VAT rise will stay, Cameron hints

David CameronMr Cameron said tackling the deficit was important for the economy
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Prime Minister David Cameron has said that the rise in VAT from 17.5% to 20% is likely to be permanent.

He told the BBC’s Andrew Marr Show the government was trying to deal with the “structural budget deficit” – the gap between spending and taxes.

“That is structural, that’s not going to go away because of the growth, so the changes we are making have to be pretty permanent too.”

He said 2011 would be “difficult” but he was “optimistic” for the future.

And the prime minister stressed the Coalition was a “strong government” and would not be deterred by the threat of strikes from its plans to reform the economy.

The government hopes the VAT rise will raise £13bn a year to tackle Britain’s deficit.

However the Centre for Retail Research has predicted that retail sales will decline by about £2.2bn in the first quarter of this year as a result.

And Labour says the increase in VAT, which came into effect on Tuesday, will cost the average family £7.50 a week.

In the interview Mr Cameron said the VAT rise was part of an economic policy which was predicted to see an increase in employment across the Parliament.

“The trade unions need to know they’re not going to be able to push anyone around by holding this strike or that strike or even a whole lot of strikes together – they can forget it.”

David Cameron

Asked how many jobs were predicted to be lost as a result of the VAT rise, he said any tax rise would have an impact on the economy.

However he added if the budget deficit was not tackled Britain would be “in a hole like Ireland or Greece” and confidence would “sap” out of the economy.

Mr Cameron said: “If you didn’t do VAT, what tax would you do? The first category there would probably be National Insurance. that’s what Labour have committed to – and putting up National Insurance when you’re trying to get the economy growing and jobs growing would be a perverse thing to do.”

Labour had planned to increase National Insurance Contributions (NICs) by 1% for both employers and employees.

Instead, the Coaltion is raising the starting point for employers’ NICs to reduce the cost to firms, and is leaving in place the higher levies on employees.

Mr Cameron also said he hoped the new top rate of income tax would not be permanent because it would discourage people from working, living in the UK and “getting on”.

He rejected suggestions it was unfair to keep VAT permanent while reducing the top rate of income tax and said the government was “determined” that the richest should pay the most “not only in total cash terms but also as a share of their income, and that is what the Budget and spending round achieved”.

Last week London’s mayor Boris Johnson said the 50p tax rate would harm the UK’s economy if it was made permanent – Chancellor George Osborne has also described it as a “temporary feature of our tax system”.

Mr Cameron said while the coalition government was trying to help the economy recover from a “vast pit of debt”, 800,000 people were being also lifted out of income tax altogether because it was raising income tax thresholds.

“That will help all people who are basic rate taxpayers… it is going to be difficult but we did things in the Budget to help the economy, to help business, to make it cheaper to employ people.

“That’s where we’ve got to put the priority this year, to get the economy moving.”

But Mr Cameron admitted 2011 was going to be “a tough and difficult year.”

He said strikes were not “inevitable” and told the BBC: “Striking is not going to achieve anything and the trade unions need to know they’re not going to be able to push anyone around by holding this strike or that strike or even a whole lot of strikes together – they can forget it.

“This government is a very strong government. It has a strong majority, I believe the public is right behind the approach we are taking and people will need to know we will not change course because one union or another at the union wants to kick off.”

This article is from the BBC News website. © British Broadcasting Corporation, The BBC is not responsible for the content of external internet sites.

South Sudan votes on independence

Salva Kiir (right), 8 January 2011Salva Kiir said he hoped a “Yes” vote would contribute to peace

People in southern Sudan are due to start voting in a landmark referendum on independence.

The week-long vote is widely expected to result in Africa’s largest country being split in two.

Ahead of the referendum, the region’s leader Salva Kiir said there was no alternative to peaceful co-existence between the north and the south.

The poll was part of the terms of the 2005 peace agreement which ended the war between the two.

Speaking in the grounds of the presidential palace in Juba, Mr Kiir said the referendum was “not the end of the journey but rather the beginning of a new one”.

“There is no substitute for peaceful coexistence,” he added.

He was speaking alongside US Senator John Kerry, who has been in dialogue with both northern and southern leaders attempting to smooth the process ahead of the vote.

