US shares hit by the threat of a shutdown - BBC News

30 September 2013 Last updated at 11:24 ET

Shares in New York are trading lower as the prospect of a shutdown of some US government activities looks increasingly likely.

The Dow Jones and S&P 500 both fell 1% shortly after the open, but then recovered some lost ground.

The deadlock also unsettled European stock markets, already nervous about the political crisis in Italy.

The US needs to agree a new spending bill before the financial year ends at midnight on Monday.

But political divisions have resulted in a stalemate and there are worries over the economic impact of a shutdown of the US government.

If the government does shut down on 1 October, as many as a third of its 2.1 million employees are expected to stop work - with no guarantee of back pay once the deadlock is resolved.

National parks and Washington's Smithsonian museums would close, pension and veterans' benefit cheques would be delayed, and visa and passport applications would be stymied.

Programmes deemed essential, such as air traffic control and food inspections, would continue.

Unemployment report

Investors will be keen to know if Friday's job report will be released.

The monthly non-farm payrolls report is one of the most closely watched pieces of US economic data.

Employees at the Labor Department's Bureau of Labor Statistics (BLS), who prepare the report, would be among those who would stood down in the event of a shutdown.

"All survey and other program operations will cease and the public website will not be updated," said Erica Groshen, commissioner of the BLS, said in a memo published on the department's website.

Deadlock

Republicans are targeting President Barack Obama's healthcare law, popularly known as Obamacare.

Early on Sunday, the Republican-run House of Representatives passed an amended version of the Senate spending bill that removed funding for the healthcare law.

US Senate Majority leader Harry Reid has vowed that his Democrat-led chamber will reject the Republican bill.

"Tomorrow, the Senate will do exactly what we said we would do and reject these measures," said Adam Jentleson, a spokesman for Senate Majority Leader Harry Reid.

"At that point, Republicans will be faced with the same choice they have always faced: put the Senate's clean funding bill on the floor and let it pass with bipartisan votes, or force a Republican government shutdown."

Speaking for the president, White House spokesman Jay Carney said: "Any member of the Republican Party who votes for this bill is voting for a shutdown." The president, he said, would also veto the Republican bill.

Continue reading the main story Uncertain Italy

Meanwhile European financial markets have been upset by a deepening political crisis in Italy.

Italian shares are down 1.5% and the euro fell to the lowest level since June against the Swiss Franc.

Italy's 10-year bond yield - an indication of how much the government has to pay to borrow money - rose as high as 4.66%, the highest level in more than three months.

Prime Minister Enrico Letta plans to hold a confidence vote on Wednesday, to seek the backing of Italy's parliament.

He was forced to make that move after five ministers from Silvio Berlusconi's party stepped down at the weekend.

But those ministers have now given mixed signals as to whether they are actually leaving the government.

The crisis follows weeks of worsening ties between Mr Berlusconi's party and Mr Letta's grouping.

Mr Berlusconi's People of Freedom (PDL) objects to a planned increase in sales tax, which is part of a wider government policy to reduce big public debts.

The government has also been struggling with a deteriorating economy.

It is forecast to shrink by 1.4% this year according to the national statistics agency.

The agency also estimates that unemployment will reach a record high of 12.3% next year.

'Fear of the unknown'

Earlier on Monday, Worries over the US shutdown had hit Asian shares.

Japan's Nikkei 225 index closed 2% lower, Hong Kong's Hang Seng was down 1.5%, Australia's ASX fell 1.7%, while South Korea's Kospi shed 0.7%

"It is the fear of the unknown," said David Kuo of financial website the Motley Fool. "No one knows what is really going to happen and markets don't like uncertainty."

"There is likely to be some reduction in US government spending, but we don't know what areas are going to be affected.

"Until that is resolved, we are likely to see volatility in the markets," he added.

Kenya's Westgate siege: Number of missing reduced to 39 - BBC News

30 September 2013 Last updated at 09:40 ET

Watch: Nairobi's Asian Muslim community join hands for a human chain around the Westgate mall

The Kenyan Red Cross has said the number of missing in the Westgate shopping centre attack has gone down to 39 from an earlier figure of 61.

Fourteen of the missing have been found alive and seven bodies were in the morgue, it said.

The government has said 67 people were killed after al-Shabab militants stormed the Westgate centre in the capital, Nairobi, on 21 September.

MPs have started a probe into alleged intelligence failings over the attack.

The Red Cross says some relatives were not updating them when they found people who had been reported as missing.

A Red Cross tracing manager has told the BBC that "some were reports from people who could not get through to their relatives on the phone and thought they might have been at the mall".

The organisation has been calling those who reported people missing for updates.

The government has said there are hardly any people still unaccounted for after the attack and that it did not think any hostages were killed when a car park collapsed inside the mall, ending the siege.

However, the rubble is still being moved, so Interior Minister Joseph Ole Lenku accepted that some more bodies might still be discovered.

Red Cross head Abbas Gullet told the Associated Press by telephone that: "The only way to verify this is when the government declares the Westgate Mall 100% cleared."

'Lapses'

Five militants were killed by the security forces during the four-day siege, while nine people are in custody after being arrested in connection with the attacks, the authorities say.

Al-Shabab, a Somali Islamist group, said the attack was in retaliation for Kenya's military involvement in Somalia.

Security sources have told the BBC that the militants rented a shop at Westgate in the weeks leading up to the siege.

Kenya's joint parliamentary defence and national security committees met briefly on Monday morning to begin their investigation into possible lapses in the country's security system.

They have now adjourned and later visited Westgate. They will start calling people on Tuesday to testify before the joint committees.

Committee head Ndung'u Gethenji had said the questioning of the security chiefs, including the head of the National Intelligence Service (NIS), Michael Gichangi, would begin on Monday.

He told the BBC last week that "people need to know the exact lapses in the security system that possibly allowed this event to take place".

He also said they needed to understand "the anatomy of the entire rescue operation" amid allegations of confusion over who was in charge.

Kenyan newspapers have reported that the NIS warned a year ago of the presence of suspected al-Shabab militants in the capital and that they were planning suicide attacks, including on the Westgate shopping centre.

Briefings were given to the ministers "informing them of increasing threat of terrorism and of plans to launch simultaneous attacks in Nairobi and Mombasa around September 13 and 20, 2013", Kenya's Daily Nation had quoted counter-terrorism reports as saying.

A dossier from the NIS - amounting to more than 8,000 pages according to Kenya's Standard newspaper - also suggests the Israelis issued warnings that buildings owned by its citizens could be attacked between 4 and 28 September.

Westgate is partly Israeli-owned.

The Daily Nation has reported that Kenyan intelligence had established that al-Shabab leaders had begun singling out Westgate and the Holy Family Basilica for attack early this year.

