petraeus.

Obama's backing

Mrs Broadwell, who wrote a biography of Gen Petraeus, held a high security clearance through her prior work as an Army intelligence officer.

It is not uncommon for those under investigation to have such clearance suspended, officials say.

An investigation is under way into how classified material ended up on the West Point graduate's computer and in her Charlotte, North Carolina home, which was searched by the FBI on Monday.

Meanwhile, a Pentagon spokesman said suspending Mrs Kelley's pass for MacDill Air Force Base was in the best interests of the local military community.

He confirmed the 37-year-old married mother of three would be able to enter the base, near Tampa, but only through the visitors' centre.

She was a "social liaison" for the facility, which is the home of US Central Command.

In his first public comments on the scandal, US President Barack Obama told reporters on Wednesday he had seen no evidence that Gen Petraeus' extramarital affair had compromised national security.

His resignation should be a "sidenote" to a distinguished career, said Mr Obama.

Gen Petraeus, who previously commanded the war effort in Iraq and Afghanistan, will testify on Friday to Congress about September's deadly attack on the US consulate in Libya.

He will not be questioned about his affair with Mrs Broadwell, said lawmakers.

Meanwhile, General John Allen, the top US commander in Afghanistan, said he plans to "fully co-operate" with an investigation into allegedly flirtatious emails he sent to Mrs Kelley, his lawyer said on Wednesday.

Adultery is illegal under military law, and Pentagon officials are sifting through thousands of pages of emails involving the married Gen Allen, 58, and Mrs Kelley.

'Prudent'

He is said to have addressed her as "sweetheart" and "dear" in the communication, although the messages are not said to be overtly sexual.

President Barack Obama praises David Petraeus

The commander, who has received the backing of President Obama and Defence Secretary Leon Panetta, insists he has done nothing wrong.

But Mr Panetta said on Wednesday that suspending Gen Allen's nomination to be the top Nato commander in Europe, pending an inquiry, was the "prudent" thing to do.

Mrs Kelley is said to have developed close friendships with Gen Petraeus and Gen Allen. Both men wrote letters supporting her twin sister in a messy custody dispute.

Mrs Kelley is known to have thrown extravagant parties for the officers posted to MacDill and was reportedly appointed in August as an honorary consul representing South Korea.

In a recording of a phone call to police on Monday, Mrs Kelley asked for diplomatic immunity to have media crews outside her house removed.

"I'm an honorary consul general, so I have inviolability, so they should not be able to cross my property," Mrs Kelley can be heard saying.

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14 November 2012 Last updated at 13:05 ET

David Petraeus will testify to Congress on Benghazi

President Obama news conference

The former director of the CIA, David Petraeus, will testify to Congress about the attack on the US consulate in Libya, a leading senator says.

Dianne Feinstein said Gen Petraeus would give evidence only about September's Benghazi attack, in which four Americans were killed.

He would not testify about his resignation over an affair with biographer Paula Broadwell, she added.

Republican senators have called for a joint committee to probe the attack.

Confirmation that Gen Petraeus will attend a hearing of the Senate Intelligence Committee comes after days of reports focussing on the fallout from the revelation that he had an extramarital affair with Mrs Broadwell.

Following his resignation it then emerged that Jill Kelley, who filed a harassment report over emails she received that led to the discovery of the affair, was in contact with Marine Gen John Allen.

The link to Gen Allen - currently commanding US forces in Afghanistan and nominated to be the top Nato commander in Europe - prompted the US defence secretary and the White House to stress they have complete confidence in him.

But Mr Panetta requested that Gen Allen's nomination as Supreme Allied Commander of US and Nato troops in Europe be placed on hold, saying it was the "prudent" thing to do.

Gen Allen has denied any wrongdoing and has spoken to Gen Martin Dempsey, chairman of the Joint Chiefs of Staff, to emphasise he is innocent of misconduct, a spokesman for Gen Dempsey said.

Divisive issue

Gen Petraeus could appear before congressional committees as early as Thursday, although no final date for a hearing has been confirmed.

Ms Feinstein, who chairs the Senate Intelligence Committee, said the general would be asked about the Benghazi attacks, which took place while he was in charge of the CIA.

The attack - initially blamed on a spontaneous protest over an anti-Islamic film - remains a divisive issue in Washington and a focal point of Republican anger.

Arizona Senator John McCain led a group of Republican senators on Wednesday calling for the establishment of a special committee to investigate the deaths of the four Americans, which included the Ambassador Christopher Stevens, in Benghazi.

They said there was need to find out whether there had been a cover-up over the attack, which Senator Lindsay Graham referred to in the same breath as Watergate and the Iran/Contra scandal.

Meanwhile, acting CIA Director Michael Morell began meetings with legislators in the Senate on Tuesday to answer questions about Gen Petraeus' resignation.

Legislators are concerned about a possible breach of national security after it was reported that classified material was discovered on Mrs Broadwell's computer.

