Tabloid accused of buying silence after persuading celebrity PR agent to drop case over interception of voicemail messages

The News of the World was tonight accused of buying silence in the phone-hacking scandal after it agreed to pay more than £1m to persuade the celebrity PR agent Max Clifford to drop his legal action over the interception of his voicemail messages.

The settlement means that there will now be no disclosure of court-ordered evidence which threatened to expose the involvement of the newspaper's journalists in a range of illegal information-gathering by private investigators.

The case had potentially important implications for Andy Coulson, media adviser to the Conservative leader, David Cameron, who edited the News of the World at the time of the illegal activity and who has said that he does not remember any of his journalists breaking the law.

Chris Huhne, the Liberal Democrat home affairs spokesman, who has asked questions in parliament about the affair, said: "This is a clear attempt to buy the silence of people who had their phones hacked by the News of the World's reporters. It would make more sense for the newspaper to come clean. The trouble with cover-ups like this is that they give no reassurance that the guilty parties have really changed their ways."

The settlement with Clifford is understood to be worth just over £1m, including legal costs and substantial personal payments which will not be described as "damages", leaving the News of the World free to claim that it has admitted no wrongdoing. It brings to more than £2m the amount paid by News International to victims of phone-hacking to secure their silence: in a separate case the paper paid more than £1m to suppress legal actions brought by Gordon Taylor, chief executive of the Professional Footballers' Association, and two others who had sued the paper over the interception of their voicemail. The paper had always denied all involvement but paid for a secret settlement after a judge ordered disclosure of paperwork which implicated some of its journalists.

The two men at the heart of the scandal – the paper's former royal correspondent, Clive Goodman, and the private investigator Glenn Mulcaire – also have been paid money by the News of the World in settlements of unfair dismissal claims, the terms of which are believed to compel them not to disclose what they know about illegal activity at the paper.

Goodman and Mulcaire were jailed in January 2007 for intercepting the voicemail of a total of eight victims, including Clifford and Taylor. The News of the World originally claimed that it had no knowledge of any of the illegal activity. Coulson resigned on the grounds that he carried ultimate responsibility.

Since then it has emerged that other News of the World journalists were involved in handling illegally "hacked" voicemail messages and that there were numerous other victims. Three mobile phone companies found more than 100 customers whose voicemail had been accessed in the previous 12 months by the two jailed men.

Scotland Yard has admitted that in material seized from Mulcaire, it found 91 pin codes, which are used for the interception of voicemail, and that it warned people in government, the military, the police and the royal household that their messages may have been intercepted. Known victims include Prince William, Prince Harry, the former culture secretary Tessa Jowell, the mayor of London, Boris Johnson, the MP George Galloway and the former executive director of the Football Association, David Davies.

The Clifford case threatened to bring important new material into the public domain. In preliminary hearings, Mulcaire insisted that, contrary to the News of the World's denials, he passed information from the hacking of Clifford's voicemails to journalists on the paper. He did not identify them but on February 3, Mr Justice Vos ordered him to do so. The settlement means that Mulcaire is no longer required to name the names.

The judge had also ordered the Information Commissioner's Office to provide material seized from a second investigator, Steve Whittamore, which according to an ICO witness statement reveals "a widespread and unlawful trade in confidential information commissioned by journalists of the News of the World".

Through its barrister the News of the World accepted that contrary to its previous claims, Goodman's purchase of confidential personal information from a private investigator had not been an isolated incident. The ICO material would have identified individual journalists, but that, too, will not now be disclosed.

Finally, the settlement means the News of the World is no longer required to disclose the terms of its secret settlement with Taylor, nor the agreement with Mulcaire that is alleged to have bought his silence.

The settlement is unlikely to mark the end of the affair. Clifford's lawyer, Charlotte Harris, of JMW Solicitors in Manchester, said last night: "There are a number of public figures who are now contemplating issuing proceedings against the News of the World." Politicians, leading actors and sportsmen are believed to be among those who are preparing to sue. And MPs on all sides of the house are watching closely for the effect of the scandal on Coulson.

The House of Commons media select committee last month accused witnesses from the News of the World of "obfuscation" and "collective amnesia". A Labour member of the committee, Paul Farrelly, said last night: "This seems to be another settlement by the News of the World that preserves the cloak of secrecy and confidentiality around its affairs. It all mounts up to give the impression that silence is effectively being bought. People will draw their own conclusion about what are the real motives behind the settlement."

The News of the World declined to comment. Clifford said he was very happy with the outcome: "I'm now looking forward to continuing the successful relationship that I experienced with the News of the World for 20 years before my recent problems with them."

Foreign Office officials believe elements of Taliban ready to talk but fears grow of long Afghan conflict, and growing casualties

Britain will today urge the Afghan government to put more effort into the pursuit of peace talks amid fears that the war could be prolonged – and more British lives lost – as a result of incompetence and lack of political will in Kabul.

A speech to be delivered in the US by the foreign secretary, David Miliband, will reflect growing anxiety in London that President Hamid Karzai's professed desire for a political solution has not been backed up by any serious planning or concrete proposals.

Unless more pressure is put on the Afghan government, some British officials predict that Karzai's proposed loya jirga, or grand peace council, due at the end of next month, will be little more than a PR stunt. "My argument today is that now is the time for the Afghans to pursue a political settlement with as much vigour and energy as we are pursuing the military and civilian effort," Miliband will say at the Massachusetts Institute of Technology, according to a text of the address seen by the Guardian.

British officials believe that significant Taliban leaders are ready to start talking about a political settlement in which they would sever ties with al-Qaida and put down weapons in return for a role in politics. But there is also concern that opportunities to open a preliminary dialogue are being lost, and that the conflict, which has already cost more than 270 British lives, is being intensified by Kabul's inefficiency and corruption.

"The Afghans must own, lead and drive such political engagement," Miliband will say in his speech. "It will be a slow, gradual process. But the insurgents will want to see international support.

"International engagement, for example under the auspices of the UN, may ultimately be required."

Karzai presented a paper on political reconciliation at a conference held by Gordon Brown in London in January. But officials who saw it, and subsequent Afghan proposals on peace talks, have variously described them as "empty" and "a C-team effort".

Gerard Russell, at the Carr Centre for Human Rights at Harvard University, said: "We had a look at the Afghan government's thinking on reconciliation, but we haven't seen a concrete proposal or a workable methodology."

Russell, a former political adviser to the UN mission in Afghanistan, added: "There is a talk about having a loya jirga. But what is a loya jirga going to do? On its own, its not going to achieve anything."

The growing alarm at the lack of political initiative in Kabul comes at a time when back-channel contacts with the Taliban have also run into trouble, paradoxically as a result of a Taliban arrest hailed as a triumph last month.

Mullah Abdul Ghani Baradar, the head of the Taliban's military operations seized in Karachi by Pakistani intelligence agents, had taken part in tentative and secret contacts with Saudi intermediaries last year.

One participant in those talks told the Guardian that Baradar's arrest had been "a huge blow" to the peace effort.

Britain's special envoy for Afghanistan and Pakistan, Sir Sherard Cowper-Coles, has been sent to Kabul as caretaker ambassador, with the primary mission of trying to inject more substance into the loya jirga planned for 29 April. Tomorrow, Miliband will also call for a direct international role in managing the peace process. Miliband's speech also carries a message for Washington.

While Britain's Foreign Office believes work on peace talks should begin straight away and be pushed behind the scenes by the Obama administration, most US officials, and some British generals, question whether such negotiations would produce results before Taliban morale has been depleted by the military surge.

"There is an important US audience for this," a British official said. "Nobody wants a PR stunt in Kabul that doesn't lead anywhere."

• Waterboarding of 9/11 suspect was 'concealed'
• Manningham-Buller criticises Bush staff

The government protested to the US over the torture of terror suspects, the former head of MI5, Dame Eliza Manningham-Buller revealed last night.

She also said the Americans concealed from Britain the waterboarding of Khalid Sheikh Mohammed, the alleged mastermind of the September 2001 attacks.

"The Americans were very keen that people like us did not discover what they were doing," Lady Manningham-Buller told a meeting at the House of Lords.

She also admitted MI5 were slow to recognise that the US was torturing detainees. Asked if Britain protested, she replied: "We did lodge a protest." She declined to elaborate but it is believed that the protests were made at ministerial level.