Government figures said to have received the intelligence briefings include Mr Lenku, Treasury Minister Julius Rotich, Foreign Affairs Minister Amina Mohammed, Defence Minister Raychelle Omamo and Kenya Defence Forces chief Julius Karangi.

On Sunday, Mr Lenku refused to answer questions on the issue, saying the information was confidential and would not be discussed in public.

However, a senior interior ministry official earlier denied that ministers had ignored intelligence warnings.

The official - who was speaking on condition of anonymity - told the BBC the government received intelligence daily, that action was taken and that many attacks had been averted.

Nigeria to boost school security after deadly attack - BBC News

30 September 2013 Last updated at 10:45 ET

Victims' families gather to identify the bodies and visit the wounded in hospital

Authorities in Nigeria say there was no security protection at an agricultural college where up to 50 students were shot dead as they slept on Sunday.

The students were killed by suspected Islamist gunmen in their dormitory in Yobe state, north-eastern Nigeria.

Official Abdullahi Bego told the BBC the government and military would work to increase protection in schools.

Continue reading the main story

"Start Quote

When we heard the sound of gun shots, we tried to run to escape for fear of our lives"

End Quote Survivor

North-eastern Nigeria is under a state of emergency amid an Islamist insurgency by the Boko Haram group.

Boko Haram is fighting to overthrow Nigeria's government to create an Islamic state, and has launched a number of attacks on schools.

Schools 'to stay open'

BBC Hausa service editor Mansur Liman says there seems to be some complacency in the Nigerian military after their recent successes in driving militants out of many urban areas in the north-east.

However, the insurgents have previously seized army uniforms and vehicles, which they are able to use to infiltrate supposedly secure areas and carry out attacks, he says.

Abdullahi Bego, special advisor to the Yobe state government, told the BBC on Monday that no security forces had been operating in the area when the attack on the College of Agriculture took place.

He acknowledged that security forces are meant to undertake regular patrols of educational institutions.

He said schools in the area would not be closed because that is what the "terrorists" wanted.

"We are committed to providing education to our children in Yobe state and in north-eastern Nigeria," he said.

The state authorities would work with the military to reinforce protection at schools, he added.

A survivor of the attack has told the BBC Hausa service he and at least 200 other students ran away from the college when they heard gunfire.

"We tried to run to escape for fear of our lives. The windows were open so we escaped through them and ran into the bush. We didn't even know where we were."

He said he was chased by residents of a nearby village who mistook him for a thief: "They were scared themselves when they saw us. They thought we were thieves and they in turn chased us with sticks and clubs. We had to continue running deep into the bush."

He said he was traumatised by the attack: "I have seen dead bodies of my friends and people I know very well. It is very depressing and emotional. They were people I was talking to before I went to bed."

Casualty figures from the attack vary, but a local politician told the BBC that around 50 students had been killed.

The Nigerian military said soldiers had collected 42 bodies and taken 18 wounded students to a hospital in Yobe's state capital, Damaturu.

Footage shot by the Associated Press shows the bodies of at least 23 young men lined up on the floor of what appears to be a makeshift mortuary in the town.

About 1,000 students had fled the campus in the wake of the attack, according to college provost Molima Idi Mato.

The gunmen also set fire to classrooms, a military spokesman in Yobe state, Lazarus Eli, told Agence France-Presse.

The college is in the rural Gujba district.

In May, President Goodluck Jonathan ordered an operation against Boko Haram, and a state of emergency was declared for the north-east on 14 May.

Many of the Islamist militants left their bases in the north-east and violence initially fell, but revenge attacks quickly followed.

In June, Boko Haram carried out two attacks on schools in the region.

At least nine children were killed in a school on the outskirts of Maiduguri, while 13 students and teachers were killed in a school in Damaturu.

In July in the village of Mamudo in Yobe state, Islamist militants attacked a school's dormitories with guns and explosives, killing at least 42 people, mostly students.

Boko Haram regards schools as a symbol of Western culture. The group's name translates as "Western education is forbidden".

Boko Haram is led by Abubakar Shekau. The Nigerian military said in August that it might have killed him in a shoot-out.

However, a video released last week purportedly showed him alive.

Other previous reports of his death later proved to be unfounded.

Are you in north-eastern Nigeria? Do you have connections with the College of Agriculture? Send us your story and comments using the form below.

US shutdown looms amid political stalemate over budget - BBC News

30 September 2013 Last updated at 10:44 ET

The looming US government shutdown - explained in 60 seconds

A US government shutdown looms as Democrat and Republican lawmakers remain unable to strike a deal on a new plan to continue funding its operation.

If they fail to reach an agreement by midnight (04:00 GMT Tuesday), the US government will be forced to close all non-essential federal services.

More than 700,000 staff could be sent home on unpaid leave, with no guarantee of back pay once the deadlock is over.

The shutdown would be the first in the US for 17 years.

Continue reading the main story

The Republican leadership in the House are not stupid. But they are trapped by their radicals.

Any backing away from confrontation could brand John Boehner an Obama-loving apostate, and cost him his job. The same goes for his members who don't want to be deselected in primary elections.

This is not about ideology. The Republicans in the House are all conservatives, all hate "Obamacare" and think government spending is irresponsibly out of hand.

This is about strategy. It is an argument between those Republicans who want to rush to the barricades and go down in a blaze of glory, heroes of the revolution to like-minded Tea Party types, and those who think it is a pointless charge but don't want to be labelled traitors and cowards.

• Read more from Mark

One of the key points of contention in the political stalemate has been President Barack Obama's healthcare law, popularly known as Obamacare.

Republicans in the House of Representatives - and their allies in the Senate - have demanded the law be repealed or stripped of funding as a condition for continuing to fund the government.

Major portions of the law, which passed in 2010 and has been validated by the US Supreme Court, are due to take effect on Tuesday.

As the Democrats and Republicans vie for political advantage with the shutdown approaching, on Monday Republican House Speaker John Boehner criticised the Democratic-led Senate for remaining in recess on Sunday after the House passed its version of a budget bill.

"The House has done its work," he said.

"We passed a bill... The Senate decided not to work yesterday. My goodness, if there is such an emergency, where were they?"

Impact of shutdown

Early on Sunday, the Republican-run House of Representatives passed an amended version of the Senate spending bill that removed funding from the healthcare law and repealed a $29bn (£17.9bn) medical device tax.

US Senate Majority leader Harry Reid vowed that his Democrat-led chamber would reject the Republican bill.

Boehner says the Senate should have worked over the weekend to reach a budget deal

"[On Monday], the Senate will do exactly what we said we would do and reject these measures," said Adam Jentleson, a spokesman for Mr Reid.