However, FBI officials have said the agency concluded in its investigation that there had not been any security breach.

President Barack Obama is also due to make his first public comments on the scandal at a news conference scheduled for 13:00 EST (18:30 GMT), before meeting business leaders.

He hopes to concentrate on his economic agenda and discuss plans for reaching a deal to avoid a package of spending cuts and tax rises known as the "fiscal cliff".

'Honorary consul'

While Gen Petraeus attempts to focus on Benghazi, Pentagon investigators are also examining as many as 30,000 pages of Gen Allen's documents.

They are said to include extensive communication between the general and Mrs Kelley, a 37-year-old, married Florida socialite.

The emails are now understood to have included pet names such as "sweetheart" or "dear" but were not sexually explicit or seductive, the Associated Press reports.

In May, Mrs Kelley reported anonymous, harassing emails to the FBI. The agency launched an investigation that traced the emails to Mrs Broadwell and revealed her affair with Gen Petraeus.

Mrs Kelley has been described as a "social liaison" for the MacDill Air Force Base near Tampa, Florida. Home to the US Central Command, both generals have served at the base in recent years.

The Kelleys are said to have developed close friendships with Gen Petraeus and Gen Allen, both of whom wrote letters supporting Mrs Kelley's twin sister, Natalie Khawam, in a messy custody battle for her son.

Mrs Kelley is known to have thrown extravagant parties for the officers posted there and in August was appointed as an honorary consul representing South Korea, ABC News reports.

It is reported that her Mercedes car displays consular licence plates reading "JK1".

In a recording of a phone call to police on Monday, Mrs Kelley asked for diplomatic immunity to have media crews waiting outside her house removed.

"I'm an honorary consul general, so I have inviolability, so they should not be able to cross my property. I don't know if you want to get diplomatic protection involved as well," Mrs Kelley can be heard saying.

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14 November 2012 Last updated at 07:19 ET

Bank of England cuts UK growth forecast for 2013

Bank of England cuts UK growth forecast for 2013

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UK Economy

• Four steps to getting that job
• How to write a successful CV
• Where to find help for financial problems
• Economy tracker: Unemployment

The Bank of England has cut its growth forecast to 1%, and said recovery will be "slow and protracted" with inflation staying higher than expected.

Continuing global economic fragility meant the previous forecast of about 2% was unlikely to be achieved, it said.

Bank governor Sir Mervyn King said he had not "lost faith" in quantitative easing as a way to stimulate growth.

He hailed the improving jobs figures, but said it was not easy to square them with the picture of weak growth.

The quarterly report said inflation would not now fall towards the government's 2% target until mid-2013, rather than in the first half of next year, as previously thought.

The report said the UK could be stuck in a "low-growth" environment, with economic problems in the eurozone and the rest of world continuing to have an impact domestically. Output would remain below pre-financial crisis levels for the next three years.

The Bank's report came on the day that the Office for National Statistics said that the UK unemployment rate fell to 7.8% in the July-September quarter, down from 8% in the previous three months.

However, the claimant count went up in September, leading some economists to suggest that the recent resilience of the jobs market was beginning to weaken.

Sir Mervyn told a news conference: "I don't think one would say that the data released this morning were weak. There are some signs in the claimant count of a small increase, that maybe it's beginning to move, but there were still falls in unemployment, a rise in employment [and] a big increase in total hours worked.

'Overly optimistic'

"This is still a pretty strong labour market and, of course, it is not easy to reconcile that with the picture of underlying growth being still so weak," he said.

He warned that growth from quarter to quarter would continue to fluctuate. In the April-June quarter growth was depressed by one-off factors such as the unseasonably bad weather and had given a misleadingly weak picture of the economy.

Similarly, growth in the July-September period was boosted by one-off factors including the Olympics and gave "an overly optimistic impression of the underlying trend," he said.

"Continuing the recent zig-zag pattern, output growth is likely to fall back sharply in Q4 [between October and December] as the boost from the Olympics in the summer is reversed. Indeed, output may shrink a little this quarter," he said.

The Bank has previously predicted that inflation might fall towards the government's 2% target in the first half of next year.

But it now expects inflation to stay higher for longer. "We face the rather unappealing combination of a subdued recovery, with inflation remaining above target for a while," Sir Mervyn said.

He said that the Bank had not ruled out further asset purchases to stimulate growth. He said that with the global economy still struggling, "there are limits to the ability of domestic policy to stimulate private sector demand as the economy adjusts to a new equilibrium".

"But the [Monetary Policy] Committee has not lost faith in asset purchases as a policy instrument, nor has it concluded that there will be no more purchases."

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14 November 2012 Last updated at 05:05 ET

UK unemployment falls to 2.51 million

Youth unemployment has fallen

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UK Economy

• What is inflation?
• What is quantitative easing?
• What is GDP?
• Is inflation making you poorer?