Manningham-Buller was answering questions after delivering a lecture in parliament sponsored by the Mile End study group set up by Queen Mary, University of London.

She said that in 2002 or 2003 she questioned how the US was able to supply Britain with intelligence gleaned from Sheikh Mohammed.

"I said to my staff, 'Why is he talking?' because our experience of Irish prisoners and terrorists was that they never said anything," she said.

"They said the Americans say he is very proud of his achievements when questioned about it. It wasn't actually until after I retired that I read that, in fact, he had been waterboarded 160 times," Manningham-Buller said.

She criticised senior figures in the Bush administration, including the president himself, Dick Cheney, the vice-president, and Donald Rumsfeld, the defence secretary for their attitude towards the treatment of terror suspects. She added: "Nothing, even saving lives, justifies torture."

Referring to criticism of MI5, and notably evidence in the mistreatment of the UK resident Binyam Mohamed, she said in her speech: "The allegations of collusion in torture and lack of respect for human rights will wound [MI5 officers] personally and collectively and, in some respects, whether proven or not, will make it harder for them to do their job."

Last month, Lord Neuberger, the master of the rolls, said MI5's insistence in a court case that it was unaware of the harsh treatment of some detainees held overseas in CIA custody was unreliable.

Manningham-Buller confirmed that Britain was aware of mistreatment cases before she left office.

In an original draft of a ruling, Neuberger also criticised MI5's supposed lax attitude toward the mistreatment of detainees. Manningham-Buller's successor as MI5 director, Jonathan Evans, has rejected the claims, and warned that the courts risk being exploited by those seeking to undermine British counterterrorism work.

But Manningham-Buller said she believes the allegations of complicity in torture could disrupt the future work of MI5 staff.

She spent 33 years in British intelligence, and was head of MI5 between 2002 and 2007. She said British spies are proud to be quietly effective, unlike the "gung-ho UK" intelligence officers portrayed in TV dramas.

"One of the sad things is Cheney, Rumsfeld and Bush all watched 24." Manningham-Buller said, referring to the popular TV show about a counterterrorist agent. She said future terrorist attacks would involve chemical, biological and radioactive weapons. "After the next terrorist attack, there will be cause for fresh legislation, which should be resisted. The criminal law as it stands is enough. We have masses of legislation that deals with terrorism."

She predicted the parliamentary intelligence and security committee, which was heavily criticised recently for its failure to hold MI5 to account, would be turned into a fully-fledged committee in the House of Commons.

• Power-sharing finalised as assembly agrees to first justice minister since Troubles
• Ulster Unionists oppose measure but Hillary Clinton welcomes assembly's yes vote

A 15-year search for a political settlement in Northern Ireland cleared its final hurdle today when unionists and nationalists voted to transfer policing and criminal justice powers to Belfast, creating the province's first justice minister since the Troubles erupted four decades ago.

Sinn Féin and the Democratic Unionist party (DUP), who were barely on speaking terms a few years ago, joined forces with the nationalist SDLP in the Northern Ireland assembly to endorse a deal on policing, hammered out last month.

The justice minister will be appointed on 12 April and is likely to be David Ford, the leader of the centrist Alliance party.

The breakthrough was marred by a row when the Ulster Unionist party (UUP), which governed Northern Ireland for five decades until the imposition of direct rule in 1972, voted against the deal.

Sir Reg Empey, the UUP leader, who recently formed an electoral pact with the Conservatives, said he had voted no because his party did not believe that the four-party power-sharing executive was functioning properly. Empey, the minister for employment and learning, said: "We exercise our rights, refusing to bow to the blackmail and bullying to which we have been subjected in recent weeks."

The UUP hit out after facing intense pressure from London and the US to fall in behind David Cameron, who has backed devolution of the criminal justice system. Gordon Brown phoned Empey shortly before today's vote, while former US president George Bush pleaded with Cameron last week to persuade the UUP to support the deal.

Empey's unionist rivals, the DUP, who have overtaken the UUP in recent years, focused on what could happen after the vote. The DUP leader, Peter Robinson, who managed to persuade all but one of his 36 assembly members to back the devolution deal, said: "The move is about completing and maintaining devolution, it is about whether we move forward together as a society."

The vote secures an extra £800m for policing and justice that Brown promised the assembly if they backed the transfer. It also adds an extra 1,200 police officers. The prime minister praised the main parties for reaching the deal on an issue that almost broke the power-sharing government.

He said: "Today the politics of progress have finally replaced the politics of division in Northern Ireland. The completion of devolution, supported by all sections of the community in Northern Ireland, is the final end to decades of strife. It sends the most powerful message to those who would return to violence: that democracy and tolerance will prevail. The courage and leadership of the parties who voted to complete devolution at Stormont will be noted around the world."

The vote was also praised tonight by Hillary Clinton, the US secretary of state. She said: "I commend the Northern Ireland Assembly for its affirmation of the Hillsborough Agreement and its endorsement of the devolution of policing and justice, an important step in ensuring a peaceful and prosperous future for all of the people of Northern Ireland for generations to come."

Irish president Mary McAleese also hailed the move. "Today's vote in the Northern Ireland assembly represents an eloquent statement of confidence in the political institutions established under the Good Friday Agreement," she said.

Matt Baggott, chief constable of the Police Service of Northern Ireland, welcomed the vote as a step forward. "Devolution will strengthen our service. It will help to ensure communities receive the policing service that not only they deserve, but that we are committed to delivering.

"The financial package is also welcomed … it will help us deal with those who are living in the darkness of the past and who have tried to disrupt this process and the lives of our community."

But there was discord inside Stormont after the UUP and their 17-strong assembly team voted against the move.

Martin McGuinness, Sinn Féin's deputy first minister, denounced the UUP stance, claiming they were doing it to embarrass the DUP. "The UUP declared last night [Monday] that they will not support this resolution," McGuinness told the assembly. "That saddens and disappoints me. They are opposed in my view to the transfer for cynical party political reasons." He stressed that no single party could control the justice department.

The UUP no-vote will put pressure on the Tories, who will campaign with their allies in the general election, having taken opposing sides on the biggest vote since the DUP and Sinn Féin started sharing power in 2007.

Cameron insisted that the Tories had played a constructive role, saying he would maintain his alliance with the UUP. "We want to move Northern Ireland politics forward – to focus on the issues that affect people in their everyday lives – rather than remaining stuck in the past. That is why we remain totally committed to bringing national, mainstream UK politics to Northern Ireland and to ending its semi-detached political status."

Cameron's remarks were designed, in part, to reassure the White House, which fears a UUP no-vote could harden unionist opinion against power-sharing.

Hardline Unionists turned on the DUP tonight. Jim Allister, the former DUP MEP, who now leads the breakaway Traditional Unionist Voice, claimed his former party had "rolled over in triple somersaults for Sinn Féin". He also suggested the new justice minister would be a "pointless puppet keeping the seat warm for Sinn Féin". Prior to the vote the widow of the first Police Service of Northern Ireland officer to be murdered by dissident republicans urged all parties to back the devolution of policing and justice powers. Kate Carroll, whose husband, Stephen, was killed by a Continuity IRA sniper, said in an appeal to the UUP: "It is heartbreaking that I have to get on this morning to please ask the politicians to get on with their job."

Next steps

What happens next?

The new justice minister will be appointed on 12 April and will be David Ford (below). As leader of the middle ground Alliance party, Ford is seen as a compromise candidate between unionists and nationalists.

Will all aspects of security be under the control of a justice minister?

No. MI5 is not answerable to the justice ministry and remains under the control of the Home Office in London.

How will the final act of devolution impact on the struggle against the republican dissidents?

As MI5 plays the leading role in counterterrorism, the input of the justice minister will be minimal. Outside of London the largest concentration of MI5 officers is at its regional HQ in Holywood, near Belfast.

Will this vote affect the armed campaigns of the republican dissidents?

The Continuity IRA, the Real IRA and Oghlaigh na hEireann – the three terror groups still engaged in violence – will continue to try to undermine the peace process through a campaign of sabotage and assassinations.

• Conservatives hit out at Labour and Lib Dem 'death tax'
• Tory proposal would force elderly to sell homes, say critics

The political parties traded blows over the vexed issue of how to pay for care of the elderly in the run-up to the first debate between the three main health spokesmen today.

The conference was organised by Age UK, Britain's largest charity representing older people, after weeks of angry exchanges between the parties and the collapse of consensus talks between Andy Burnham, the health secretary, and his opposite numbers, Andrew Lansley of the Conservatives and Norman Lamb of the Liberal Democrats.