"At that point, Republicans will be faced with the same choice they have always faced: put the Senate's clean funding bill on the floor and let it pass with bipartisan votes, or force a Republican government shutdown."

Speaking for the president, White House spokesman Jay Carney said: "Any member of the Republican Party who votes for this bill is voting for a shutdown." The president, he said, would also veto the Republican bill.

If the government does shut down on 1 October, national parks and Washington's Smithsonian museums would close, pension and veterans' benefit cheques would be delayed, and visa and passport applications would go unprocessed.

Programmes deemed essential, such as air traffic control and food inspections, would continue.

The defence department has advised employees that uniformed members of the military will continue on normal duty, but that large numbers of civilian workers will be told to stay home.

Borrowing crisis

The looming shutdown is not the only crisis the US government is facing.

The US government and Republicans are also at loggerheads over extending the government's borrowing limit.

US Treasury Secretary Jack Lew has warned that the US will hit its debt ceiling by 17 October, leaving the government with half the money needed to pay its bills.

Continue reading the main story

Earlier this month, Mr Lew said that unless the US was allowed to extend its borrowing limit, the country would be left with about $30bn (£18.5bn) to meet its commitments, which on certain days can be as high as $60bn.

A failure to raise the limit could also result in the US government defaulting on its debt payments.

President Obama has warned that "failure to meet this responsibility would be far more dangerous than a government shutdown".

Washington faced a similar impasse over its debt ceiling in 2011. Republicans and the Democrats only reached a compromise on the day the government's ability to borrow money was due to run out.

That fight was resolved just hours before the country could have defaulted on its debt, but nevertheless led to ratings agency Standard & Poor's downgrading the US for the first time ever.

The 2011 compromise included a series of automatic budget cuts known as the "sequester" which came into effect earlier this year.

The US government has not experienced a shutdown since 1995-96, when services were suspended for a record 21 days.

Republicans demanded then-President Bill Clinton agree to their version of a balanced budget.

After weeks of negotiation, they reached a compromise similar to what they discussed prior to the shutdown.

Australian PM Abbott set for Indonesia talks on migrants - BBC News

29 September 2013 Last updated at 23:48 ET

New Australian PM Tony Abbott is to begin a visit to Indonesia, amid tensions between the two nations over his tough asylum policies.

Jakarta says Mr Abbott's policy of sending boats with illegal migrants back to Indonesia risks violating the country's sovereignty.

Mr Abbott, who was elected earlier this month, defends his plans.

Last week, at least 31 asylum seekers drowned when their vessel sank off the coast of Java.

'Stand or fall'

Mr Abbott is expected to hold talks with Indonesian President Susilo Bambang Yudhoyono during the two-day visit to the country - his first overseas trip since becoming prime minister.

Ahead of the tour, Mr Abbott has sought to play down the tensions, saying he would like to focus on other key issues, including trade. He is bringing a delegation of 20 Australian business leaders to Jakarta.

He also stressed the symbolic importance of his visit.

"It is my hope that this visit establishes a convention for all future incoming prime ministers to make Jakarta their first port of call overseas," Mr Abbott said.

Mr Abbott has said in the past that he wants "more Jakarta and less Geneva" in Australia's foreign policy.

But last week's boat disaster off Java is expected to keep the asylum issue in sharp focus.

Continue reading the main story

Analysis

Prime Minister Abbott's trip to Indonesia is being billed as an economic and trade visit.

But the reality is that his meetings with Indonesian President Susilo Bambang Yudhoyono are likely to be overshadowed by his controversial asylum seeker policies.

Last week Indonesia made the unprecedented move of releasing a virtual transcript of the conversations that took place between Indonesia's Foreign Minister Marty Natalegawa and his Australian counterpart Julie Bishop.

In the statement, Mr Natalegawa was firm about Indonesia's opposition to any form of unilateral action from Australia.

Analysts said that this was an unusually blunt diplomatic move from Indonesia and an indication of just how seriously the government is taking this issue.

However, since then, the Indonesian foreign ministry has said it did not mean to release the transcript.

Australia will need to get Indonesia's co-operation for Mr Abbott's plan to work, but given the increase in political tensions ahead of this meeting he may have to focus on appeasing the Indonesians instead of pushing ahead with his policies.

• Australia: Why boat people risk it all

Indonesian officials have told the BBC that at least 31 boat people drowned, and 28 have been rescued.

It is not clear how many were on the boat, but some reports say between 80 and 100 people were on board.

Survivors have since been accusing the Australian navy of failing to respond. Canberra says it has provided all appropriate assistance to the vessel.

Also last week, Indonesian Foreign Minister Marty Natalegawa said Mr Abbott's policies could put co-operation on asylum seekers at risk.

Ahead of September's elections Mr Abbott campaigned on a "stop the boats" policy, which helped propel him to power.

He says stopping the thousands of asylum seekers is a "stand or fall" issue for him.

The Liberal prime minister has also ordered the military to turn back migrant boats en route to Australia and - where possible - prevent them from embarking.

Hundreds of migrants have died trying to reach Australian shores in recent years; many of them head for Christmas Island, a remote Australian territory in the Indian Ocean.

Kenya's Westgate siege: Security chiefs to be quizzed - BBC News

29 September 2013 Last updated at 19:42 ET

Top Kenyan security officials are to be questioned by MPs about alleged intelligence failings over the deadly Westgate shopping centre attack.

The head of the parliament's defence committee says "people need to know the exact lapses in the security system".

There are reports the NIS intelligence agency issued warnings a year ago.

Some 67 people were killed and many injured after al-Shabab militants stormed the Westgate centre in the capital Nairobi on 21 September.

Five militants were killed by the security forces during the four-day siege and 10 people have since been arrested, the authorities say.

Al-Shabab, a Somali Islamist group, said the attack was in retaliation for Kenya's military involvement in Somalia.

Security sources have told the BBC that the militants hired a shop there in the weeks leading up to the siege.

Operation's 'anatomy'

The BBC's Karen Allen: How siege unfolded

Security officials - including the head of the National Intelligence Service (NIS), Michael Gichangi - are set to appear before the parliamentary defence committee later on Monday.

Committee head Ndung'u Gethenji has told the BBC that "people need to know the exact lapses in the security system that possibly allowed this event to take place".

He also said they needed to understand "the anatomy of the entire rescue operation" amid allegations of confusion over who was in charge.

Kenyan newspapers have reported that the NIS warned a year ago of the presence of suspected al-Shabab militants in the capital and that they were planning suicide attacks, including on the Westgate shopping centre.

Briefings were given to the ministers "informing them of increasing threat of terrorism and of plans to launch simultaneous attacks in Nairobi and Mombasa around September 13 and 20, 2013", Kenya's Daily Nation had quoted counter-terrorism reports as saying.

