Nick Clegg accepts that hopes of Lords reform are receding

Economic crisis forces subject off the agenda

Plans for an elected House of Lords are likely to fall victim to the Coalition's desire to convince voters it is prioritising economic growth.

Conservative ministers believe Nick Clegg's flagship scheme will die a "slow death" as it runs into strong opposition in both the Commons and the Lords.

A Lords Reform Bill will be included in the Queen's Speech today after Mr Clegg rebuffed demands from Tory MPs for it to be dropped. But yesterday the Deputy Prime Minister appeared to downgrade the importance of the measure.

At an event with David Cameron aimed at relaunching the Coalition, Mr Clegg said: "I care a lot more about apprenticeships than I do about House of Lords reform. I care a lot more about the fact that, as of next April, two million people on low pay will be taken out of paying income tax for the first time... I care more about children from disadvantaged backgrounds doing well out of school and getting ahead and having real opportunities in life than I do about House of Lords reform."

On their joint visit to a tractor factory in Basildon, Mr Cameron appeared lukewarm about the Lords shake-up, describing it only as "a perfectly sensible thing for Parliament to consider". He said: "I wouldn't for a moment say that this is the most important thing the Government is doing. Of course it isn't. But Parliament is capable of doing more than one thing at a time... What matters, the things we are really focused on, are getting the deficit down, getting our economy moving and creating a country and a society that is more worthwhile."

Last night Clegg allies denied that the proposal for 80 per cent of the Lords to be elected is being diluted, insisting the Government remains committed to it. But there is growing speculation at Westminster that ministers will pull the plug if, as looks inevitable, the Bill is delayed and threatens to clog up the parliamentary timetable.

One option being floated is a trade-off in which both the Lords shake-up and plans to cut the number of MPs from 650 and 600 and bring in new constituency boundaries are shelved until after the 2015 general election.

Mr Cameron and Mr Clegg reaffirmed their commitment to the Coalition's core purpose of repairing the economy, but admitted that securing growth had been more difficult than they had predicted two years ago.

Labour seized on a comment by the Prime Minister, who said during a question and answer session with staff at the factory, "what you call austerity, what I might call efficiency". Chris Leslie, a Labour Treasury spokesman, said: "How out of touch can David Cameron get? His so called efficiencies actually mean deep cuts to frontline services like police officers, slashing tax credits for working families and raising taxes on pensioners."

Mr Cameron will today insist that the Coalition's "number one priority" remains dealing with the deficit and stimulating growth. But he will also highlight measures to tackle crime and support the family as evidence that the Government is in tune with voters' anxieties and is about more than simply a "cuts agenda".

A Families Bill will set out plans to make the adoption process quicker and overhaul support for children with special needs or disabilities.

A Communications Bill will include controversial plans to monitor emails, text messages and website visits. The most contentious sections will be published in draft form. But one Liberal Democrat critic said last night: "If we don't like what we see, we will have no hesitation in vetoing it."

Pressure from Liberal Democrats secured a Banking Bill to separate the retail and riskier investment parts of high street banks and make it easier for people to switch accounts, and an Electricity Bill to secure a long-term future for renewable sources.

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