The charity said recent polls showed six out of 10 people thought politicians were not working together adequately to improve the care and support for older people.

Yet the parties were quick to point out the inadequacies of each other's proposals. Labour and the Lib Dems appear to favour a compulsory, comprehensive scheme to cover health costs, which the Tories have called a "death tax" with a £20,000 bill. The Conservatives, meanwhile, propose an insurance scheme, where the elderly would voluntarily pay £8,000 into a fund to cover the cost of care.

Labour and the Liberal Democrats say the Conservative plan would force many elderly people to sell their homes to fund care. Figures obtained by the Lib Dems show that 3.5m pensioner households do not have assets of £8,000 if their homes are excluded. This would leave two-thirds of households having to sell or release equity from their homes to pay for the private insurance scheme.

Norman Lamb, the Liberal Democrat health spokesman, described the proposal as a poll tax. "Many people on modest means will be wondering how the Tories could think it's fair that they should pay the same amount for care as multimillionaires."

The Tories hit back, accusing the Lib Dems of resorting to "smear tactics", and said insurance fees would not be imposed on the poor. Wealthier pensioners could pay the premium by using their pension lump sum entitlement. "The average pension pot is worth around £25,000, indicating an average lump sum entitlement of around £6,250 which could fund the bulk of the joining fee," said a Conservative spokesman.

The Tories say the only way for Labour to pay for its scheme is to impose a £20,000 "death tax". Recent analysis shows the Treasury would raise more than £9bn a year at this level of taxation, which the Tories say is needed to cover the gap in funding. The spokesman said: "The government's own green paper admits that a compulsory, state insurance scheme would mean people need to pay around £20,000. It's not our figure, it's theirs."

Labour likely go to the country on same day as local elections in England as budget date confirmed

The Treasury will announce the budget will be held on 24 March, making 6 May a racing certainty for the general election.

The timing is likely to mean parliament debating the budget in the week of 29 March. Gordon Brown could then go to Buckingham Palace to call the election on 6 April, after the Easter holiday weekend. MPs and peers would spend a short time in parliament to negotiate remaining bills.

A 6 May election, on the same day as local elections in England, has for some time been regarded as the favoured date. But it runs the risk for Labour of seeing critical first-quarter growth figures published in the final fortnight of the campaign.

Ministers are increasingly optimistic, however, that the figures will not reveal a slide back into recession.

It is not expected that the chancellor, Alistair Darling, will have to reveal major changes to growth forecasts or the size of the public sector deficit.

He may have some cash spare from lower-than-expected unemployment forecasts.

In a speech in London Brown is expected to confirm a cap on public sector pay rises despite civil servants gearing up for strikes in the run-up to the election. Brown is expected to use a speech on the economy to reaffirm the government's position as set out in last year's pre-budget report.

He will tell public sector workers that from 2011 those at the higher end will see an absolute pay cap and that 700,000 middle-ranking civil servants, including police officers, nurses and teachers, will have pay rises capped at 1% for two years. That could amount to a real-terms cut.

The plans for senior public sector workers would affect 40,000 GPs, hospital consultants, Whitehall's highest paid civil servants and the chief executives of quangos.

When he announced the plans, the chancellor said the move would save the exchequer £3.4bn a year. Darling has written to the salary review bodies calling for a freeze on the pay of the highest-paid civil servants and a cap of 1% for those in the middle.

The full details will be published tomorrow, including exemptions for armed forces.

Some 200,000 civil servants ranging from 999 operators and coastguards to court workers began a 48-hour strike on Monday. Driving tests have been cancelled and police officers called on to man 999 emergency lines in London.

Yesterday the Policy Exchange thinktank published research showing that public sector productivity fell nearly 4% in the decade after 1997, while growing by 23% in the private sector.

Neil O'Brien, director of Policy Exchange, said: "Despite this, pay has risen by 15% more than in the private sector. The simple truth is that we need public services run on 21st century principles – not the rules of the 70s."

Korean company Samsung kicks off the industry-wide push by launching a 3D range that will be in British shops by the end of the month

The friendly green monster Shrek, the blue-skinned Na'vi of the planet Pandora and Wayne Rooney's shots on goal will shortly take on a new, three-dimensional glory.

Spurred on by the success of the Hollywood fantasy blockbuster Avatar, the world's top electronics companies believe they can make 3D television sets the norm for consumers in the US and Europe within three years.

The Korean company Samsung kicks off the industry-wide push – and battle for brand supremacy – by launching a 3D range that will be in British shops by the end of the month.

Billed as the world's first high definition, three-dimensional LED televisions, Samsung's range will be serenaded by the Black Eyed Peas at a glitzy global marketing debut in New York tomorrow.

At a press conference today, Samsung said its televisions and Blu-ray devices will come with a starter pack of two pairs of 3D glasses and a Blu-ray version of Monsters vs Aliens under a tie-up with the movie studio DreamWorks Animation.

"It's quite simply the entertainment revolution of our time," said DreamWorks' chief executive, Jeffrey Katzenberg. "It's as important as the introduction of sound or colour."

Keen to get in on the act, the Japanese company Panasonic will sell its first 3D television at a BestBuy electronics shop in Manhattan this week. And Sony, which expects to begin selling its sets in June, has set an ambitious target of selling 2.5m 3D televisions by March 2011 – amounting to roughly one tenth of all its global television sales.

In British shops, John Lewis's vision buyer, David Kempner, said he expected demand to be a "slowburn", with an opening price point of £2,000. "HD is still a relatively new concept and consumers are just getting used to it but 3D will be the next big thing. Given it has the support of all the major manufacturers, 3D technology has got momentum of its own but it also requires content providers to support it and there is a time lag there."

Experts say that 3D televisions are likely to enjoy mainstream uptake because the technology behind them barely costs any more than existing sets. To achieve three dimensions, manufacturers need more powerful processors but the fundamental make-up of the television changes only marginally. The only substantial extra cost is making 3D glasses.

"The add-on cost of manufacturing isn't significant," said Jim Bottoms, director of the technology consulting company Futuresource. "Set makers are starting to incorporate 3D in higher-end televisions this year. Very quickly, certainly by 2015, virtually every full-sized television will have 3D capability."

Although pricing for British shops is yet to be finalised, Sony's 3D televisions range in Japan from around £2,150 for a 40in set to double that amount for a 60in model, while Samsung is charging $2,000 (£1,350) to $4,000 in American stores.

Sport and films will be the early applications for 3D home entertainment. Under a deal with Sony, Sky has already begun showing certain Premier League matches in pubs on 3D televisions and this summer's World Cup could be a watershed for the technology: Sony will film 25 matches in South Africa using 3D cameras.

The opening ceremony of Vancouver's Winter Olympics was available in 3D. More than 20 movies in 3D are scheduled for release this year, including Tim Burton's Alice in Wonderland, which topped Britain's cinema box office charts at the weekend.

Mainstream television programming will take longer. The BBC and ITV have expressed interest in experimenting with 3D content.

But Bottoms said everyday shows were unlikely to go 3D until technology arrives to eliminate the need for special glasses, which is thought to be up to five years away.

"We see the next three to five years as being 'event-driven' for 3D. When we get to a glass-less solution, then we'll really see 3D become more pervasive," he said.

It has taken decades even to get to this point. The first 3D film, The Power of Love, was made back in 1922 and dozens of movies came out in the 1950s including such gems as Creature from the Black Lagoon.

But a key problem was "3D fatigue" whereby viewers' eyes became tired from distinguishing the twin images needed to create depth perception.

Samsung's president of visual display products, Boo Keun Yoon, told the Guardian that 3D fatigue killed off three-dimensional filming in the 20th century but that new techniques have overcome this lingering problem by creating a more consistent image.

"We've recently had developments in how 3D films are shot," said Yoon. "I believe 2010 will be the year of the 3D television revolution. Probably by the end of this year, we'll see an explosive growth in demand."

Party's revised constitution would require all applicants to submit to a two-hour home visit, court is told

The British National party plans to send officials to vet all would-be members in their homes, a court heard today.

A clause in the far right group's revised constitution would require all applicants to submit to a two-hour home visit by two party officials, Central London county court was told.