A dossier from the NIS - amounting to more than 8,000 pages according to Kenya's Standard newspaper - also suggests the Israelis issued warnings that buildings owned by its citizens could be attacked between 4 and 28 September.

Westgate is partly Israeli-owned.

The Daily Nation has reported that Kenyan intelligence had established that al-Shabab leaders had begun singling out Westgate and the Holy Family Basilica for attack early this year.

Government figures said to have received the intelligence briefings include Interior Minister Joseph Ole Lenku, Treasury Minister Julius Rotich, Foreign Affairs Minister Amina Mohammed, Defence Minister Raychelle Omamo and Kenya Defence Forces chief Julius Karangi.

On Sunday, Mr Lenku refused to answer questions on the issue, saying the information was confidential and would not be discussed in public.

However, a senior interior ministry official earlier denied that ministers had ignored intelligence warnings.

The official - who was speaking on condition of anonymity - told the BBC the government received intelligence daily, that action was taken and that many attacks had been averted.

Congress shenanigans as shutdown looms - BBC News

29 September 2013 Last updated at 21:49 ET

The Republicans have been accused of having Tea Party tantrums, they've been compared to people who want to burn the house down, suicide bombers, hostage takers and teenage drivers repeatedly taking a blind curve in the rain.

All these images of blackmail and mayhem come about because their strategy has brought the government to the brink of shutdown. What may happen at midnight on Monday is short of Armageddon, but it is not pretty.

But what brought us here says a lot about the state of American politics.

The shenanigans in Congress are more twisted than a sack of snakes, but the basics are easy to get straight.

Tea Party-backed members decided it would be a great idea to couple the vote to pay the government's bills with one to gut President Obama's healthcare legislation. Now it is linked to a similar idea that would delay "Obamacare" for a year.

They hoped that the Democrats would either blink or get the blame. It has never looked like a winning strategy.

President Obama's years in office are not so chockful of triumphs that he or the Democrats would be likely to disembowel his signature achievement - and particularly not three years after it became the law of the land. Not after winning a second term in an election in which "Obamacare" was a central issue.

'Will of the people'

The Republican leadership in the House are not stupid. They knew that. But they are trapped by their radicals.

Any backing away from confrontation could brand John Boehner an Obama loving apostate, and cost him his job. The same goes for his members who don't want to be deselected in primary elections.

This is not about ideology. The Republicans in the House are all conservatives, all hate "Obamacare" and think government spending is irresponsibly out of hand.

This is about strategy. Some Republicans have decided the House, and the House alone, embodies "the will of the people" - and the people hate "Obamacare".

They know it is so, not because of the rather indecisive opinion polls, but because the people in their district and on talk radio tell them so.

It is an argument between those who want to rush to the barricades and go down in a blaze of glory, heroes of the revolution to like-minded Tea Party types, and those who think it is a pointless charge but don't want to labelled traitors and cowards.

They have different aims. Boehner has to lead his fractious party and ensure some semblance of running a functioning chamber.

Ted Cruz may realise that his ploy has little chance of success. He may realise that his party, not the Democrats, will get the blame.

But the donations have been flooding into anti-"Obamacare" campaign groups since he took his stand.

A recent poll has put him as the man Republican voters would most like to be their candidate. For those standing in next year's elections, in staunchly Republican areas, going with the Tea Party flow isn't likely to do them any harm.

There are few electoral areas where appealing to the centre makes any sense, but diving headlong over the brink may make a certain sense.

One former insider, thinking back to days gone by, has mused how President Ronald Reagan managed to do deals with Tip O'Neill because of their "joint loyalty to American self-government".

And that is the real trouble. A first-past-the-post system decrees - usually - that the winner takes all, and systems that produce coalition government force those who want power into agreement. But the American system relies on goodwill.

There's precious little of that in this town right now.

Osborne to unveil new conditions for long-term jobless - BBC News

29 September 2013 Last updated at 23:36 ET

The long-term unemployed will have to undertake work placements in return for their benefits, under changes to be unveiled by Chancellor George Osborne.

From April, people who are jobless after being on the Work Programme will face three options, including community work, or face losing benefits.

Mr Osborne will announce the plan at the Conservative Party conference.

Labour said the idea was proof the Work Programme, set up by the coalition two years ago, had failed.

'Something in return'

In his speech to the party conference in Manchester, the chancellor is expected to say that while the government will not "abandon" the long-term unemployed no-one will be able to get something for nothing.

A central theme of Mr Osborne's speech will be that those who have been out of work for a long time will have to work hard to find a job.

Those who have not found work after two years on an existing scheme, the Work Programme, will face another one called Help to Work.

To still qualify for jobseeker's allowance they will have three options - work placements, such as cleaning up litter, daily visits to a job centre or taking part in compulsory training, for example, to improve their literacy.

People would have to remain on Help to Work until they found employment.

Those who breach the rules will lose four weeks' worth of benefits. Anyone who breaks the rules a second time faces losing three months' worth.

Mr Osborne is expected to say: "For the first time, all-long term unemployed people who are capable of work will be required to do something in return for their benefits to help them find work.

"They will do useful work to put something back into their community; making meals for the elderly, clearing up litter, working for a local charity.

"Others will be made to attend the job centre every working day. And for those with underlying problems, like drug addiction and illiteracy, there will be an intensive regime of help.

"No-one will be ignored or left without help. But no-one will get something for nothing."

'Languish on dole'

Shadow chief secretary to the Treasury, Rachel Reeves, said it had "taken three wasted years of rising long-term unemployment and a failed Work Programme to come up with this new scheme".

"But this policy is not as ambitious as Labour's compulsory jobs guarantee, which would ensure there is a paid job for every young person out of work for over 12 months and every adult unemployed for more than two years," she added.

"With Labour's plans we would work with employers to ensure there are jobs for young people and the long-term unemployed, which they would have to take up or lose benefits.

"Under the Tory scheme people would still be allowed to languish on the dole for years on end without having a proper job."

BBC political correspondent Chris Mason, in Manchester, says everywhere activists look at this year's conference there is a simple slogan, reading: "For hard working people."

In developments at the conference on Sunday:

• Prime Minister David Cameron announced that a scheme allowing people across the UK to take out 95% mortgages would be launched next week, three months earlier than planned
• Mr Cameron led tributes to former Prime Minister Lady Thatcher - who died in April - at the opening of the conference
• Two retired soldiers were ejected from the conference hall after heckling Defence Secretary Philip Hammond over defence cuts
• The prime minister backed televised leader debates at the next election - but suggested they should take place before campaigning gets under way
• About 50,000 people took part in a union protest in Manchester against austerity cuts and changes within the NHS as the conference took place
• Mr Cameron denied claims in a new book that he regretted his decision to put same-sex marriage into law in England and Wales

Meanwhile, the leader of the UK Independence Party has said it is open to local deals for its candidates stand aside in seats with Eurosceptic MPs.

