The Guardian does not state who would be responsible for administering the new ratings, although a likely candidate would be the British Board of Film Classification, who spearheaded the Manhunt 2 ban. Although we're hesitant whenever the government tries to step in and tell us what to play (that whole censorship thing), perhaps with a new system they can implement a rating that would allow games like Manhunt 2 to be carried. (Hey, we can dream.)
The proposal also goes into ways the government can restrict children from seeing unsuitable games (don't forget all new consoles have family settings) and internet content. A commissioned review of violence and video games is due next month.