That could operate as a form of indirect discrimination against non-whites, said Robin Allen QC, representing the Equalities and Human Rights Commission (EHRC), which is challenging the party's membership rules. "One way the provisions could operate would be to intimidate someone who wanted to join the party," he said, adding: "Of course, it could simply be a greeting."

BNP members last month voted to scrap the whites-only membership criteria after it was warned it faced legal action under equality laws.

The EHRC is arguing that the new constitution remains indirectly racist, even though the colour bar has been removed. That is rejected by the BNP, which argues that ever since it officially opened its doors to all ethnic groups it has acquired a "waiting list" of black and Asian would-be members.

The party's new constitution, which has yet to be published, remains prejudicial because it requires members to agree to clauses including that they are "implacably opposed to the promotion, by any means, of the integration or assimilation" of the UK's indigenous white population, Allen said.

"It would be jolly difficult for a mixed-race person to join the BNP without effectively denying themselves," he argued.

Gwyn Price Rowlands, representing the BNP, described the EHRC argument as nonsense and claimed the party already had a "significant number" of non-white members, all of whom were "welcome".

"I am informed that there is a waiting list of black, Asian and Chinese people to join," he said.

Judge Paul Collins is to rule on whether the new BNP constitution is indirectly racist on Friday.

An internal BNP memo seen by the Guardian tells members: "We don't expect any more than a handful of people of ethnic minority origin to apply to join the party nationally, and we will not let this deflect us from our political objectives of saving Britain and restoring the primacy of the indigenous British people."

The legal wrangling comes amid claims of a renewed challenge to the BNP from other extreme rightwing groups. The National Front says it has seen an upsurge in membership enquiries in recent months – mainly from BNP supporters who feel the party is "selling out".

National Front's spokesman, Tom Linden, said there had been a 70% increase in inquiries since Griffin appeared on BBC Question Time and the NF is expected to stand around 25 candidates at the general election.

"The British National party is no longer a white racist party, it is becoming a multi-racial party by giving into the race industry," he said.

Lord Laming's costly recommendations are overloading social workers, council leaders warn

The cost of implementing child protection reforms recommended in the wake of the Baby Peter case will run into tens of millions of pounds and new rules and targets have left social workers so overloaded that vulnerable children's safety could be put at greater risk, council leaders warn today.

The first independent costing of the action ordered a year ago by Lord Laming, which children's secretary Ed Balls backed and agreed to fund, put the price of hiring thousands of extra social workers to meet just one aspect of the requirements at £116m.

Children's services leaders backed the report and warned that councils were already having to cope with additional costs relating to an unexpected post-Baby Peter surge in referrals, child protection plans and court applications to take children into care.

The study, by researchers at Loughborough University and commissioned by the Local Government Association, found that nearly two-thirds of social workers had reported an increase in their workloads in the past six months, with child protection workers now dealing with an average of 14 cases at a time. Social workers said they were spending up to three-quarters of their time filling in paperwork rather than seeing families.

The study looked in particular at one of the 58 recommendations Laming made in his report – that every child protection referral to councils from police and health workers should lead to an initial assessment of the risk to the child. Social workers said it would lead to unnecessary assessments, which could compromise the quality of safeguarding work. On average, only 13% of the time taken to complete one was spent with the child or family, and the rest on form-filling.

The LGA called for the recommendation to be scrapped, allowing social workers to use their own discretion about when an initial assessment is needed, and for interim government funding to plug the gap if the proposal was left in place.

Shireen Ritchie, chair of the association's children and young people board, said: "Every right-minded person wants to know everything possible is being done to keep children safe from harm. Money is an ugly topic to raise when the issue is the safety and wellbeing of children, but it would be irresponsible to pretend social work teams can make major changes to how they operate without there being implications for their workload and resources.

"There has to be recognition of what dedicated social workers all over the country are dealing with every day, the pressures placed on them and the valuable expertise they can share. Children who are at risk, and families that are struggling, will benefit more from additional time with experienced social workers than they will from an increase in the number of forms filled in about them. Some paperwork is essential to doing the best possible job, but it is right to try to reduce bureaucracy where it can ease the pressure on social workers and increase the quality of care offered to children."

The Association of Directors of Children's Services backed the findings. Its president, Kim Bromley-Derry, said: "Prescribing that every referral has an initial assessment will … divert resources from the most vulnerable children to others whose needs can be assessed and met in other ways."

Some authorities were already predicting deficits for next year due to rising numbers of children needing services, he said.

The government said spending on children's social care increased by more than £3.5bn between 1997/98 and 2008/09 - a rise of more than 90% in real terms.

Children's minister Delyth Morgan said: "Ultimately, it is up to local authorities to decide when it is appropriate to carry out an initial assessment – over the last year the number of initial assessments they have carried out has increased. It is crucial that local authorities and their partners treat any concerns for children's safety seriously and on its merits, wherever and whoever it comes from."

Tim Loughton, the shadow children's minister, said: "This is yet further proof that the government is strangling social work with red tape. Lord Laming's proposals were supposed to improve child protection, instead they have made things worse. We need to prune back this bureaucracy so that social workers can spend time with children."

The usual rules of sexual attraction go out of the window when men are stressed, say psychologists

Men are drawn to a wider range of women when they are feeling stressed out, according to research into the psychology of sexual attraction.

People are usually attracted to partners with similar facial features to their own, but after a brief but stressful experience, men's preferences changed to include a wider variety of women, the study found.

Relaxed men who took part in the study rated women on average 14% less appealing if they looked very different from themselves compared with women who looked similar. But a group of stressed men found dissimilar women 9% more attractive.

Johanna Lass-Hennemann, who led the study at the University of Trier in Germany, said the findings echo research suggesting that animals lose their normal mating preferences when they are under stress.

"Men have a tendency to approach dissimilar mates and to rate these to be more pleasant when they are acutely stressed," Lass-Hennemann said. "[But] we are not sure how this might reflect in true mating decisions."

Scientists suspect the appeal of similar-looking partners may be linked to our tendency to have more trust in a familiar face, a factor that is important for long-term relationships. Under stress, however, the importance of pairing up with someone similar-looking seems to vanish.

Lass-Hennemann speculates that stress might increase men's tendency to "outbreed", or reproduce with more genetically dissimilar women, with the potential benefit that any children born from the relationship might be better equipped to cope with a stressful environment.

"We think that chronically stressful environments should increase outbreeding, because inbreeding may lead to offspring that are not genetically diverse enough to deal with the varying circumstances that a risky and stressful environment imposes on them," she said.

In the study, 50 healthy heterosexual male students were divided into two groups. Those in the first group were asked to plunge one arm into a bucket of icy water for three minutes before taking part in the test. Those in the second group were asked to do the same, but with water heated to body temperature.

Measurements of the volunteers' heart rates and levels of the stress hormone cortisol indicated that the men in the first group were significantly more stressed before the test began than those in the second.

In the test itself, the men were shown a series of images on a computer screen. Some were of household objects, but others were of naked women. Some of the women's faces had been digitally altered to resemble either the person being tested or another man in the group.

Throughout the test, the scientists played occasional bursts of noise to startle the men and recorded their reactions. Previous research suggests people startle less when they are looking at something they find attractive. The men were also asked to rate the images by how appealing and arousing they were.

While men in the control group performed as expected and were more attracted to women who looked like them, the stressed men consistently rated the unfamiliar women as more appealing. Their startle reactions confirmed their preferences.

The research is published in Proceedings of the Royal Society B.

Lass-Hennemann said it is highly unlikely that the acute stresses of everyday life can switch someone's tastes when it comes to choosing a partner, but long-term stress might shift male preferences towards women who are more dissimilar.

Soaring violence claim 'concocted', says minister, as Tories hit back over prisoners released early

The home secretary, Alan Johnson, today tried to escalate the political row over "broken Britain" by urging the UK Statistics Authority to censure the Tories for new claims that violent crime has risen since Labour came to power.

Johnson dismissed unpublished Conservative-commissioned calculations by the House of Commons library showing violent crime has risen by 44% since 1997 as a "concocted deception".

The home secretary wrote to Sir Michael Scholar, the head of the UK Statistics Authority, asking him to intervene to ensure accuracy in the way politicians comment on crime statistics. He said the more authoritative British Crime Survey showed that violent crime had fallen by 41% since 1997.

The row deepened as Labour issued a party video in effect accusing the Conservatives of being the "criminal's friend" because of their opposition to the growth of CCTV cameras and retaining DNA of innocent people, and for voting against mandatory sentences for gun crime.