The number of people out of work in the UK has fallen to its lowest total for more than a year.

Unemployment fell by 49,000 to 2.51 million in the three months to September, taking the jobless rate to 7.8% from 7.9%.

The Office for National Statistics said that almost all the 49,000 fall was due to a decline in youth unemployment.

But the ONS said that the claimant count rose by 10,100 last month to 1.58 million, the highest since July.

The unemployment total is now 110,000 lower than for the July-September quarter last year, the ONS said. The number of people in work increased by 100,000 in the latest quarter to just under 30 million, a rise of more than half a million over the past year.

Other figures from the ONS showed that long-term unemployment - those out of work for over a year - increased by 12,000 in the quarter to September to 894,000, while 443,000 people have been jobless for more than two years, up by 21,000.

Part-time employment increased by 49,000 to 8.1 million, close to a record high, while there were 51,000 more people in full-time jobs, at 21.4 million. Unemployment among women fell by 10,000 to 1.09 million, and by 39,000 among men to 1.43 million.

Although the latest fall in unemployment was due to a reduction in youth unemployment, the ONS said that the jobless rate among 16 to 24-year-olds was still 963,000. This figure includes 315,000 unemployed young people in full-time education, the ONS said.

Howard Archer, chief UK economist at IHS Global Insight, said the figures suggest "signs of some softening in the labour market's recent impressive resilience".

He said: "The most obvious sign of softening in the labour market came in a 10,100 rise in the number of claimant count unemployed, which was the largest increase for 13 months and followed a small rise of 800 in September.

"Even if employment in the private sector rises modestly rather than falls, it will likely not be enough to offset job cuts in the public sector as well as cater for an increasing labour force."

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10 November 2012 Last updated at 11:50 ET

Gmail probe led FBI to CIA chief David Petraeus's affair

BBC's Adam Brookes: "This is an extraordinary fall from grace for Petraeus"

CIA director David Petraeus's extra-marital affair, which forced him to resign, was uncovered during an investigation into a potential breach of his Gmail account, reports say.

Unnamed officials said the FBI was checking his private account when it found Mr Petraeus was having an affair with his biographer, Paula Broadwell.

Mr Petraeus described his behaviour as "unacceptable" for the leader of the nation's main intelligence agency.

President Barack Obama has praised him.

His resignation came just three days after President Obama's re-election.

The four-star general became CIA boss in 2011 after heading international forces in Iraq and later in Afghanistan.

He was the highest-profile military officer of the post-9/11 years, winning plaudits for his role running the "surge" in Iraq and implementing a counter-insurgency strategy in Afghanistan.

He left his command role in Afghanistan in mid-2011, resigning from the US Army to head the CIA after Leon Panetta became defence secretary.

'Extremely poor judgment'

Shortly after Mr Petraeus resigned, reports emerged that the FBI had uncovered the affair during the course of an investigation into a potential breach involving his emails.

The FBI was monitoring Mr Petraeus's email account to check whether Mrs Broadwell had access to it, administration officials were quoted as saying.

FBI agents then met Mr Petraeus to discuss the investigation.

Announcing his decision to stand down, the former general was full of contrition.

Paula Broadwell graduated from the same West Point academy as Mr Petraeus

"After being married for over 37 years, I showed extremely poor judgment by engaging in an extra-marital affair," Mr Petraeus said in a statement.

"Such behaviour is unacceptable, both as a husband and as the leader of an organisation such as ours. This afternoon, the president graciously accepted my resignation."

Mrs Broadwell is a Harvard University research associate and PhD candidate at King's College, London.

She has a military background, graduating from the same West Point Academy as Mr Petraeus. She is married to radiographer Scott Broadwell and lives in Charlotte, North Carolina.

She spent months alongside the then-general in Afghanistan while researching her 2011 book, All In: The Education of General David Petraeus. The book was widely seen as a positive account of his leadership methods.

Last week Mrs Broadwell wrote a piece for Newsweek entitled General David Petraeus's Rules for Living.

Obama praise

In his statement, Mr Obama said Mr Petraeus had "provided extraordinary service to the United States for decades", citing both his time as CIA director and as a top general.

"By any measure, through his lifetime of service David Petraeus has made our country safer and stronger."

"Going forward, my thoughts and prayers are with Dave and Holly Petraeus, who has done so much to help military families through her own work."

Senior Obama adviser David Axelrod said the president had not known about the Petraeus issue during the campaign, and that the former general had come to Mr Obama after the election to offer his resignation.

CIA deputy director Michael Morell will serve as acting director of the agency, the White House confirmed. Eventually Mr Obama must nominate a new director to head the agency, who will then need to be confirmed by the Senate.

Mr Morell, who is well respected at both the White House and on Capitol Hill, also served as acting director following the departure of former CIA chief Leon Panetta.

He is expected to testify before the Senate Intelligence Committee at a hearing scheduled for next week on the deaths of US personnel during an attack on the US consulate in Benghazi, Libya.