As the vote neared, six people died in an attack by rebels on southern Sudan’s military in the oil-rich area of Unity state.

Harding on Africa

“After so many years of conflict, there is no mistaking the sheer appetite for peace here in Juba -a hard factor to measure, but an all too easy one to overlook”

Read Andrew’s thoughts in full

Col Philip Aguer, a military spokesman, told the Associated Press that his troops had retaliated and killed four of the rebels.

UN officials confirmed that they had received reports of an attack in the area, but did not say which side had suffered the fatalities.

On Friday, Sudan’s President Omar al-Bashir warned the south would face instability if it voted to secede.

In an interview with the Arabic news channel al-Jazeera, he said he understood why many southerners wanted independence, but he expressed concern at how the new nation would cope.

“The south suffers from many problems,” he said.

“It’s been at war since 1959. The south does not have the ability to provide for its citizens or create a state or authority.”

Sudan’s Historic VoteVoting: 9-15 JanuaryTo pass, 60% of those registered need to vote plus majority of ballotsVote a condition of 2005 deal to end two-decade north-south conflictMost northerners are Arabic-speaking MuslimsMost southerners Christian or follow traditional religionsOil-rich Abyei area to hold separate vote on whether to join north or southReferendum could divide Africa’s largest countryFinal result due 6 February or 14 February if there are appealsSouth would become continent’s newest nation on 9 July 2011New national anthem chosen, but not name

Mr Bashir said southerners living in the north would not be allowed dual citizenship, and floated the idea of the two nations joining in an EU-style bloc.

He also raised the issue of Abyei, an oil-rich region with disputed borders.

He warned that if southerners seized the region for themselves, it could lead to war.

Analysts say Mr Bashir is under intense pressure from northern politicians, who fear that secession of the south may lead to a further splintering of the country.

North and south Sudan have suffered decades of infighting in conflicts driven by religious and ethnic divides.

Southern Sudan is one of the least developed areas in the world and many of its people have have long complained of mistreatment at the hands of the Khartoum government.

Turnout in the referendum will be important, as the 2005 peace agreement stipulates a quorum of 60% of the 3.8 million registered voters.

Sudan: A country divided
Satellite image showing geography of Sudan, source: Nasa

The great divide across Sudan is visible even from space, as this Nasa satellite image shows. The northern states are a blanket of desert, broken only by the fertile Nile corridor. Southern Sudan is covered by green swathes of grassland, swamps and tropical forest.

Map showing Ethnicity of Sudan, source:

Sudan’s arid northern regions are home mainly to Arabic-speaking Muslims. But in Southern Sudan there is no dominant culture. The Dinkas and the Nuers are the largest of more than 200 ethnic groups, each with its own traditional beliefs and languages.

Map showing infant Mortality in Sudan, source: Sudan household health survey 2006

The health inequalities in Sudan are illustrated by infant mortality rates. In Southern Sudan, one in 10 children die before their first birthday. Whereas in the more developed northern states, such as Gezira and White Nile, half of those children would be expected to survive.

Map showing percentage of households using improved water and sanitation in Sudan, source: Sudan household health survey 2006

The gulf in water resources between north and south is stark. In Khartoum, River Nile, and Gezira states, two-thirds of people have access to piped drinking water and pit latrines. In the south, boreholes and unprotected wells are the main drinking sources. More than 80% of southerners have no toilet facilities whatsoever.

Map showing percentage of who complete primary school education in Sudan, source: Sudan household health survey 2006

Throughout Sudan, access to primary school education is strongly linked to household earnings. In the poorest parts of the south, less than 1% of children finish primary school. Whereas in the wealthier north, up to 50% of children complete primary level education.

Map showing percentage of households with poor food consumption in Sudan, source: Sudan household health survey 2006

Conflict and poverty are the main causes of food insecurity in Sudan. The residents of war-affected Darfur and Southern Sudan are still greatly dependent on food aid. Far more than in northern states, which tend to be wealthier, more urbanised and less reliant on agriculture.

Map showing position of oilfileds in Sudan, source: Drilling info international

Sudan exports billions of dollars of oil per year. Southern states produce more than 80% of it, but receive only 50% of the revenue, exacerbating tensions with the north. The oil-rich border region of Abyei is to hold a separate vote on whether to join the north or the south.