Labour highlighted the Conservatives' record on DNA, where they have been voting in the Commons to reduce the time limit for retention of profiles of unconvicted people from six years to three.

Scholar reprimanded the shadow home secretary, Chris Grayling, last month for "misrepresenting data" on crime figures, after he compared levels of violent crime as recorded by the police in recent years with figures from before 2002, when recording methods were overhauled.

The latest Conservative figures claim a 44% rise for violent crime, from 618,000 offences in 1998 to 887,000 in 2009, having stripped out 24% of the increase to account for the new recording methods.

But Johnson claimed tonight that this was misleading as the 24% figure had come from a National Audit Office study which referred to only one year's impact of the changes in the recording standards. The Home Office made clear at the time that the police violent crime figures were artificially inflated by the recording changes for at least two to three years afterwards.

Johnson said: "The Tories have an obligation to tell the true story rather than the pulp fiction version designed to fit in with their PR strategy. The truth for the Conservatives is that, without this deception on crime, the big fat lie about so-called 'broken Britain' collapses."

Grayling said tonight the Conservatives would take no lessons on law and order from a government that let 80,000 prisoners out of jail early, leaving them free to commit horrendous crimes. "Gordon Brown's administration has been soft on crime and soft on the causes of crime."

Chris Huhne, the Liberal Democrat home affairs spokesman, agreed that the Tories were wrong to claim that crime had been rising. But he added that Labour was also wrong to take the credit for the fall in crime, arguing that technology and demographics had had more impact than government action.

National Audit Office says so little is done to tackle reoffending rates of p[risoners serving less than 12 months that most have no work or education courses

A failure to tackle the criminality of 60,000 prisoners who serve sentences shorter than 12 months is costing the country between £7bn and £10bn annually in reoffending, according to a report from Whitehall's spending watchdog published today.

The National Audit Office says so little is done to tackle their reoffending rates that more than half spend almost all day in their cells because they have no work or education courses.

While £300m is spent keeping the 60,000 short-term inmates in England and Wales secure, safe and well, prisons are struggling to meet their needs, the report says. Most have a longer criminal history than any other single group of prisoners: the average is 16 previous convictions each. They also experience high levels of homelessness, joblessness and drug and alcohol problems once they are released into society.

The auditors say most spend fewer than six weeks in prison. Overcrowding and constraints on physical space mean that there are not enough activity spaces for all, problems compounded by the long waiting lists for courses that tackle the offending behaviour of those in prison.

"Only a small proportion of prison budgets is spent on activity intended to reduce reoffending by prisoners on short sentences, despite the fact that 60% of such prisoners are reconvicted within a year of release, at an estimated economic and social cost of £7bn to £10bn a year," says the NAO report. Edward Leigh, the chairman of the House of Commons public accounts committee, said it demonstrated that attempts by the Ministry of Justice to tackle the "merry-go-round" of incarceration and criminality were ineffective.

"The uncomfortable truth is they are not working, studying or doing almost anything constructive with their time. Indeed, half of them spend all day, every day sitting in their cells," he said.

A Prison Service spokesman said: "Prison is not always the right answer for less serious offenders. In some of these cases, a tough community sentence can be more effective than a short prison sentence — more effective in terms of rehabilitating offenders, turning them away from crime and therefore giving greater protection to the public."

The report was welcomed by the Criminal Justice Alliance, a penal reform group. Jon Collins, a member, said: "Instead of spending more money in a futile attempt to make these short sentences work better, the government should instead focus on keeping more of these people out of custody, freeing up space and resources in the prison estate to better rehabilitate those people who do need to be there."

Prime minister also announces pay freeze for doctors, dentists and hospital consultants as well as senior managers across most of the public sector

Gordon Brown warned today that Britain's economy is still in "choppy waters" but declared he had the "character" to lead the country to recovery. The prime minister announced a pay freeze affecting doctors, dentists, and hospital consultants as well as senior managers across most of the public sector.

Brown stressed the country was at a "crossroads" and faced "crucial decisions" in the months ahead. He warned that "ideologically-driven" Tory plans for cuts risked tipping the country back into recession.

Brown also used his address to confirm that the budget will be in two weeks' time, on 24 March, leading to speculation that the prime minister will announce the date of the election on 6 April.

Speaking at Thomson Reuters in Canary Wharf, the same venue where the Tory leader, David Cameron, attacked Labour's record on the economy last week, Brown said the "resolve" and urgency felt during the 2008 banking crisis needed to be displayed again now.

He admitted that in hindsight, it was now clear just how close the world economy came to "economic meltdown".

The economy remained in "choppy waters", said Brown as he cautioned against any belief that the recovery would automatically continue.

"In my view we are nearly there ... but there is nothing preordained or automatic about the upturn either here or abroad," he said.

Brown turned the tables on those who accuse him of lacking character by insisting that the past 18 months had been a period demanding the "greatest test of character" as the country was brought through a "dreadful" economic storm.

The prime minister said: "I have heard people say it is about policy and I have heard other people say it is about character. I do not think you can separate the two."

He told the audience that tough decisions needed to be made to keep the economy on course to recovery.

He said: "We face crucial decisions. The stakes are high. We dare not risk the recovery. We are weathering the storm and now is no time to turn back. We will hold to our course and will complete our mission."

This included a "disciplined approach" to pay and benefits right across the public sector.

Speaking on the day that the senior salary review bodies publish their recommendations for public sector pay rises, Brown announced he intended to freeze the pay of senior staff in the civil service, senior staff in the military, the judiciary, senior managers in the health service and the pay of consultants, GPs and dentists.

He said that the government remains committed to halving Britain's record £178bn deficit within four years.

Following on from the freeze on parliamentary and ministerial salaries for all government ministers which he announced last week, Brown said the curbs on public sector pay would save more than £3bn by 2013-14.

The announcement is likely to provoke fury among public sector unions just days after it was announced MPs' will see an automatic rise of 1.5% in their pay.

However, he stressed that while the worst of the recession is over, the economic recovery remains "fragile" and could be undermined if spending cuts were pushed through too quickly.

Brown emphasised the need to ensure the recovery is balanced and sustainable on a global basis as he called for the G20 to inject "new urgency into the delivery of the international agreements we have reached".

He said: "I believe that around the world we have to re-discover that sense of urgency and collective ambition that guided us a year ago. For it is our choices – and the wisdom resolve and judgments we bring to bear in making them – at both a national and global level – that will determine whether we secure a lasting recovery and indispensable reforms to safeguard our economic future."

In a Vanity Fair piece, Ed Vaizey says Cameron is 'much more conservative by nature than he acts' while in the same article the Tory leader tries to avoid left/right labels

I've only just got round to reading the Michael Wolff piece about David Cameron in Vanity Fair. Other bloggers (such as Peter Hoskin, Paul Waugh and Iain Martin) have already pointed out that Ed Vaizey seems to have embarrassed his leader again. Vaizey told Wolff that Cameron was "much more conservative by nature than he acts". But what interested me was the way Cameron rejected the whole left/right mindset. He told Wolff:

There's a left-right spectrum – where are you? I don't really do it like that ... What I've tried to do is marry a belief in market economics with the importance of a strong economy while restoring the condition of the Conservatives' being social reformers and also addressing the future – climate change and the environment. It's the full kind of package.

The whole article is quite jolly. It's not half as good as the profile the New York Times published last year, but it contains some choice quotes. I particularly enjoyed Boris Johnson's comic but rather scathing verdict on the Conservative leader's philosophy.

[Cameron has] alchemized a position of more or less glutinous consensus ... The lion lies down with a lamb, calf, and fatling together, and a little child shall lead them.

Fraser Nelson, the Spectator editor, told Wolff that he thought Cameron's rhetoric about the NHS was phoney.

I don't believe for a minute [Cameron] believes protecting the NHS is a good idea.

And Cameron himself, when asked to explain why he thought Sarah Palin was so popular in the US, suggested, politely, that he was baffled.

It's hard for us to understand, if I can put it that way.

From bikers to Islam4UK, many seek to exploit Wootton Bassett's 'homeland' mystique – but its neutrality is precious

I have recently discovered the hugely unwelcome news (courtesy of an RAC road sign) that over 10,000 bikers plan to invade Wootton Bassett next Sunday, Mothering Sunday. As residents of the high street for the past 20 years, this is particularly vexing to my family. The children may have to review the planned family day at home, and take the cards, chocolates and flowers elsewhere in an attempt to escape the fumes, the noise and the congestion.