The CIA faces a potential period of instability after Mr Petraeus' resignation, as it also deals with a budget squeeze.

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10 November 2012 Last updated at 04:28 ET

Entwistle says BBC wrong on Newsnight abuse report

The apology statement read out at the start of the programme

A BBC Newsnight report in which an abuse victim accused a former Tory politician of sex abuse should not have been broadcast, BBC director general George Entwistle says.

He gave an unreserved apology to Lord McAlpine after it wrongly implicated him in abuse at care homes in Wales.

Mr Entwistle, the BBC's editor-in-chief, said he was not aware of the episode until after it was broadcast.

An internal investigation is under way into what went wrong.

The abuse victim, Steve Messham, apologised to Lord McAlpine, a former Tory treasurer during Margaret Thatcher's leadership, after saying he did not assault him.

Newsnight had reported Mr Messham's claims against a leading 1980s Tory politician but did not name him.

'Totally unacceptable'

Mr Entwistle, speaking on BBC Radio 4's Today programme a day after the apology, said: "We should not have put out a film that was so fundamentally wrong. What happened here is so totally unacceptable. In my view the film should not have gone out".

He has commissioned a report from BBC Scotland director Ken MacQuarrie into what happened with the Newsnight investigation, and expects it see it on Sunday.

"This was a piece of journalism referred to senior figures within News, referred up to the level of the management board and had appropriate attention from the lawyers," Mr Entwistle said.

"The question is, in spite of all that, why did it go wrong? Something definitely went wrong, something definitely and clearly and unambiguously went wrong."

Asked if he should have been aware of it as he is the editor-in-chief, he said "not every piece of journalism made inside the BBC is referred to the editor-in-chief".

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9 November 2012 Last updated at 17:57 ET

BBC apologises for Newsnight child abuse report

Lord McAlpine's solicitor Andrew Reid: "We have to look at Newsnight and the way in which they behaved"

The BBC has issued an unreserved apology for a Newsnight report which led to Lord McAlpine being wrongly implicated in the alleged sexual abuse of children at north Wales care homes.

It comes after a victim, Steve Messham, apologised to the former Tory treasurer after saying he did not assault him.

Newsnight had reported Mr Messham's claims against a leading 1980s Tory politician but did not name him.

The BBC also announced an "immediate pause" in all Newsnight investigations.

Earlier, Lord McAlpine said the claims were "wholly false and seriously defamatory".

His solicitor, Andrew Reid, said the peer will take legal action against those who later named and linked him to the claims.

The BBC's statement said: "On 2 November, Newsnight broadcast a report that looked into criticism of the North Wales Abuse Tribunal.

"The report included an interview with Steve Messham, an abuse victim who said that a senior political figure of the time had abused him.

"We broadcast Mr Messham's claim but did not identify the individual concerned. Mr Messham has tonight made a statement that makes clear he wrongly identified his abuser and has apologised.

"We also apologise unreservedly for having broadcast this report."

The BBC said that, on Friday night, director general George Entwistle had ordered the following actions:

• Sending in a senior news executive to "supervise" Friday night's edition of Newsnight
• An apology broadcast on Friday's programme
• An "immediate pause in all Newsnight investigations to assess editorial robustness and supervision"
• Commissioning BBC Scotland director Ken MacQuarrie to write an "urgent report for the DG covering what happened on this Newsnight investigation"
• An "immediate suspension" of all co-productions with the Bureau of Investigative Journalism which Newsnight worked with on the programme

Mr Messham, a former resident of the Bryn Estyn home, last week told Newsnight he had been abused by a senior politician of the Thatcher era.

Steve Messham has apologised for incorrectly identifying Lord McAlpine as his abuser

He called for a new investigation claiming a report by Sir Ronald Waterhouse in 2000 had not uncovered the full scale of the abuse.

Mr Messham said police had shown him a picture of his abuser but incorrectly told him the man was Lord McAlpine.

He has offered "sincere and humble apologies" to the peer and his family.

In a statement on Friday evening Mr Messham said: "After seeing a picture in the past hour of the individual concerned, this [is] not the person I identified by photograph presented to me by the police in the early 1990s, who told me the man in the photograph was Lord McAlpine."

He later told BBC News he was "actually mortified" when he realised.

He said recent coverage of the scandal had "brought everything back to the fore but I just want justice for everybody and hope we get justice for everybody".

"But I certainly don't want the wrong people accused, that is also wrong.

"That's why I'm speaking out now and I hope people believe what I say. I am sincerely sorry."

North Wales Police said it would be inappropriate to comment on Mr Messham's allegations about the mix-up over identifying the picture "because an investigation is ongoing".

'Seriously defamatory'

Earlier Lord McAlpine's solicitor, Andrew Reid, said the peer had "no choice" but to take legal action over claims linking him to abuse at Bryn Estyn children's home in Wrexham.