This article is from the BBC News website. © British Broadcasting Corporation, The BBC is not responsible for the content of external internet sites.

Chinese vice premier on UK visit

Li KeqiangLi Keqiang is touching down in Edinburgh at the start of his four-day state visit
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Chinese Vice Premier Li Keqiang is arriving in Scotland at the start of a four-day visit to the UK to promote links between the countries.

The state visit is taking a focus on trade and business and includes talks with Prime Minister David Cameron and Scottish First Minister Alex Salmond.

Mr Li is being greeted at Edinburgh Airport by Scottish Secretary Michael Moore.

He will then go on to hold bilateral talks with Mr Salmond.

The Scottish leg of the visit by the vice premier and his delegation, which includes six Chinese ministers, is taking in a series of meetings with ministers and business leaders.

The agenda will focus on Scotland’s growing renewable and low-carbon energy industry and includes a visit to a wave power project in Edinburgh.

There will also be a state dinner in the Scottish capital.

During his stay, Mr Li – widely tipped to be the next Chinese premier – will also meet key UK government figures in London, including Deputy Prime Minister Nick Clegg, Chancellor George Osborne and Foreign Secretary William Hague.

Analysis

One of the most important in a new and upcoming generation of Chinese officials, Li Keqiang is widely tipped to take over as China’s next premier.

This is his first proper outing on the European stage. On this tour he’s already met Chancellor Merkel in Germany, signed deals with German carmakers and offered to buy over $7bn worth of Spanish debt.

These earlier stopovers are designed to signal that the EU as a whole is still seen as key to China’s future growth, and reassure European nations that they are important partners.

In Britain over the next four days, the focus will be on the economy. Today’s tour of the innovative wave and tidal energy project in Leith is to signal that the UK and Scotland are at the forefront of hi-tech renewable technology that China is keen to acquire.

The message is that both sides, not only indebted Britain, can benefit from a deeper relationship.

He is also due to deliver a speech at a China-Britain British Council banquet, ahead of his return to Beijing on Wednesday.

The vice premier’s stay in the UK comes after a three-day visit to Spain, where he signed $7.5bn (£4.8bn, 5.7bn euros) in trade deals.

Mr Li also reaffirmed his country would buy Spanish government bonds, despite the recent crisis of market confidence over eurozone debt.

Mr Salmond, who has led several trade missions to China in the past two years, said the visit was vital for building economic growth, especially in renewable energy.

“China already has the largest deployment of on-shore renewable technology and Scotland is a world-leader in pioneering the technology and application of clean, green off-shore energy,” said the first minister.

“Therefore, the economic opportunities for Scotland are enormous in terms of wind and marine energy technology developers and manufacturers, and for potential investors across the world.

“I look forward to welcoming this high-powered delegation to Scotland and leading discussions to advance our relationship with China.”

China has already made several Scottish trade agreements, including a deal requiring all “Scotch Whisky” sold in China to have been made in Scotland.

Anne MacColl, of the economic agency Scottish Development International, said Scotland was in a strong position to contribute to many of China’s key aims, which also included life sciences, financial services and academic connections.

This article is from the BBC News website. © British Broadcasting Corporation, The BBC is not responsible for the content of external internet sites.

PM plays down fuel duty changes

Fuel pump nozzles on 4 January 2010The prime minister has admitted that fuel price rises have been “painful” for motorists
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The Federation of Small Businesses (FSB) is calling on the prime minister to fulfil a Conservative manifesto pledge to limit fuel duty increases.

Petrol prices are now at a record high after recent rises in VAT and duty.

The FSB wants David Cameron to introduce a fuel duty stabiliser which would cut duty when oil prices rise, and increase it when prices fall.

He backed the idea in opposition and said this week that he was considering ways to help cash-strapped motorists.

The FSB says the UK now has the second highest diesel price in Europe – something which it says is causing great difficulties for hauliers and other businesses dependent on road transport.

The organisation also points out that on the continent, the total price is split about 50/50 between the cost of the fuel itself and tax.

But in the UK, the average product price is 38% of the total, with the remaining 62% coming from tax.