What is particularly perplexing about all this, however, is that this invasion is apparently sanctioned by the police, Wiltshire council and the MoD. The town council were not consulted. Nor were the residents. It turns out that the rally is taking place under the aegis of the charity known as Afghan Heroes. According to its website, by arranging for 10,331 registered (and who knows how many unregistered) bikers to thunder along the high street, it is "honouring the people of Wootton Bassett and the soldiers who have lost their lives in Afghanistan".

No one can argue against our population honouring anyone who puts their life on the line in the defence of this country and its values, whether or not they agree with the particular escapade on which those lives are lost. I hope that Afghan Heroes is also offering the victims of the war whatever practical and financial support that this government hasn't, and I have no issue with them raising funds for this purpose by any legal means.

I can't imagine, however, why they think that creating an unimaginable nuisance outside my front door is in any way "honouring" me. In fact, I don't actually need to be "honoured" for attending a number of the repatriations, and I haven't even been asked whether I want to be respected in this curious way. I imagine that I am being "honoured" in the same way as I was "honoured" in January by the upstanding members of the English Defence League and their pitbulls, who graced our high street one grey Sunday afternoon following an internet rumour that Islam4UK were going to stage an impromptu rally – on a weekend, coincidentally, that many football matches were cancelled owing to wintry weather.

I wish I failed to understand why the rally is picking on Wootton Bassett. Sadly, it's all too obvious that the town is becoming a "homeland" symbol that confers respectability on those who can prove or imply an association, an association that such honoraries as Nick Griffin have recently attempted to exploit. The gatherings for the repatriations began quietly, honestly, almost accidentally. Due in no small part to the sterling efforts of the town council, they continue to be mostly genuine, spontaneous and apolitical, but the attempted politicisation by the media and those who seek the town's reflected glory has been relentless. (The town now even has its own flagstaff flying the Union Jack, which mysteriously appeared overnight in the days before the visit of Charles and Camilla.)

The bigger question is: what message will this rally give out? Will it simply honour the dead and the respecters of the dead, or will it imply a call to arms? There's a massive difference between a repatriation and a rally. Ten thousand motorbikes throbbing through the town will be noisy, smelly, thrilling, almost martial – miles away from the quiet, spontaneous and reflective commemorations of young lives lost prematurely.

Back in January, Islam4UK abandoned its widely criticised plans to hold a rally through the town, the ostensible purpose of which would have been to raise awareness and promote discussion of the wider issues of the war. While that is doubtless a debate that should be had more frequently, it was right not to have it in Wootton Bassett, thereby preserving the town's neutrality. The Afghan Heroes parade would be a blow to Wootton Bassett's quiet, unassuming decency and neutrality from which the town may never recover.

Russian oligarch awarded damages over claims he arranged polonium poisoning of friend and former KGB spy

The exiled Russian oligarch Boris Berezovsky was today awarded libel damages of £150,000 over "savage" allegations he was behind the murder of his Alexander Litvinenko, the poisoned Russian dissident who was his close friend.

In a chaotic high court battle in London, the 64-year-old tycoon successfully argued his reputation had seriously been damaged by a Russian state television broadcast in April 2007.

The programme, available to view for free by satellite in the UK, included an interview with a man who claimed he had been offered £40m by Litvinenko – who was working for Berezovsky until his death – to falsely confess to being a KGB hitman tasked with killing Berezovsky with a poisoned ballpoint pen.

When he refused to take the bribe, the man said, he was drugged and then forced to make a false testimony used to bolster Berezovsky's asylum application in the UK.

The purpose of this lie-filled testimony, the man said, was to "prove" the oligarch would be in mortal danger if he returned to his homeland.

His evidence was indeed crucial in proving Berezovsky's political refugee status and he was granted asylum in 2003, the court heard.

In the same programme the presenter suggested that Litvinenko, who died from poisoning with radioactive polonium in London in November 2006, was killed at Berezovsky's behest because Litvinenko was a witness to Berezovsky's fraudulent claim for political asylum.

The logic was that Litvinenko would be an important witness for Russian prosecutors investigating allegations that Berezovsky's asylum was based on lies, and thus Berezovsky wanted him dead – just in case.

Berezovsky claimed he was a victim of "selective editing" after the programme began with a clip of him saying: "If I particularly dislike someone, I'll kill him." The remark was clearly "ironic or jocular", said his barrister, Desmond Browne, QC.

The oligarch pulled up to court most days during the trial in a blacked-out limousine complete with motorcycle outriders and sat in court flanked by his security guards.

Giving evidence, he explained why he took action. "I cannot imagine a more offensive and damaging allegation. It would be damaging enough to allege merely that I bribed or drugged a man so as to force him to give false evidence in order to help me secure my asylum status; that I was accused of Sasha's [Alexander Litvinenko's] murder, and to think people may believe it to be true, was, and still is, deeply upsetting."

"I have been portrayed as a man whom people should fear; this affects my relationships with everyone who is not already a close personal friend."

Berezovsky, who has an estimated wealth of $1bn (£667m) according to Forbes magazine, told the court that Litvinenko was a dear and loyal friend who had saved his life "on more than one occasion" – chiefly by refusing to assassinate him in 1998 when Litvinenko was a KGB agent.

The grateful Berezovsky then became Litvinenko's benefactor, arranging his family's escape to the UK. Once in London he gave Litvinenko a house and thousands of pounds a month in "research grants".

To back up his claim Berezovsky enlisted a roster of high profile witnesses, including Litvinenko's widow, Marina.

After Litvinenko fell ill in 2006 after ingesting a radioactive isotope in a London sushi bar, Berezovsky told British journalists that his friend had been poisoned because he was an enemy of the then-Russian president, Vladimir Putin.

The two-week trial was almost anarchic at times after officials from the Russian prosecutors' office repeatedly intervened despite not being party to proceedings.

At least three Russian prosecutors were in court each day to assist Vladimir Terluk, the man accused of giving the contentious interview about Berezovsky's bogus asylum claim. They whispered in Terluk's ear, passed him notes and smirked or laughed as the evidence was heard.

Terluk, a Khazak who came to the UK to seek asylum in 1999, had been left to defend the libel action alone and without a lawyer after the Russian Television and Radio Company refused to take part.

He denied being "Pyotr", the man in the offending broadcast, yet maintained everything Pyotr said was true, including "that [Berezovsky's] associates tried to organised the falsification of the assassination plot with the purpose of obtaining refugee status by Mr Berezovsky and his associates… and the late Mr Litvinenko himself was the one who was trying actively to implement that falsification".

Moscow has made no secret of their desire to extradite Berezovsky, who has been an outspoken critic of the Kremlin ever since he fell out with Vladimir Putin in 2000.

In April 2009 the Russian prosecutor charged Berezovsky with "knowingly false denunciation of a involvement in a serious crime" – a charge peculiar to Russian law that relates to him allegedly knowingly fabricated evidence in support of his 2003 asylum claim.

One of the Russian prosecutors admitted to the Guardian he hoped Berezovsky would lose the case so his asylum status would be called into question by the Home Office and he would be returned to Russia to face trial.

So obvious was their intention that when one of their mobile phones went off in court one day, Desmond Browne, QC, quipped: "That must be Mr Putin on the line."

Berezovsky is no stranger to London's law courts. In 1997 he sued the American magazine Forbes after it printed an article that asked: "Is he the Godfather of the Kremlin?" He won despite only 2,000 copies of the 785,000 sold worldwide having been purchased in the UK.

That case is often cited as an example of libel tourism – foreigners taking advantage of England's libel laws, which tend to favour the claimant by putting the burden of proof on the defendant.

In 2008 he began a £2bn legal tussle with another London-based oligarch, Roman Abramovich, over allegations Berezovsky was forced to sell shares in a string of huge Russian state companies. He is currently fighting the widow of his friend and business partner Badri Patarkatsishvili for half of the dead man's fortune.

Some economists believe the weak outturn was a blip and expect production to have bounced back in Februar

Britain's manufacturers suffered their biggest fall in production in six months at the start of the year when snow storms brought parts of the country to a standstill.

Factory output fell by 0.9% in January, official figures showed this morning, taking City economists by surprise who had pencilled in a 0.3% gain. This was the biggest monthly drop since last August.