The solicitor also criticised the way Newsnight aired Mr Messham's claims last week.

Lord McAlpine, who was Conservative Party treasurer from the late 1970s until 1990, said: "I have never been to the children's home in Wrexham, nor have I ever visited any children's home, reform school or any other institution of a similar nature."

Lord McAlpine, whose grandfather founded the McAlpine construction firm, is a life peer who took the title of Baron McAlpine of West Green in Hampshire.

He became Conservative Party Treasurer in the late 1970s and held the post until 1990. He now lives in Italy.

Lord McAlpine said: "I do not suggest that Mr Messham is malicious in making the allegations of sexual abuse about me.

"If he does think I am the man who abused him all those years ago I can only suggest that he is mistaken and that he has identified the wrong person."

On Tuesday the Home Secretary Theresa May announced a new police inquiry into the allegations of child abuse in north Wales in the 1970s and 1980s.

Mrs May said the head of the National Crime Agency would lead the inquiry.

Separately Mrs Justice Macur will investigate the terms of the Waterhouse abuse inquiry, which began in 1996.

The Home Office said there would be no change to the inquiries announced by Mrs May, following the statements by Mr Messham and Lord McAlpine.

Newsnight is already the subject of a BBC inquiry, headed by ex-Sky News boss Nick Pollard, into why the programme dropped an investigation into sexual abuse claims against Savile last year.

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9 November 2012 Last updated at 15:31 ET

CIA director Petraeus stands down over affair

David Petraeus retired from 37 years in the military to become CIA director

CIA director David Petraeus has resigned from his post because of an extramarital affair.

In a statement, Mr Petraeus said he had submitted his resignation to President Barack Obama, and that he had shown "extremely poor judgment".

He said: "Such behaviour is unacceptable... as the leader of an organisation such as ours".

Mr Petraeus became CIA boss in 2011 after heading international forces in Iraq, then in Afghanistan.

He was the highest-profile military officer of the post-9/11 years, winning plaudits for his role running the "surge" in Iraq and implementing a counter-insurgency strategy in Afghanistan.

"After being married for over 37 years, I showed extremely poor judgment by engaging in an extra-marital affair," Mr Petraeus said in a statement.

"Such behaviour is unacceptable, both as a husband and as the leader of an organisation such as ours. This afternoon, the president graciously accepted my resignation."

In a statement, Mr Obama said Mr Petraeus had "provided extraordinary service to the United States for decades", citing both his time as CIA director and service to the military.

"By any measure, through his lifetime of service David Petraeus has made our country safer and stronger."

"Going forward, my thoughts and prayers are with Dave and Holly Petraeus, who has done so much to help military families through her own work."

CIA deputy director Michael Morell will serve as acting director of the agency, the White House confirmed.

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9 November 2012 Last updated at 13:31 ET

Lord McAlpine gets man's apology over abuse claims

Steve Messham met Welsh Secretary David Jones earlier this week

A former resident of a north Wales care home has apologised for making false allegations of sexual abuse against a Conservative politician.

Steve Messham said a case of mistaken identity had led to peer Lord McAlpine being linked to the historical claims.

It comes as the solicitor for Lord McAlpine, 70, threatened legal action against those who had named him in connection with the allegations.

Mr Messham offered "sincere and humble apologies to him and his family".

In a statement on Friday evening, he said: "After seeing a picture in the past hour of the individual concerned, this [is] not the person I identified by photograph presented to me by the police in the early 1990s, who told me the man in the photograph was Lord McAlpine."

Earlier Lord McAlpine's solicitor, Andrew Reid, said the peer had "no choice" but to take legal action over claims linking him to abuse at Bryn Estyn children's home in Wrexham.

'Seriously defamatory'

Mr Reid said the claims were "false and seriously defamatory" to Lord McAlpine, who was Conservative Party treasurer from the late 1970s until 1990.

The solicitor was critical of the BBC's Newsnight, on which Mr Messham's claims were aired last week, although no-one was named.

The BBC said the Newsnight broadcast had voiced concerns raised by an abuse victim, in the public interest.

Lord McAlpine's solicitor Andrew Reid: "We have to look at Newsnight and the way in which they behaved"

Mr Messham, a former resident of the Bryn Estyn children's home, last week told Newsnight that he had been abused by an unnamed, senior politician of the Thatcher era at the home.

He called for a new investigation claiming a report by Sir Ronald Waterhouse in 2000 had not uncovered the full scale of the abuse.

In a statement also on Friday, Lord McAlpine said he had been subsequently named on the internet and by implication by other media over the claims and was issuing a denial "to set the record straight".

Lord McAlpine said he wanted to "tackle these slurs and set the record straight".

He said: "I have never been to the children's home in Wrexham, nor have I ever visited any children's home, reform school or any other institution of a similar nature.

"I have never stayed in a hotel in or near Wrexham, I did not own a Rolls-Royce, have never had a 'Gold card' or 'Harrods card' and never wear aftershave, all of which have been alleged.

