Clegg and Gove in spending review battle over free nursery education Education secretary Michael Gove lost out in the clash with the deputy prime minister and has been told to find savings elsewhere. Photograph: Stefan Rousseau/PA Archive/Press Association Ima An attempt to save £380m by cancelling a plan to further extend access to free nursery education has been at the centre of one of the most bitter battles in the comprehensive spending review due to be announced Wednesday. Whitehall sources said Nick Clegg, the deputy prime minister, and Michael Gove, the education secretary, clashed over the plan, with the issue taken to the most senior ministers by Clegg last Wednesday. Gove had proposed that the plan to provide 15 hours a week of free nursery education to a further 20% of low income families from next year be shelved. Clegg, Whitehall sources said, objected and took the issue to the so-called Quad, the coalition's most senior ministers. The first tranche of free 15 hours a week nursery education for two-year-olds is due to be made available to the lowest 20% income group from this autumn in England. Gove, the Whitehall sources said, has instead been told to find efficiency savings in the way in which new academies and free schools are commissioned. It has also been agreed that the budget for the second wave of free nursery care will not assume 100% take-up, but if there is higher than expected take-up, the cash will be found from the general contingency reserve. The row is another indication of the ill feeling now emerging between Gove and the Lib Dems. Gove has still not forgiven Clegg for what he regards as backtracking on plans to relax the ratios of nursery assistants to children in registered nurseries. The education secretary is furious at what he regards as Clegg's politically driven U-turn in an effort to win the support of parenting groups, such as MumsNet. Currently, more than 800,000 3- and 4-year-olds nationally access up to 15 hours of free early education every week. The government had pledged in the Spring to extend that to around 150,000 of the least advantaged 2-year-olds from September 2013, rising to around 260,000 in September 2014. Gove had put the extension to the second group under threat. Clegg has made the extension of free nursery care to young children one of his key personal issues. In another issue that has caused tension across government during the spending review, the Treasury chief secretary, Danny Alexander, announced an extra £200m to help fund an extension of the troubled families programme to a wider group of 400,000 families from 2015-16. The current £110m a year programme is aimed at 120,000 families deemed to be at very serious risk of offending or failing to secure an education for their children. Each family is deemed to cost the taxpayer £75,000 a year. The announcement, at a time when most programmes are facing cuts, is a victory for Louise Casey, the civil servant in charge of the programme. Although the extra £200m covers 2015-16 the first year of the next government, there has been a cross party consensus over the effectiveness of the troubled families programme and it is likely that the new wider programme designed to reach families liable to classified soon as in severe difficulty will continue after 2015-16. That implies a larger and long term financial commitment. Casey's capture of the cash will see money transferred from departments of health, education and ministry of justice. Delivered in partnership with local areas, central government will cover 40% of the cost of working with each family. Local government provides the remaining 60%. A one-off average investment of £4,500 in work with each family is expected to reduce the annual £15,000 cost of dealing with their problems, by supporting families to access work, reducing anti-social behaviour, poor school attendance and criminality. The Local Government Association said: "We will be seeking clarification that this £200 million is actually additional money and not money redirected from existing local authority budgets. We await the Spending Round announcement on Wednesday for more detail on this. The spending review is due to announce £11.5bn in cuts for 2015-16. Much of it will be found through greater efficiency. There is also growing concern in aid circles that the budget of the department of international development has been raided to help the budget of the Ministry of Defence. In a sign that the coalition ministers are determined to continue to try to pin the blame for the cuts on the last Labour government, David Laws, currently schools secretary and previously Treasury chief secretary, showed ITV the private letter he received in 2010 from the outgoing Treasury chief secretary, Liam Byrne saying "there is no money." There is a convention that ministers leave letters to their successors, and at the time Byrne would have been expecting the shadow chief secretary Phillip Hammond to take up the post, and not Laws, a Liberal Democrat. Laws claimed in an ITN interview he had broken no constitutional convention by disclosing the letter and claimed to have been surprised it led to such a media reaction in 2010. At the time he claimed the letter said "There is no money left," but the text filmed yesterday said more simply "there is no money," a form of words that does not imply the Labour government had blown all the money. Laws told ITN: "I did not set out to embarrass Liam Byrne," and conceded the letter had been intended as a joke. But he claimed the letter was totemic of a profligate government, and said he now expected the letter to be used in future election campaigns.