Nigel Farage ruled out a formal electoral pact but suggested there could be agreements at constituency level between UKIP and candidates from different parties.

Writing in the Times, Mr Farage said: "If either they, or others like them, even Labour MPs, with their local associations, chose to propose running on a joint ticket then I would leave the local UKIP association to have those associations."

A poll of Conservative councillors for BBC One's Sunday Politics had suggested nearly a quarter would support an electoral pact with UKIP at the next general election.

The conference continues until Wednesday when Mr Cameron will deliver his keynote speech.

Will you be affected by Mr Osborne's 'work for benefits' plan? Send us your comments using the form below.

Tremor from Italy amid political crisis - BBC News

29 September 2013 Last updated at 17:23 ET

Prime Minister Enrico Letta will try to save his government over the next two or three days but Italy is in political turmoil.

During the recent election campaign in Germany, the Finance Minister Wolfgang Schaeuble said: "The world should rejoice at the positive economic signals the eurozone is sending almost continuously these days."

His comments attracted some criticism; after all, rejoicing seemed a touch inappropriate when some countries had youth unemployment around 50%.

Others like Mario Draghi, the president of the ECB, had sounded a different note. "I am very very cautious about the recovery," he said. "I can't share the enthusiasm ..."

It is hard to know but some of his caution may have had its roots in his native Italy.

Italian politics are never far from crisis. The political caste that inhabits the Palazzo Montecitorio revels in intrigue. Italy has had over 60 governments since the World War II.

For a long period the comings and goings of prime ministers passed without much comment. Not any longer.

Italy is the third largest country in the eurozone. It has debts of 2 trillion euros and is the world's third largest bond market. It remains true that despite the European Stability Mechanism (the eurozone's giant rescue fund) that Italy is too big to be bailed out. The country is still in recession; the longest since World War II.

Seven months ago Italy fought an inconclusive election campaign. There was no clear winner. President Giorgio Napolitano, mindful that the markets could turn against Italy, helped forge an unlikely coalition between the left and the right.

Crying out for reform

Suddenly the Partito Democratico - the social democrats - were in partnership with Silvio Berlusconi's People of Freedom Party.

Italy was crying out for reform. It had a political system that did not function with an over-paid political class. (At the election the comedian Beppe Grillo had won over 20% of the vote on a platform to dismantle political corruption.)

Under the previous Prime Minister Mario Monti there was an attempt to free up the labour market but more radical reforms were needed. A start had been made on clamping down on tax evasion but often the actions seemed like high-profile stunts; pulling over Ferrari owners and asking them to explain how they afforded their vehicles.

Above all Italy needed growth. The economy had been flat-lining for a decade and had racked up huge debts. From the start the new coalition was a fragile marriage, marked by political bickering.

There were uneasy compromises and differences of substance. Berlusconi and his allies fought hard against a property tax but, without it, there was a 5bn euro hole in the finances. Other measures, including an increase in VAT, were needed if Italy was to meet its spending commitments.

Whatever the disagreements, Berlusconi seemed to understand that the voters wanted stability and had no appetite for another election.

Strains

A strained relationship soured after Berlusconi's conviction for tax fraud was upheld by the Supreme Court at the start of August. He faced expulsion from the Senate, house arrest for a year and a ban on holding public office.

For the past two months his supporters have been trying to find a way around these penalties. There were numerous threats to bring down the government, although it was never clear how that would help Berlusconi. At times the Letta government seemed paralysed.

At the end of last week Mr Letta concluded no further legislation could be enacted unless the political crisis was resolved. He decided to hold a vote of confidence.

Berlusconi did not want that and urged five of his ministers to resign their cabinet posts, so bringing down the coalition. Mr Letta called it ' a crazy gesture" to cover up Berlusconi's personal affairs. In his view it had nothing to do with opposition to the increase in VAT.

The future is now uncertain. Italian ministers are wary of the response from the markets. Some say if there is a long period of instability then the credit ratings agencies will downgrade Italy.

President Giorgio Napolitano says that he will only dissolve Parliament "as a last resort". He is exploring whether another coalition can be scrambled together. Silvio Berlusconi wants a vote "as quickly as possible". On his 77th birthday he seems determined to bet his future on increasing his influence at the polls.

Risky

It is a risky bet. He may even struggle to hold his party together. Some of his ministers opposed the collapse of the coalition.

Almost certainly there will be days of attempted deal-making and a vote of confidence. Italy's Labour Minister Enrico Giovannini said: "If instability were to persist and affect the eurozone, then international authorities could put much stronger pressure on national authorities".

It was a warning that Brussels and Berlin could start flexing their muscles if the euro-zone crisis returned.

Italy - as it has been for the past year - is protected by Mario Draghi's promise to do whatever it takes to defend the euro. Those words, never tested, have kept the markets at bay, unwilling to bet against the central bank. Mr Draghi will be watching to see whether last year's promise still deters the markets.

It has been said many times before that we are witnessing the final act in Silvio Berlusconi's career. His political influence is on the wane and it may just be that the voters are no longer willing to risk stability as part of a battle over his legal convictions.

Yet once again the future of Italy is tied into the personal drama of the man who likes to call himself Il Cavaliere, but if the markets turn against Italy, Berlusconi and his allies could yet be forced into making a compromise.

Pakistan explosion: Dozens killed in Peshawar market - BBC News

29 September 2013 Last updated at 05:21 ET

The attack came just one week after a deadly blast at a church in the city, as Rajesh Mirchandani reports

An explosion has ripped through a market in the north-western Pakistani city of Peshawar, leaving at least 33 dead and dozens wounded, officials say.

Police said a bomb had exploded in the Kissa Khwani market, with shops and vehicles set alight.

The blast comes a week after a double suicide bombing that killed at least 80 people at a church in the city.

On Friday, at least 17 people were killed in the bombing of a bus carrying government employees near Peshawar.

Peshawar, the main city of Khyber Pakhtunkhwa province, has been hit by numerous bomb and gun attacks blamed on Taliban insurgents in recent years.

Hospital emergency

Police said they suspected the explosion was caused by a car bomb.

Pakistan's Dawn newspaper quoted the health minister as saying that the main Peshawar police station may have been the main target.

However, bomb disposal chief Shafqat Malik said it appeared the blast had taken place some way from the station.

He told Agence France-Presse that a parked car had been "converted into a remote controlled bomb".