"I did not sexually abuse Mr Messham or any other residents of the children's home in Wrexham."

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9 November 2012 Last updated at 12:29 ET

Lord McAlpine 'to take legal action' over abuse claims

Lord McAlpine issued his response amid claims over abuse at a north Wales children's home

Lord McAlpine has "no choice" but to take legal action over claims of abuse at a north Wales children's home, the Conservative peer's solicitor has said.

Andrew Reid said claims linking the peer to alleged historical child abuse were "false and seriously defamatory".

The solicitor was critical of the BBC's Newsnight, on which claims were made although no-one was named.

The BBC said the Newsnight broadcast had voiced concerns raised by an abuse victim, in the public interest.

Steve Messham, a former resident of the Bryn Estyn children's home in Wrexham, claimed on Newsnight that he had been abused by an unnamed senior politician of the Thatcher era.

But in a statement on Friday Lord McAlpine, 70, who was Conservative Party treasurer from the late 1970s until 1990, said he had been named on the internet and by implication by other media over the claims.

Some newspapers on Friday reported that the peer had been a victim of mistaken identity.

Asked by BBC Radio 4's PM programme if Lord McAlpine would take legal action, Mr Reid said: "Sadly he has no choice.

"We need to take a number of different actions. Firstly to try to get this taken down from the internet which is not going to be easy.

"Then we have to look at Newsnight and.. the way in which they behaved, the way they trailed, they made it obvious who it was, or who they alleged it was by referring people to the internet.

"And all the others who have used the internet and just let people know where to go and find the answer because they made these statements recklessly."

A BBC spokeswoman said: "Newsnight broadcast an investigation into alleged failures in a child abuse inquiry. It worked with the Bureau of Investigative Journalism to give a voice to concerns raised by an abuse victim.

"It was in the public interest to air these. We did not name any public figure for legal reasons. It is now for the inquiries announced by the home secretary to dig deeper into Mr Messham's concerns."

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9 November 2012 Last updated at 11:00 ET

Obama to address looming fiscal cliff

Continue reading the main story

US Presidential Election 2012

• Five challenges facing the president
• Exit polls explain Obama win
• What Obama must do next
• What next for US Republicans?

Re-elected President Barack Obama will make a statement on the economy later, setting the stage for a political showdown over a looming budget crisis.

He is expected to discuss the so-called fiscal cliff, a package of tax rises and spending cuts due early next year unless Congress acts.

Budget analysts warn the US will tip into recession unless a deal is struck.

Mr Obama has repeatedly called for the wealthy to pay more taxes, but such a plan is anathema to Republicans.

The fiscal cliff would see Bush-era tax cuts expire at the end of 2012, combined with automatic, across-the-board reductions to military and domestic spending.

Ticking timebomb

The International Monetary Fund has repeatedly warned that failure by US lawmakers to reach a deal would deepen uncertainty over the global economy.

Investor concerns over the issue have been partly blamed for two straight days of losses on financial markets.

John Boehner, leader of the Republican-controlled House of Representatives, told ABC News on Thursday: "Raising tax rates is unacceptable.

"Frankly, it couldn't even pass the House. I'm not sure it could pass the Senate."

Mr Boehner reiterated his opposiiton to tax rises in a news conference on Friday morning.

He spoke shortly before Mr Obama was due to deliver his statement from the East Room of the White House at 13:05 (18:05 GMT).

The president's statement could set the tone for his second-term working relationship with Republicans, whom he has battled repeatedly over the last four years.

One Obama official said the president's oft-stated call for tax rises on the wealthy has been vindicated by his resounding victory over Republican challenger Mitt Romney in Tuesday's election.

"One of the messages that was sent by the American people throughout this campaign is ... [they] clearly chose the president's view of making sure that the wealthiest Americans are asked to do a little bit more in the context of reducing our deficit in a balanced way," senior White House adviser David Plouffe was quoted by Reuters news agency as saying.

Obama cabinet shake-up

Mr Obama's position has been that taxes should rise on earnings above $250,000 (£157,000).

President Barack Obama is reduced to tears as he thanks his campaign staff

Mr Boehner says his party is willing to countenance cutting loopholes and special exemptions, but only in exchange for an overhaul of the tax code.

Republican lawmakers also want cuts to federal healthcare programmes such as Medicare, Medicaid and food-stamp assistance for the poor.

A Congressional Budget Office (CBO) report published on Thursday warned that the US economy would fall back into recession if no deal were struck on the fiscal cliff.

The analysis projected that the package of tax rises and spending cuts would cut the ballooning US deficit by $503bn through to next September, but also shrink the economy by 0.5% and cost millions of jobs.

Meanwhile, as Mr Obama turns his attention to shaping a second term in office his administration is expected to undergo a shake-up in the coming weeks.