The pound fell more than half a cent to $1.49 on the news, which dented hopes that the economic recovery might have picked up more speed in the first quarter of the year.

The Office for National Statistics said the decline came after a strong December and poor weather in January.

Some economists believe the weak outturn was a blip and expect production to have bounced back in February.

"Snow will have physically obstructed workers at manufacturers and their end customers from getting to work," said Alan Clarke at BNP Paribas. "Similarly deliveries in and out of businesses will have been impeded. We believe this was a temporary blip and a sharp snapback is likely next month. Past episodes of extreme snow have experienced an offsetting bounce when the big thaw arrives."

In the three months to January, manufacturers ramped up production at the fastest rate in nearly four years.

But Colin Ellis at Daiwa was more sceptical about the sector's prospects. "The risk is that at least part of January's weakness reflects the soft underbelly of the economic recovery, and is another signal that GDP growth will struggle to pick up to around 3% by the turn of the year, as the Bank of England expects. At the very least, today's data mark an inauspicious start to 2010."

Overall industrial production, which also includes mining and utilities, fell by 0.4% in January, also the largest drop since August.

Hopes that the cheaper pound will power the UK to an export-led economic renaissance suffered a blow yesterday with the news the trade gap widened sharply in January.

"Industry now looks unlikely to drive any significant pick-up in GDP growth in the first quarter. What's more, with the latest trade figures still showing few signs of any real boost from the lower pound, the outlook for the export-sensitive industrial sector remains pretty fragile," said Jonathan Loynes at Capital Economics.

Waltham Forest's Freewheleer, writing yesterday:

A male cyclist, believed to be in his early 20s, has been killed in a collision with a lorry at the junction of Snowsfields and Weston Street near Guy's Hospital. With hideous and bitter irony this fatality coincided with Boris Johnson and Transport for London launching.

The victim, a 21 year-old man, collided with a lorry. The police are appealing for witnesses. Yes, it was indeed a bitter irony that the tragedy occurred at almost exactly the same time as the Mayor's Cycle Action Safety Plan was being published. Its objectives are:

- To ensure the growth of cycling in London is accompanied by a reduced rate of cycling casualties.

- To increase the perception that cycling is a safe and attractive transport option

- To make progress towards achieving existing and future targets for reducing cyclists killed or seriously injured

- To ensure London continues to be a world leader in developing effective cycling safety improvements, underpinned by analysis and a sound understanding of the causes of collisions

Discuss.

Nee Naw: Real Life Despatches From Ambulance Control by Suzi Brent is published by Penguin. Her blog is at http://www.neenaw.co.uk/

Steve Bell's If ...

Government proposals go further than the recommendations of City veteran Sir David Walker, who had suggested that banks should disclose how many people are earning more than £1m

Banks could be forced to reveal how many of their employees earn more than £500,000-a-year under new government proposals. This goes further than the recommendations of City veteran Sir David Walker, who had suggested that banks should disclose how many people are earning more than £1m.

The government has drawn up regulations on greater disclosure on pay for the top earners at banks, which will be published later today. This will include proposals for narrower disclosure bands than Walker suggested.

They are expected to show that hundreds, perhaps thousands, of City bankers become millionaires each year.

Speaking at the British Private Equity and Venture Capital Association this morning, City minister Lord Myners said: "From the outset of the crisis, the government has been focused on eliminating rewards for failure and ensuring that remuneration does not incentivise excessive risk-taking.

"And we will continue to lead on this issue – David Walker's proposals will be implemented to give shareholders much more power and information to shape remuneration policies at banks. And in some cases we may go further. Later today the government will publish draft regulations on greater disclosure on pay for the top earners at banks.

"This will include proposals for narrower disclosure bands than Walker proposed, starting with salary packages below the £1m floor that he suggested. We will consult on that idea, but as the chancellor has said – most people are convinced that far more disclosure is important, because they will then be able to see precise remuneration practices."

It is understood that the pay disclosure bands will start from £500,000 and go up in £500,000 increments to £5m, and then up from £5m by £1m increments. Pay packages include salary, cash bonuses, deferred shares, long-term awards and pensions.

In his review of corporate governance last year, Walker proposed bands of £1m-£2.5m and £2.5-£5m and bands of £5m thereafter.

Despite the losses – down to £257m from £1.3bn a year ago – Northern Rock is paying out £15m in bonuses to its staff but chief executive will waive his

More than 22,500 Northern Rock customers – over 4% – have missed monthly mortgage payments, the nationalised mortgage lender admitted today as it reported a sharp fall in losses for last year.

Despite the losses – down to £257m from £1.3bn a year ago – the bank is paying out £15m in bonuses to its staff and will be paying £1.5m to the Treasury to cover the cost of the one-off tax on the payments.

Chief executive Gary Hoffman is waiving his bonus although the bank said a new long-term incentive scheme was being drawn up for the former Barclays executive.

The new scheme for Hoffman will pay out only when the nationalised bank returns to profit or if it can be returned to private hands.

The bank, which was split into a "good" and "bad" operation at the start of the year, actually managed to make a £466m profit in the second half of the year although this was not enough to offset losses in the first half, and charges for impaired loans of £1bn.

The operation reporting today is Northern Rock (Asset Management) plc – technically the "bad" bank. Before it was nationalised, the company specialized in so-called Together loans – allowing customers to borrow more than the value of their home – and this left it a legacy of large customers in arrears.

The company's mortgage arrears rate rose in the first half of 2009 before stabilising in the final quarter of the year by which time residential mortgage accounts over three months in arrears reached 4.28%, compared with 2.92% at 31 December 2008. If Together loans are stripped out, the numbers in arrears fall to 3.10% although this is still higher than the 2.25% at 31 December 2008, which shows that more than 6% of customers with Together mortgages are in arrears.

Hoffman warned of the difficulties ahead. "The outlook for the UK economy remains uncertain. After a contraction in the economy during 2009, with increases in unemployment and house price deflation, conditions appear to have stabilised, but economic recovery is still expected to be relatively weak," Hoffman said.

He said the current low level of interest rates means that loan repayments "remain affordable for those in employment", but said that the company's future performance will be influenced by the timing and extent of increases in rates.

He also admitted that loan loss impairment charges are expected to remain high during 2010, but below the level recorded in 2009.

"It is over two years since Northern Rock entered public ownership. During that time the company has made good progress in pursuit of its objectives that include repayment of state aid, delivering value for taxpayers and ultimately a return to private ownership. We are looking forward, not back, and my colleagues across the business remain committed to delivering a high standard of service for all of our customers. We are on the right trajectory and I am confident that, with the current strong management team in place, we are well positioned to deliver against our objectives in 2010," he added.

The bank, which has permission from the EU to start mortgage lending after reducing its loans in the early months following its nationalization in February 2008, said residential lending stood at £4.2bn in 2009, compared with £2.9bn in 2008. But as a result of the strategy to lend again, the taxpayer has injected more funds into the lender which now owes the taxpayer £22.8bn, up by more than £8bn.

Northern Rock Asset Management has £49.7bn of residential mortgages, as well as £3.9bn of personal unsecured loans.

Following approval for state aid granted by the European commission, the company ceased to offer new lending at the end of 2009. As a result of the restructuring the company also transferred its entire book of retail savings, of £19.5bn, to the new "good" bank, Northern Rock plc, and no longer offers any retail savings products.

Adam Bienkov:

The Conservative's parliamentary candidate for Greenwich and Woolwich has spoken of his "huge disappointment" after the Mayor broke his promise to reinstate tidal flow in the Blackwall Tunnel. Speaking during a wide-ranging interview with Greenwich.co.uk, the current leader of the Conservatives on the council Spencer Drury said, "I think it is a huge disappointment because it does create congestion unnecessarily. For years it worked perfectly well and I can't see why it suddenly had to change."

In the run up to the Mayoral elections, Boris Johnson promised to reverse the controversial decision to end tidal flow "at the earliest opportunity." The pledge gathered widespread support in the area and formed a major part of his transport manifesto. However, last month he admitted to LBC presenter Nick Ferrari that he would not fulfill his promise.

For more good stuff with Spencer, who also leads his Council's Tory group, read on.

Following his death the front of the Bond Street shop of the late fashion designer - Lewisham-born and Stratford-raised - was made over to resemble a memorial tombstone. My photo is of its inscription in the dark, reflecting glass. Today, the Guardian has coverage of his final collection.