One shop owner, Nazar Ali, told Associated Press: "It was a huge blast that was followed by fire in vehicles. Thick black smoke covered the air and splinters spread all over. I saw people lying dead and bleeding."

An emergency situation was declared at the Lady Reading Hospital as it received the injured, many of them badly burned. Officials said 76 people had been hurt.

Anxious relatives gathered outside the hospital for news.

Rising violence has hindered new Prime Minister Nawaz Sharif's overtures to end the insurgency through peace talks with the Taliban.

On 21 September, Pakistan released from the jail the co-founder of the Afghan Taliban, Mullah Abdul Ghani Baradar.

But the Pakistan Taliban have consistently rejected the country's constitution and demand the imposition of Sharia law.

Mr Sharif is in New York at the UN and is to meet Indian PM Manmohan Singh later on Sunday.

Mr Sharif strongly condemned the Peshawar bombing in a message from New York, saying: "Those involved in the killing of innocent people are devoid of humanity and all religions."

Ahead of the talks, Mr Singh said Pakistan must stop being "the epicentre of terrorism".

Last Sunday's attack on the historic All Saints church - thought to be the deadliest attack against Christians in Pakistan - sparked angry protests nationwide.

Two Islamist militant groups with Taliban links said they had ordered the attack to hit back at US drone strikes.

More than 120 people were wounded.

Friday's bus bomb targeted government employees returning home in the Gulbela area, some 15km (9 miles) north-east of the city.

In addition to those killed, at least 34 people were injured.

Kenyan minister evades questions on Westgate warnings - BBC News

29 September 2013 Last updated at 11:39 ET

Joseph Ole Lenku said the police would continue to makes arrests

Kenya's interior minister has refused to answer questions about possible intelligence failings in the wake of the Westgate shopping centre attack.

Joseph Ole Lenku said intelligence issues were confidential and would not be discussed in public.

The questions arose after Kenyan papers reported that the intelligence agency had issued warnings a year ago.

Some 67 people were killed after al-Shabab militants stormed the Westgate centre on 21 September.

In a news conference on Sunday, Mr Lenku confirmed the death toll but refused to give the nationalities or identities of the suspects being held.

But he said there had been one more arrest on Sunday, bringing the total now held to 10, with five militants killed in the operation.

He said three people suspected of looting from the shopping centre had also been arrested.

The BBC's Karen Allen: How siege unfolded

Mr Lenku said the government believed there were no hostages left to be found in the centre "unless forensic evidence shows otherwise".

He also denied any of the militants could have escaped through a tunnel at the centre.

The minister also repeated Kenya's anger at a US decision to reissue a travel advisory that urges Americans to take precautions following the attack.

Mr Lenku said it was "unfriendly" and "counter-productive in the fight against global terrorism".

Parliamentary questions

Kenyan newspapers have reported that the country's National Intelligence Service warned a year ago of the presence of suspected al-Shabab militants in Nairobi and that they were planning suicide attacks, including on the Westgate shopping centre.

However, while Mr Lenku dismissed questions about the government failing to act on intelligence linked to the Westgate attack, a senior interior ministry official earlier denied that ministers had ignored intelligence reports on possible militant attacks.

The official told the BBC the government received intelligence daily, that action was taken and that many attacks had been averted.

A parliamentary committee which is meeting on Monday has signalled it intends to explore the issue of such warnings.

Briefings were given to the ministers "informing them of increasing threat of terrorism and of plans to launch simultaneous attacks in Nairobi and Mombasa around September 13 and 20, 2013", Kenya's Daily Nation had quoted counter-terrorism reports as saying.

The warnings were first made in January, according to the newspaper, and again from the beginning of September.

A dossier from the National Intelligence Service - amounting to more than 8,000 pages according to Kenya's Standard newspaper - also suggests the Israelis issued warnings that buildings owned by its citizens could be attacked between 4 and 28 September.

Westgate is partly Israeli-owned.

The Daily Nation reports that Kenyan intelligence had established that al-Shabab leaders had begun singling out Westgate and the Holy Family Basilica for attack early this year.

Government figures said to have received the intelligence briefings include Mr Lenku, Treasury Minister Julius Rotich, Foreign Affairs Minister Amina Mohammed, Defence Minister Raychelle Omamo and Kenya Defence Forces chief Julius Karangi.

The head of the National Intelligence Service, Michael Gichangi, is due to be questioned by Kenyan MPs on Monday.

The head of the parliamentary defence committee, Ndung'u Gethenji, told the BBC on Friday that "people need to know the exact lapses in the security system that possibly allowed this event to take place".

He also said they needed to understand "the anatomy of the entire rescue operation" amid allegations of confusion over who was in charge.

Al-Shabab, a Somali Islamist group, said it carried out the attack on the upmarket mall in retaliation for Kenya's military involvement in Somalia.

Security sources have told the BBC that the militants hired a shop there in the weeks leading up to the siege.

This gave them access to service lifts at Westgate enabling them to stockpile weapons and ammunition. Having pre-positioned weapons they were able to re-arm quickly and repel the security forces.

Kenya's Westgate siege: 'Militants hired shop to hide arms' - BBC News

27 September 2013 Last updated at 12:00 ET

The BBC's Karen Allen: How siege unfolded

The militants who led the attack on a Kenyan mall hired a shop there in the weeks leading up to the siege, senior security sources have told the BBC.

This gave them access to service lifts at Westgate enabling them to stockpile weapons and ammunition.

Having pre-positioned weapons they were able to re-arm quickly and repel the security forces.

Sixty-seven people are known to have died in the four-day siege. Kenya's Red Cross says 61 others are still missing.

Forensic experts are still combing the complex, looking for bodies and clues.

Continue reading the main story

Analysis

"Terrorism is an exploitation of openings" was the way Ndung'u Gethenji, chair of Kenya's parliamentary defence committee, described to me the attack in Nairobi. And the gunmen at the Westgate siege exploited those openings to the full to mount a "spectacular" that has wounded Kenya - and left its people shaken.

That extremist gunmen could secure a base within the mall in the weeks leading up to the attack and pre-position weapons is in itself astonishing. But for many Kenyans, audacious as it is, it will come as little surprise when bribery remains the currency of everyday life.

A few "bob" - (Kenya shillings) to "look the other way" is not unusual here, despite the best efforts of many brave Kenyans to rein the problem in. Porous borders and a ready supply of weapons have long fuelled the threat of violence in Kenya - an AK-47 costs just $450 (£280) today if you know the right people.

Many Kenyans now hope the legacy of Westgate will be tougher action to tackle dodgy deals. The human cost of not doing so has already been laid bare.

The Somali Islamist group al-Shabab, which is part of al-Qaeda, says it was behind the attack and the following siege at the upmarket mall in the Kenyan capital, Nairobi.