John Walker, national chairman of the FSB, said they were “severely disappointed” with Mr Cameron.

“In opposition, the Conservative Party promised to put a fuel duty stabiliser in place – something the FSB has been calling for – but they have failed to deliver,” he said.

“We are looking at this because we do want to try and help people”

David Cameron Prime Minister

“As such, they are placing strain on already hard-hit businesses’s cash-flow. It is imperative the government acts now and introduces the stabiliser to avoid a relentless flow of fuel duty increases that simply put small firms on a knife-edge.”

The prime minister said last week that the VAT and duty hikes were “very painful and difficult” for motorists, adding that he was working with the Treasury on the idea of a stabiliser.

“We are looking at it. It’s not simple, it’s not an easy thing to put in place but I would like to try and find some way of, as I say, sharing the risk of higher fuel prices with the consumer,” the PM said.

“At the moment I think they feel they are bearing all of the burden so we are looking at this because we do want to try and help people.”

This article is from the BBC News website. © British Broadcasting Corporation, The BBC is not responsible for the content of external internet sites.

Banks must ‘pay smaller bonuses’

Canary WharfThe scale of bankers’ bonuses remains a controversial issue

Prime Minister David Cameron has called on banks to pay smaller bonuses this year.

Speaking on the BBC’s Andrew Marr show he said banks should be more “socially responsible”.

He said that the Royal Bank of Scotland (RBS), which is majority-owned by the taxpayer, should not be “leading the way” on bonuses but should be a “back marker”.

But he also said that “micro-managing” the banks was not the answer.

There have been unconfirmed reports that RBS’s chief executive, Stephen Hester, is to get a substantial bonus for his work in 2010.

The Sunday Telegraph reports that RBS’s board is poised to award Mr Hester a cash-and-shares bonus of £2.5m at their meeting next month.

But Mr Cameron said the details of Mr Hester’s pay packet was “pure speculation”.

He warned against “banker-bashing”, saying that it was too easy to make banks the “scapegoats” for the recession.

Mr Cameron did say that the banks needed to do more to increase their lending.

He said: What I want to see is socially responsible banks behaving responsibly, and proper agreements on lending to businesses, large and small.”

He defended his government’s action on banks, saying that his was one the first governments in the world to introduce a banking levy.

This article is from the BBC News website. © British Broadcasting Corporation, The BBC is not responsible for the content of external internet sites.

Shot US congresswoman ‘critical’

Congresswoman Gabrielle Giffords

Gabrielle Giffords was the intended target, Sheriff Clarence Dupnik said

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A US congresswoman is in critical condition after a gunman shot her in the head and killed six people in an Arizona shooting spree.

Democratic Representative Gabrielle Giffords was shot at close range at a public meeting in a Tucson supermarket.

The 40-year-old is under sedation, but the doctor treating her said he was “very optimistic about her recovery”.

Barack Obama said the shooting was a “tragedy for our entire country”. A 22-year-old man has been arrested.

He has been named locally as Arizona resident Jared Loughner, who is described as having a troubled past.

He is described by various former classmates as “obviously disturbed” and a loner who had posted a number of anti-government videos and messages on social networking websites.

Mark Mardell’s America

“It is an indication of the febrile, volatile nature of politics in America that, immediately the news broke, the internet was alive with anger, a dispute between the left and the right”

Read Mark’s thoughts in full

Local police, who have not confirmed the suspect’s name, said they were hunting for a possible accomplice, who may have driven the suspect to the supermarket.

“We’re not convinced that he acted alone,” said Pima County Sheriff Clarence Dupnik.

Police have released a CCTV image of the person they are hunting, described as a white man aged between 40 and 50 with dark hair who was wearing a blue jacket and jeans at the time of the attack.

Left-wing commentators have accused right-wing politicians of creating a climate of hatred that allows such attacks.

The rhetoric that instantly sprang up around the shootings shows the volatile, febrile state of American politics, says BBC North America Editor Mark Mardell in Washington.

Sheriff Dupnik said a consuming atmosphere of political vitriol centred on Arizona may have been a factor in the attack.

“When you look at unbalanced people, how they respond to the vitriol that comes out of certain mouths about tearing down the government,” he said.

