Children come first despite tough times, says Clegg

The coalition will spend an extra £7bn on improving the life chances of children from disadvantaged families despite the draconian spending cuts to be announced next week.

Nick Clegg will trumpet the "fairness premium" today as ministers launch a drive to convince voters they have used the Government-wide review to channel money to priority areas rather than merely impose savage cuts across the board.

The move comes as Ed Miliband prepares to shift Labour's policy towards higher taxes and fewer cuts. The Shadow Cabinet discussed a new "deficit reduction strategy" yesterday and the new shadow Chancellor, Alan Johnson, will announce it on Monday – two days before George Osborne unveils his £83bn of cuts. Labour is expected to stick broadly to the former chancellor, Alistair Darling's plan to halve the £155bn deficit over four years. But Mr Miliband favours raising billions of pounds more from a higher levy on the banks, so that some of the Coalition's spending cuts could be avoided. He is unlikely to propose higher income tax, shadow ministers said last night.

In a speech today in Chesterfield, Derbyshire, Mr Clegg will join battle with Labour by insisting the spending review will be fair as well as tough. "It will increase our investments in fairness, and in particular the promotion of social mobility and life chances," he will say. "It will be an investment package for future fairness."

The extra £7bn will be spent over the next four years from April. The bulk of it will go on a new "pupil premium" – a key plank of the Liberal Democrat election manifesto – under which schools will receive more money for every pupil eligible for free school meals – the poorest 20 per cent of children. Schools will decide how to spend it – for example, on one-to-one tuition, catch-up classes or after-school sessions. The budget for the "pupil premium" will eventually rise to £2.5bn a year.

The £7bn will also finance 15 hours a week of pre-school education for all disadvantaged two-year-olds, on top of the 15 hours they already receive at aged three and four. It will be used to encourage bright, poor children to go university, through a "student premium" such as maintenance or bursaries. This may help to defuse a revolt by Liberal Democrat backbenchers against the U-turn by the party leadership, which is backing a rise in tuition fees.

Mr Clegg has fought hard during the spending talks to secure the extra cash and allies say it shows there is some "good news" among the gloomy headlines that cuts to state benefits for the vulnerable are bound to attract.

Today, the Deputy Prime Minister will say the Coalition was not prepared to negotiate away a better future for children in the spending review. "The reddest line of all is the one around our commitment to their future," he will say. Admitting that the cuts mean a "hard road" ahead, he will insist: "I am clear we have a moral obligation to wipe the slate clean. We must shelter the next generation from the legacy of debt – especially the most disadvantaged children."

The Liberal Democrat leader will claim: "Our vision of fairness is based on people having an equal crack at the whip, that the life chances of every child should be the same. It is simply not acceptable that the circumstances of a child's birth can become a life sentence of disadvantage."

Labour is bound to dismiss the "fairness premium" as window dressing to distract attention from the £83bn of cuts. It challenges the notion of "fair cuts" and argues that the Liberal Democrats lost their progressive credentials by forming the Coalition.

Yesterday, the Government confirmed that the amount of pension savings on which people receive a tax break is to be cut to less than a fifth of its current level to save £4bn a year. The tax-free amount will be reduced from £255,000 to 50,000 a year from next April.

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