Kenya is in its third day of official mourning for both the civilian and military victims of the attack.

Fake IDs?

The BBC investigation has revealed how the Westgate gunmen were able to plan and carry out the siege, and how security breaches allegedly fuelled by corruption made it an attack waiting to happen.

To rent a shop, the militants would have needed fake IDs supplied by corrupt government officials.

The BBC has also confirmed more details about how they executed their attack.

Two vehicles dropped the Islamist extremists off outside before they forced their way into the mall, sources say.

They are also believed to have set up a base using a ventilation shaft as a hiding place, on the first floor.

Security sources have also confirmed a change of tack by the militants late on Saturday.

They rolled out heavy calibre machine guns, exploiting the moment when control of the security operation switched from the police to the military.

There are reports that this switchover was fraught with confusion.

The heads of the various security agencies have been summoned to appear before the parliamentary defence committee on Monday, amid rising concern over the authorities' preparedness for such an attack.

The committee's chairman, Ndung'u Gethenji, told the BBC that "people need to know the exact lapses in the security system that possibly allowed this event to take place".

He also said they needed to understand "the anatomy of the entire rescue operation" amid the allegations of confusion over who was in charge.

It is still not clear how many militants took place in the attack or their nationalities.

But senior sources within al-Shabab, which has repeatedly threatened attacks on Kenyan soil if Nairobi did not pull its troops out of Somalia, told the BBC by phone that they would not release the attackers' names.

'Jewellery looted'

Irene Anyango: "It's not the mall you used to see"

A senior government official told the Associated Press news agency that the army had caused the collapse of a section of the mall on Monday.

The official, who did not want to be named, said autopsies would show whether this had killed the hostages or whether they had already been murdered.

Correspondents say there have been reports that the military had blown out a supporting column to bring the siege to an end - a controversial decision which, if confirmed, would raise the possibility that hostages' lives were seen as expendable.

Irene Anyango, manager of a Westgate jewellery shop, is one of the few people who has been allowed into the mall following the end of the siege.

"It was a nightmare… and the shop was a totally different place," she told the BBC.

Ms Anyango said 90% of the jewellery was missing from the shop, which is now flooded.

"As far as we know, for the last couple of days they were intact - we don't understand what's happening but they're not there," she said.

Many people not only face the trauma of losing family and colleagues but also the possibility of losing their jobs, she added.

On Friday morning, President Uhuru Kenyatta attended the funeral of his nephew and his nephew's fiancee at a church service Nairobi, where he addressed the congregation.

Mbugua Mwangi and Rosemary Wahito were among those killed in the mall on Saturday.

About 4,000 Kenyan troops have been sent to Somalia to help pro-government forces battle al-Shabab.

The group is banned as a terrorist group by both the US and the UK and is believed to have between 7,000 and 9,000 fighters.

Its members are fighting to create an Islamic state in Somalia.

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David Cameron brings forward Help to Buy scheme - BBC News

29 September 2013 Last updated at 13:13 ET

David Cameron: "I'm not going to stand back while people's aspirations to get on the housing ladder... are being trashed"

A controversial scheme allowing people across the UK to take out 95% mortgages will be launched next week - three months earlier than planned.

PM David Cameron made the announcement as the Conservatives gathered in Manchester for their annual conference.

He rejected fears the Help to Buy scheme will fuel a housing bubble.

He told the BBC's Andrew Marr show the market was "recovering from a very low base" and first-time buyers needed help to get on the housing ladder.

"As prime minister I am not going to stand by while people's aspirations to get on the housing ladder are being trashed."

He added: "If we don't do this it will only be people with rich parents to help them who can get on the housing ladder - that is not fair, it is not right."

'Trust'

He rejected concerns - raised by Business Secretary Vince Cable among others - of an unsustainable boom in house prices, particularly in the south-east of England.

The prime minister urged people to "trust" the Bank of England, which has been given an enhanced role in monitoring the effect of the scheme on prices.

And he said mortgage-lenders, including the Halifax, RBS and Nat West, had already signed up to it.

Some of the UK's biggest lenders - HSBC, Santander, Nationwide and Barclays - have yet to decide whether to take part, the banks told the BBC.

Mr Cameron also used his Andrew Marr interview to stress that there would be no "mansion tax" if he his prime minister after the next election, making it clear that this would be a so-called "red line" - a point he would refuse to concede - in coalition negotiations.

A property tax on more valuable homes - known as a mansion tax - is a key demand of the Liberal Democrats.

Meanwhile, about 50,000 people took part in a union protest outside the conference against government austerity policies, particularly those affecting the NHS.

Greater Manchester Police described it as one of the largest protests they had ever policed.

In other developments:

• Mr Cameron told Andrew Marr he is ready to pull the UK out of the European Convention on Human Rights if he believes it is necessary to the country's safety
• Televised leaders' debates in the 2015 general election could be staged before the actual campaign begins to prevent them "overshadowing" the campaign, said Mr Cameron
• The government is looking at ways to support institutions, such as schools and the courts, who wanted to prevent Muslim women wearing full-face veils, but Mr Cameron ruled out a ban on the Niqab in public places
• New guidelines will scrap the issuing of police cautions for rape, manslaughter, robbery, child sexual abuse and other serious offences
• Defence Secretary Philip Hammond appealed for IT experts to join up as military reservists to help protect the UK's computer networks from cyber attack
• Mr Hammond also announced plans to offer interest-free home loans to armed forces personnel

Mr Cameron admitted to mistakes in the way the government handled the gay marriage issue, saying: "I don't think I expected quite the furore that there was."

He said he understood and respected people's difficulties with the policy and said the government had failed to convey the fact the policy would not affect what happened in churches, mosques and synagogues.

'Build more homes'

Continue reading the main story

"Start Quote

You can't deal with the cost of living crisis without building more homes, so it's no wonder that for millions of families this is no recovery at all"

End Quote Labour

The Conservatives will use their week in Manchester to unveil a series of policies aimed at showing they are "on the side of hard working people". Other policy announcements are set to include a crackdown on welfare payments and an expansion of free schools.

Labour extended its lead in the opinion polls after announcing at its conference last week that it would freeze energy prices and increase corporation tax to pay for a cut in business rates for small firms.

Mr Cameron dismissed Labour leader Ed Miliband's economic strategy as "nuts," arguing that increasing tax on big business risked choking off the recovery.

He said the only way to "sustainably raise living standards is to keep the recovery going, and the economy is now moving, to keep on creating jobs...to keep on cutting the deficit."

Chris Leslie, shadow treasury minister: "Where is the help to build in the government's strategy?"

Under the first phase of the Help to Buy scheme, launched in April, the government will give homebuyers in England equity loans of up to 20% of the price of a new property worth up to £600,000.