Secretary of State Hillary Clinton, Defence Secretary Leon Panetta and Treasury Secretary Timothy Geithner are among those expected to leave their posts.

Speculation has been swirling in Washington over possible replacements, with Democratic Senator John Kerry among those tipped as a substitute for Mrs Clinton.

Meanwhile, Republicans are trying to find out what went wrong their presidential election campaign.

The party's officials said they would poll voters extensively in battleground states, as well as holding focus groups and discussions with supporters.

The review would not attempt to alter the party's ideological base, Republican National Committee spokesman Sean Spicer told the Washington Post.

"This is no different than a patient going to see a doctor," Mr Spicer said.

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9 November 2012 Last updated at 05:59 ET

Lord McAlpine says abuse claims false and defamatory

Lord McAlpine issued his response amid claims over abuse at a North Wales children's home

Conservative peer Lord McAlpine has said allegations linking him to alleged historical child abuse are "wholly false and seriously defamatory".

The ex-treasurer released a statement after a man claimed he had been abused at a care home in Wrexham.

Lord McAlpine said he had visited Wrexham "only once" and that he had been in the company of an agent from Conservative Central Office.

He said he had "never" been to the children's home linked to the claims.

Lord McAlpine's denial comes after Steve Messham claimed on the BBC's Newsnight that he had been abused by a senior politician of the Thatcher era, who was not named.

In his statement, Lord McAlpine said: "I have never been to the children's home in Wrexham, nor have I ever visited any children's home, reform school or any other institution of a similar nature.

"I have never stayed in a hotel in or near Wrexham, I did not own a Rolls-Royce, have never had a 'Gold card' or 'Harrods card' and never wear aftershave, all of which have been alleged.

"I did not sexually abuse Mr Messham or any other residents of the children's home in Wrexham."

He said he had decided to "publicly tackle these slurs and set the record straight".

'Witch-hunt'

His statement comes after David Cameron said he feared a "witch-hunt" by those commenting online about child abuse allegations.

The prime minister was commenting on the This Morning programme after being unexpectedly handed a list of names of people who the ITV1 show's presenter said were being mentioned online as paedophiles.

Presenter Phillip Schofield, who said he had based the list on internet speculation, has been criticised for his actions during the live interview which had been addressing historical claims of a paedophile ring linked to No 10.

Mr Cameron, who did not look at the list, said he was "worried" that speculation about unproven allegations could lead to a "witch-hunt particularly against people who are gay" and advised anyone with evidence of abuse to go to the police.

London Mayor Boris Johnson branded it a "rum piece of journalism" and Labour's Chuka Umunna said it had been "foolish and irresponsible".

Meanwhile, TV regulator Ofcom said it had received complaints about the programme.

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9 November 2012 Last updated at 05:15 ET

HSBC investigating claims of criminal account holders

HSBC said it was unaware of an HMRC inquiry

HSBC bank says it is looking into allegations that criminals have used offshore accounts at its Jersey operation for money laundering.

The bank issued a statement after the Daily Telegraph newspaper said it was at the centre of a major investigation by HM Revenue and Customs.

HSBC said it was investigating "an alleged loss of certain client data in Jersey as a matter of urgency".

But it added it had not been contacted by HMRC or any other authority.

"Clamping down on those who try to cheat the system through evading taxes and over-claiming benefits is a top priority for us, and we value the information we receive from the public and business community," the bank said.

In a statement, HMRC said: "We can confirm we have received the data and we are studying it. We receive information from a very wide range of sources which we use to ensure the tax rules are being respected."

Allegations

According to the Daily Telegraph, the tax authorities have obtained details of "every British client of HSBC in Jersey" based on information provided by a whistle-blower this week.

It is reported that the 4,000 offshore account holders include a well-known drug dealer living in Central America, bankers who face allegations of fraud and a man once dubbed London's "number two crook".

BBC business editor Robert Peston said: "It is really quite difficult to tell from this disclosure whether or not this is an example of HSBC yet again having, shall we say, laxer or weaker controls over who it takes money from.

"The American authorities do think HSBC was, for too many years, too prone, or in a sense, too easily duped by terrorists and criminals who wanted to launder money. We just don't have enough information whether or not this is an another example of those weak controls."

Our business editor said he had been told by HSBC that this appeared to be a case of "whistle-blowers handing over bunches of bank names for whatever reasons".

He added: "They don't think they will emerge from this investigation to be shown to be particularly lax in their controls."

Earlier this year, a US Senate report alleged that staff at HSBC's global operations had laundered billions of dollars for drug cartels and terrorists in a "pervasively polluted" culture that persisted for years.

The report detailed how HSBC's subsidiaries cleared suspicious travellers' cheques worth billions, and allowed Mexican drug lords to buy planes with money laundered through Cayman Islands accounts.

David Bagley, HSBC's head of compliance since 2002, resigned from his post when he appeared before the US Senate committee in July.