US political assassinations2008: Bill Gwatney, chairman of the Arkansas Democratic Party, shot in his office and later died2003: New York City Councilman James Davis shot in the chest1998: Tommy Burks, a Democratic state representative from Tennessee, shot in the face by a political opponent1980: Russell Lloyd, Republican mayor of Evansville, Indiana and New York City Democratic Congressman Allard Lowenstein are assassinated1978: Harvey Milk, a gay rights activist and San Francisco city supervisor, shot dead in his office. Mayor George Moscone killed moments earlier by the same shooter

“The anger, the hatred, the bigotry that goes on in this country is getting to be outrageous. And unfortunately, Arizona, I think, has become the capital. We have become the Mecca for prejudice and bigotry.”

This anger had spilled into violence before, with Ms Giffords’ office being vandalised last March after she upset Arizona conservatives by supporting Mr Obama’s healthcare reform bill.

Former Alaska Governor Sarah Palin, a conservative Republican, had placed Ms Giffords on a list of politicians she wanted to remove from office in mid-term elections last November.

As a moderate Democrat who narrowly defeated a so-called tea party candidate in November’s mid-term elections, Ms Giffords had referred to the hatred during an interview with MSNBC.

“We’re on Sarah Palin’s targeted list, but the thing is, that the way that she has it depicted has the crosshairs of a gun sight over our district. When people do that, they have to realize that there are consequences to that action,” she said.

Mrs Palin has issued a statement offering her condolences to the families of Ms Giffords and the other victims of the attack.

The attacker struck as Ms Giffords held one of her regular open-invitation meetings – which she called “Congress on your corner” – with her constituents outside the Safeway supermarket in Tucson at around 1000 (1700GMT) on Saturday.

GABRIELLE GIFFORDSRepresents the eighth district of Arizona in the HouseFirst elected in 2006, re-elected to third term last NovemberHas focused on immigration reform, military issues, stem-cell research and alternative energyGrew up in Tucson, ArizonaMarried to US astronaut Mark KellyIn pictures: Gabrielle Giffords

Eyewitnesses say the gunman approached Ms Giffords and shot her at close range. Later reports from the hospital said a bullet passed through her head without exploding.

The attacker then fired some 20 shots indiscriminately before being overpowered by members of the crowd as he attempted to reload what one witness described as a semi-automatic Glock pistol.

He was then hauled away by police, witnesses said.

The six dead included a nine-year-old girl, federal Judge John Roll – who had spent more than 40 years on the bench – and one of Ms Giffords’ political aides.

In addition to the six deaths, police said 13 people – including Ms Giffords – had been wounded.

Mr Obama urged the nation to “come together, and support each other”.

Man identified as Jared Loughner at the 2010 Tucson Festival of Books in TucsonThe suspect has been described as a loner

“I ask all Americans to join me and Michelle in keeping all the victims and their families, including Gabby, in our thoughts and prayers,” he said.

He described Ms Giffords as a personal friend and an “extraordinary public servant”, and tasked FBI director Robert Mueller with overseeing the investigation.

Ms Giffords, who represents the eighth district of Arizona in the House of Representatives, is married to space shuttle astronaut Mark Kelly.

Described as a “a rising star” in the Democrats with hopes of eventually winning the Arizona Senate seat, she has served on several congressional committees, including those covering the armed services and foreign affairs, and is a member of the “blue dog” group of centrist Democrats.

The House of Representatives majority leader Eric Cantor announced that all of next week’s legislative debates would be postponed to allow politicians to “take whatever actions may be necessary in light of today’s tragedy”.

This article is from the BBC News website. © British Broadcasting Corporation, The BBC is not responsible for the content of external internet sites.

Warning to drivers over icy roads

Drivers are being urged to take care on roads across Scotland as icy weather continues to make conditions difficult.

Tayside Police said some routes were treacherous following overnight snowfall.

Areas around Perth and Kinross have been particularly badly hit.

Police in Grampian and Dumfries and Galloway are also warning of widespread ice. Northern Constabulary said there was a significant risk of black ice on untreated roads.

This article is from the BBC News website. © British Broadcasting Corporation, The BBC is not responsible for the content of external internet sites.