Homebuyers need to contribute at least 5% of the property price as a deposit, with a 75% mortgage to cover the rest.

Under the second phase of Help to Buy, which had been due to launch in January, the government will underwrite 15% of the value of a mortgage, allowing people to buy properties with a 5% deposit.

It will apply to all home purchases in the UK of up to £600,000.

Applications for loans from the scheme will now be brought forward to the week beginning 7 October but the loans will not be paid out until 1 January. Anyone hoping to complete on their home purchase using the second phase of Help to Buy before 2014 will not be able to.

'Less than responsible'

Adam Marshall, of the British Chambers of Commerce, said: "With all the concern expressed about Help to Buy - rushing into it seems less than responsible on part of government."

House prices rose at their fastest rate in more than six years in September, according to property analysts Hometrack.

Continue reading the main story

"Start Quote

You can't deal with the cost of living crisis without building more homes"

End Quote Shadow chancellor Ed Balls

Labour said the government needed to build more houses to ease shortages.

"Unless David Cameron acts now to build more affordable homes, as Labour has urged, then soaring prices risk making it even harder for first time buyers to get on the housing ladder," said Shadow Chancellor Ed Balls.

"You can't deal with the cost of living crisis without building more homes, so it's no wonder that for millions of families this is no recovery at all.

It comes as a poll of more than 1,400 Conservative councillors in England and Wales for BBC One's Sunday Politics suggested nearly a quarter would support an electoral pact with the UK Independence Party (UKIP) at the next general election.

A Tory source said: "80% of our councillors didn't respond to this survey so it's hardly representative. It should be taken with a large pinch of salt."

The conference opened on Sunday with a tribute to former Prime Minster Baroness Thatcher, who died aged 87 in April.

It will close with Mr Cameron's keynote speech on Wednesday.

#weareone - How Westgate united Kenyans - BBC News

27 September 2013 Last updated at 12:50 ET By David Okwembah BBC Africa, Nairobi

The Westgate shopping mall attack and four-day siege has seen Kenyans use social media extensively either to mobilise resources or to keep the world informed of activities around the prestigious shopping centre.

It was not just citizens who took to social media to pass information, even government officials joined in with the interior ministry and the country's police boss keeping members of the public informed and even responding to questions on Twitter.

Mobile phone operator Safaricom together with the Kenya Red Cross raised a staggering $1.2m (£740,000) in just one week. The mobile company's communications director, Nzioka Waita, said this was the fastest that the company had managed to mobilise money from Kenyans.

A group of young Kenyans aged between 22 and 25 using the Twitter hashtag #weareone were the most captivating, with their messages aimed at uniting the country through updates and insights on what was happening at the shopping mall.

Through the initiative, the country was mobilised to give money and donate blood, as well as keeping the peace.

One of the group's members, Nuru Jamal, said #weareone was started last year by a group of seven young people whose aim was to help the needy as well as encouraging members of the public to contribute to worthy causes.

Among the initiatives they have previously carried out include visiting children's orphanages as well as mobilising for sporting activities.

However, the Westgate attack seems to have made the seven members even more enthusiastic as they tweeted messages of peace to people on what was happening around the mall.

They even posted videos on YouTube and directed their followers there.

One tweet encouraged Kenyans to donate blood after an appeal from hospitals in Nairobi as the enormity of the Westgate attack unfolded.

In yet another message, the group informed its followers that Interpol was ready to provide Kenyan police with forensic officers to help investigate the attack. The group also has a presence on Facebook.

Ms Jamal said the group was inspired to come together after realising that the country was divided and that nobody was paying attention to the underprivileged in society.

"Some of us are still students while others have just graduated and some are working," she said.

Safaricom's Mr Waita said he had been inspired by the enthusiasm shown by Kenyans in making a contribution to the victims of the Westgate shopping Mall attack.

The money will be used to offset medical bills for the victims, as well as offering support.

It is not the first time the mobile phone company has mobilised resources in Kenya.

Previously the company ran a four-week fundraiser when the country was hit by drought in the northern part of the country.

US Senate would reject House bill as shutdown looms - BBC News

29 September 2013 Last updated at 00:34 ET

US Senate Majority leader Harry Reid has warned that his Democratic-led chamber will reject a House Republican bill to avert a government shutdown.

Early on Sunday, the Republican-led House passed its amended version of the Senate bill, removing funding from President Obama's healthcare law.

There is now less than 48 hours to avert a shutdown, which will begin on Tuesday if no spending bill is passed.

The Senate is not due to meet again until Monday afternoon.

In a statement, Senator Reid said that "after weeks of futile political games from Republicans, we are still at square one".

He added that Republican efforts to change the bill - that would delay the healthcare law for a year and repeal a tax on medical devices - were pointless.

Speaking for the president, White House spokesman Jay Carney said: "Any member of the Republican Party who votes for this bill is voting for a shutdown." The president, he said, would also veto the Republican bill.

However, House Republicans went ahead with the changes, ignoring the veto threat and passing the bill in a late-night session by 231 votes to 192.

Shutdown explained, in 60 seconds

The Senate is controlled by Mr Obama's Democratic party, while the Republicans hold the majority in the House of Representatives.

"House and Senate like two locomotives barreling toward one another ... in slow motion," tweeted Republican Representative Scott Rigell.

'Acting responsibly'

The looming shutdown ,which would be the first in 17 years, is one of two fiscal crises facing the US government. On 17 October, the US treasury department's authority to borrow money to fund its debt obligations expires unless Congress approves a rise in the so-called debt ceiling.

On Friday, President Obama urged House Republicans to pass the Senate's stopgap budget bill and to extend the debt limit, and demanded they not threaten to "burn the house down because you haven't gotten 100% of your way".

Mr Obama said if the nation were to default on its debt, it would have a "profound destabilising effect" on the world economy.

"Voting for the treasury to pay its bills is not a concession to me," he said. "No-one gets to hurt our economy... just because there are a couple of laws [they] don't like."

He described the healthcare law as "a done deal" and said the Republican-backed repeal effort was "not going to happen".

Mr Obama said the Senate had "acted responsibly" in passing the budget measure and that now it was up to Republicans in the House of Representatives "to do the same".

Civilian cuts

If the government does shut down on 1 October, as many as a third of its 2.1 million employees are expected to stop work - with no guarantee of back pay once the deadlock is resolved.

National parks and Washington's Smithsonian museums would close, pension and veterans' benefit cheques would be delayed, and visa and passport applications would be stymied.

Programmes deemed essential, such as air traffic control and food inspections, would continue.

The defence department has advised employees that uniformed members of the military will continue on "normal duty status", but "large numbers" of civilian workers will be told to stay home.