Nicholas Watt on how David Cameron failed to persuade his Ulster Unionist allies to vote for devolving police powers

Secret back-channel chats with Taliban leaders point to a willingness to end conflict, says UK

David Miliband's call for a major political push towards a peaceful settlement in Afghanistan follows a series of back-channel contacts between a string of international intermediaries and the Taliban, the Guardian can reveal.

Those contacts – involving a colourful cast of former Arab mujahideen fighters, Saudi lawyers, a top UN official and a retired British officer – have produced little of substance so far, but British officials believe they have demonstrated that at least some in the Taliban leadership are growing tired of fighting and are looking for a political alternative.

Senior British officials believe the nascent peace process has gained significant momentum in the wake of January's London conference on Afghanistan, when reconciliation and reintegration were the central topics. They are convinced a wholehearted Afghan push for a peace settlement, with unequivocal US support, could seize the opportunities for a dialogue offered by the contacts.

The most promising of the tentative peace feelers so far have been pioneered by former Arab mujahideen, who fought the Soviet occupation in the 1980s and who, in collaboration with sympathetic Saudi lawyers, offered their services as mediators to the Hamid Karzai government and the Taliban four years ago. The freelance effort was ultimately embraced by the Saudi monarchy and led to some contacts between Karzai family members and Taliban representatives in Saudi Arabia in 2008. The mediating role of the Saudi royal family was endorsed by the London conference in January.

According to sources close to the Saudi talks, the leading Taliban participant was Mullah Abdul Ghani Baradar, who was seized by Pakistani intelligence in Karachi last month. The seizure was widely reported as a breakthrough in co-operation between the CIA and Pakistan's Inter-Services Intelligence agency (ISI), but a key figure in the Saudi back-channel talks described Baradar's arrest as a "letdown" and "a huge blow" to the fledgling peace initiative.

"Maybe Pakistan was not happy with the negotiations," the source said, reflecting a widely held belief that the ISI had picked up Baradar because he had bypassed the agency.

However, western official sources have suggested the Baradar arrest was not the result of a Pakistani conspiracy, but a US intelligence operation, which tracked down Baradar, and gave the ISI – which has a long history of support for the Taliban – no choice but to pick him up.

A British official insisted that the capture did not conflict with Miliband's advocacy of a political settlement.

"This is an occupational hazard for someone in the top ranks of the Taliban," the official said. "Up until the point those people indicate they are serious about talks and enter into a proper conversation, they remain a legitimate target for strong military pressure."

Parallel overtures to the Taliban are being masterminded in Kabul by Sir Graeme Lamb, a former SAS general who was instrumental in securing Sunni support in the fight with al-Qaida in Iraq and who is now working as an adviser to the American Nato commander in Afghanistan, General Stanley McChrystal.

"Lamb was brought in to run reintegration and reconciliation," said a western source familiar with operations in Kabul. "He talks much more about the former but is doing more on the latter."

The outgoing head of the UN mission, Kai Eide, also held meetings with Taliban representatives in Dubai, it emerged in January, according to UN officials, but most sources say his interlocutors were relatively junior. The contacts were denied by the Taliban. Eide left Afghanistan on Saturday, being replaced by a Swedish diplomat, Staffan di Mistura.

In his speech, Miliband will call for international, possibly UN, involvement in the peace process, but that may prove difficult for the new head of mission.

"If the UN gets involved it is going to have to tread very carefully," said Gerard Russell, a former political adviser in the UN mission. "The UN got stuck between trying to form a relationship with Karzai on one hand, and on the other trying to oversee tasks that demanded neutrality, like the elections. That's the challenge for di Mistura in brokering peace talks."

The push for a political settlement, spearheaded by Miliband's speech, will not be entirely welcome in Washington. Senior officials in the Obama administration believe peace talks are premature and the Taliban will only begin to negotiate in good faith once they have felt the full force of the US-led military surge.

This summer the surge will switch its focus from Helmand, where Nato and Afghan forces have taken control of a formerly insurgent-controlled district around the small town of Marja, to Kandahar – a city of 900,000 which represents the Taliban's heartland.

During a visit to Kabul this week, the US defence secretary, Robert Gates, said President Karzai's reconciliation effort was unlikely to bear fruit until the Taliban leadership "realise that the odds of success are no longer in their favour" – which he made clear was unlikely to be any time soon.

Profile: Graeme Lamb

The straight-talking, unfussy soldier has become so largely because he is trusted and respected by senior American commanders, including General David Petraeus, whom Lamb helped to set up the Iraqi "surge" in 2007 and the Sunni Awakening, when insurgents there gave up their fight.

Now as special adviser to General Stanley McChrystal, the US commander in Afghanistan, he is persuading that country's insurgents to abandon their arms. It is an appropriate task for a former SAS commander as Britain's special forces have operated closely with MI6, which has also been in the forefront of attempts to persuade the Taliban to give up the fight.

Lamb was quoted recently as saying that coalition forces were continuing to strike the Taliban, "and have to, 'til their eyeballs bleed". It was tough talk but open to misinterpretation. He also said rank-and-file Taliban fighters carried a sense of "anger and grievances that have not been addressed".

Richard Norton-Taylor

Henry McDonald on Northern Ireland taking back control of the police

Regulator says ad featuring women apparently having orgasms unlikely to cause offence, despite being aired before 11pm

A TV commercial for a Durex "pleasure gel" featuring women apparently having orgasms has escaped a ban from the advertising watchdog, despite being aired by Channel 4 before 11pm.

The ad, for Durex's Play O gel, featured head shots of a number of women singing along to an opera aria while apparently experiencing sexual pleasure. The ad was cleared by Clearcast, the body responsible for clearing TV ads at script stage, to be run after 11pm.

However, Channel 4 aired the ad twice after 10pm, during Gordon Ramsay's The F Word and a Derren Brown show, in a "measured decision" to schedule the commercial earlier than recommended by Clearcast.

The broadcaster said viewers would not be offended as The F Word, for example, is of an adult nature and contains strong language and sexual innuendo.

In its ruling clearing the commercial, the Advertising Standards Authority said it was not overly graphic and did not contain explicit material.

The ASA added that the shows Channel 4 aired the ads around were unlikely to have many young children watching.

"Although the ad was broadcast by Channel 4 earlier than Clearcast's scheduling advice, in consideration of the child audience index figures for the ad breaks and surrounding programmes, we considered that it had been scheduled appropriately and was unlikely to cause offence to viewers," the regulator concluded.

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Advert for Durex 'pleasure gel' showing women apparently having orgasms, cleared by the ASA despite being shown before 11pm

See Polly Toynbee, Michael White and John Harris discuss the forthcoming election campaign

On Tuesday 16 March, Politics Weekly will be recorded in front of a live studio audience in Manchester, with a panel of our top commentators.

Polly Toynbee, Michael White and John Harris will be on the panel at Manchester University as our politics podcast goes on the road in the run-up to the election.

Come along, pitch questions to our panel and hear what they have to say about the key issues as Britain goes to the polls.

Tickets are £5. Click on this link to buy a ticket and secure your place.

The event takes place in the Renold Building on the Sackville Street campus at 6.30pm for a 7pm start.

Polly Toynbee

Polly Toynbee is a Guardian columnist. She was formerly the BBC's social affairs editor, columnist and associate editor of the Independent, co-editor of the Washington Monthly and a reporter and feature writer for the Observer. She has written several books – Hard Work: Life in Low-pay Britain (2003), Lost Children: The Story of Adopted Children Searching for their Mothers (1985), The Way we Live Now (1981), Hospital (1977), A Working Life (1970) and Leftovers (1969).

She co-authored Better or Worse? Has Labour Delivered? (2005) with David Walker.

Michael White

Michael White is assistant editor of the Guardian and has been writing for the paper for over 30 years, as a reporter, foreign correspondent and columnist. He was political editor from 1990-2006, having previously been Washington correspondent (1984-88) and parliamentary sketchwriter (1977-84).

John Harris

John Harris is a journalist and author, who writes regularly for the Guardian about a range of subjects including politics, popular culture and music. His published work includes The Last Party, an acclaimed cultural history of the 1990s; and So Now who do we Vote for?, the primer for disaffected Labour voters that appeared just before the general election of 2005. He is also a regular panellist on BBC2's Newsnight Review.

The roadshow will travel to Birmingham in April and London in May. Futher details will be posted on this blog soon.