HMRC has received the HSBC data only very recently. But even if it has come with names and addresses attached, it will not necessarily be an easy matter to identity the people who own the accounts.

Complex task

Ronnie Ludwig, a tax partner at the accountants Saffery Champness, believes the accounts are likely to be in the names of nominee companies and trusts, which hide the identity of the beneficial owner.

He thinks the accounts could have a trigger clause, which means the money is moved swiftly to accounts in other offshore tax havens, such as the British Virgin Islands or the Cayman Island, if HMRC intensifies its scrutiny.

Mr Ludwig told the BBC that HMRC would have quite a task on its hands to sort through each account.

"HMRC is facing an uphill struggle in terms of its resources, because these cases will be very complex, difficult and ultimately time-consuming to unravel," he said.

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8 November 2012 Last updated at 21:30 ET

Barack Obama closes in on Florida vote victory

Voters wait in West Palm Beach on Sunday after an the election office extended early voting

Continue reading the main story

US Presidential Election 2012

• Democrats hold Senate
• World impact
• States approve same-sex marriage
• Obama and Romney before fame

President Barack Obama appears close to victory in Florida, the only state yet to declare a result from Tuesday's US presidential election.

Vote-counting is ongoing, but the head of Florida's Democratic Party issued a statement congratulating Mr Obama.

Aides to Mitt Romney were also quoted appearing to concede defeat.

Florida's vote cannot change the overall result, but the slow count has brought back memories of the bitterly contested recount in 2000.

The Sunshine State's famous "hanging chads" sparked a crisis in that year's Bush-Gore election, eventually leading to a Supreme Court ruling that installed George W Bush in the White House.

Ground game praise

As of Thursday evening Mr Obama had a 0.7% lead in Florida - totalling more than 50,000 votes - but some ballots have yet to be counted.

The final result is expected by midday on Saturday, after three counties - Broward, Palm Beach and Duval - finish their tallies.

If the final difference in the number of votes for President Obama and his Republican challenger Mitt Romney is below 0.5%, a recount would be automatically triggered.

But whatever the outcome, it matters little since the Democratic incumbent decisively won the national vote in the electoral college.

As the counting edged towards its end, party operatives in Florida began to concede the race would go to Mr Obama.

"On behalf of Florida Democrats, I wish President Barack Obama congratulations on his re-election and on winning Florida's 29 electoral votes," Florida Democratic Chair Rod Smith said.

"Florida Democrats ran the strongest, largest ground game this state has ever seen," he said, describing it as "appalling" that the state had been unable to report results two days after the election.

Republican officials also said they expected Mr Obama to eventually be declared the winner.

"We thought based on our polling and range of organisation that we had done what we needed to win," Brett Doster, a Florida adviser for Mr Romney, told the Miami Herald.

"Obviously, we didn't, and for that I and every other operative in Florida has a sick feeling that we left something on the table. I can assure you this won't happen again."

Florida Republican spokesman Brian Burgess told the Associated Press that "given the wave that we saw all over the country, we're glad that we gave them enough of a fight in Florida to prolong the battle here as long as we did".

Obama campaign manager Jim Messina told reporters: "We feel we will be the official winner in Florida later today."

Counties must send preliminary results to the state by midday on Saturday.

Voting problems

Long queues were reported across the fourth most populous US state on Tuesday.

Some voters waited to cast ballots until 01:30 local time the next morning, after Mr Romney had already delivered his concession speech.

Tens of thousands of absentee ballots also arrived on election day.

In Broward County, Democratic Mayor John Rodstrom told the Miami Herald: "The big picture is that we have done this to ourselves," blaming a combination of all sorts of municipal, state and federal elections on one ballot.

"We have these tremendously long ballots now," he said.

Continue reading the main story

US re-elects Obama - reaction

• Problems facing Obama Watch02:27
• Scenes from victory night Watch02:58
• What went wrong for Romney? Watch02:43
• Candidates thank families Watch01:39
• Facing the 'fiscal cliff' Watch01:24
• What next for Romney? Watch03:04

The Sunshine State's problems began even before election day, with lengthy queues reported during the early-voting period.

Democrats launched a legal challenge against a Republican-backed measure to limit the period that voters could cast ballots before the election, from 14 days to eight.

They said it was a blatant attempt to suppress Democratic turnout - Florida's African-American voters have tended to cast ballots early in previous elections.

But Governor Rick Scott said the measure, passed by the state's Republican-controlled legislature in 2011, aimed to limit voter fraud.

The early-voting period officially ended last Saturday. Election supervisors in Miami-Dade and other counties did open up voting for several hours on Sunday.

But after being swamped by voters, one polling office in Miami-Dade County temporarily shut its doors. Some in line began to shout: "Let us vote!"

There was also a technical error with an automated phone system that told more than 12,500 voters in another county that the election was on Wednesday.

Florida was not alone in reports of lengthy election day lines. Voters waited for hours in states such as Virginia, New York and Washington DC.

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