In meetings over recent days he said he could no longer back the plan to increase the number of children nursery staff and child-minders can look after.

The deputy prime minister's veto could have funding consequences for the government's entire childcare package.

The ratio changes are set to be implemented in England in September.

Whitehall is now waiting for Prime Minister David Cameron to begin "horse-trading", in the words of one source, with the Liberal Democrats over the policy, or let it sink.

Insiders indicated they were hopeful they could persuade the deputy prime minister to change his position.

But Mr Clegg's spokesman said he "remains to be persuaded" that changing the ratios, as originally envisaged by Tory education minister Liz Truss, was a good idea.

The reform, a high-profile element of the government's drive to reduce childcare costs, has run into fierce opposition.

In one survey, conducted by the National Children's Bureau, out of 341 early years staff interviewed, 95% said they were concerned about the policy.

The government's own adviser on childcare, Professor Cathy Nutbrown, has said the ratio plans "make no sense at all". In February, a coalition formed against the changes called Rewind on Ratios, run by the pre-school learning alliance and supported by - among others - Mumsnet and Netmums.

Statutory ratios for carers per child vary depending on age and setting. Those for children aged one-and-under are set to rise from three children per adult to four children per adult. Those for two-year-olds are set to rise from four to six children per adult.

Ratios for three-year-olds and over would remain at eight or 13 children per adult, depending on whether a qualified graduate was present.

Ms Truss has championed the reforms, saying they will bring Britain into line with other European countries including France and Sweden.

She says that allowing minders to care for more children - providing those minders have higher qualifications, a parallel reform she has proposed - would lower the cost of childcare and improve quality, by enabling the profession to attract those with higher salary demands.

Sources told BBC Newsnight that if the deputy prime minister does block the plan there will be funding consequences for the entire childcare package, which also includes £1,200 tax breaks on childcare for working parents - a central offer of the coalition government as they try to bring down the cost of living.

Britain has some of the highest childcare costs in the world, with many mothers with two or more children saying it does not make financial sense to work.

Mr Clegg's spokesman told Newsnight: "The delivery of good quality, affordable childcare is one of Nick Clegg's biggest priorities in government.

"He has looked very closely at proposals to increase the number of children each adult can look after - and at the very serious concerns raised by parents and childcare providers in the recent government consultation.

"Nick remains to be persuaded that this is the right thing to do for very young children. Or, crucially, to be persuaded that this would actually help families with high childcare costs. This continues to be discussed in government."

It is currently preoccupying Whitehall and as it does we thought there were at least two truths.

The first is that there are ring-fenced areas - international aid, the NHS and schools. These, we had thought, would not be cut.

The second is that these negotiations are fraught, and there will be much gamesmanship: the Treasury threatening the unthinkable in a bid to get departments to cough up.

Much of this will be shadow boxing - drastic and fake ideas from the Treasury for public spending cuts, floated as a tactic to make a government department accept more than they otherwise would.

But when we get to the 26 June we will realise some of it wasn't shadow boxing, but the real thing.

Against that backdrop, a development.

Liberal Democrats are bemused to have been told by their Conservative coalition partners that the real numbers proposed by the Treasury to the Department for Education (DfE) could result in a massive ring-fenced area becoming un-ring-fenced.

The schools budget had been protected. But now Whitehall sources tell me that the Lib Dems are being warned by Conservatives that it may not be.

Some weeks ago, when all departments were written to by the Treasury, the DfE was told that it had to make 10% savings in those bits of its budget that are not schools. They were doing that. Schools are protected because their improvement is a key coalition pledge.

But DfE officials have been told by the Treasury that they have to also work up a cut of 10% to their whole budget, and that if needs be schools should not be protected.

Amid feathers flying, and with officials trying to protect schools, an alternative cut would be an end to the offer of free childcare for two year olds - a personal priority of the Deputy Prime Minister and Lib Dem leader Nick Clegg.

Liberal Democrats are being told that it won't be funded after the years 2014-15, my sources say.

Supposedly the number crunchers have worked out that this extreme demand from the Treasury means a cash cut of £2.5bn in 2015-16. The axing of the free childcare for two year olds offer would save £760m and other cuts to nurseries would be £2.2bn. Or you unring-fence schools.

My Lib Dem sources are sanguine, believing this to be a classic bit of heavy-handed Treasury negotiation to make them swallow unpalatable cuts elsewhere.

And the Treasury is impassive. When I contacted them, the Treasury knocked this report back. They say that they have not gone to departments for more than what is already in the public domain. Which in the case of the Department for Education was 10% cuts to non-school budgets.

The DfE declined to comment on the claims.

Monday is the deadline for departments to submit their slate of proposed cuts to the Treasury.

Might this spending review actually see the end of the schools ring fence? My sources suggest that is now on the table.

Parents will be allowed to claim back 20% out of a total of around £6,000 - what they believe to be the average annual price of a childcare place.

It will apply to all parents in England and Wales earning up to £150,000.

Read my full article on this here.

As the government struggles to make the sums works for the 2015-16 spending review, the welfare budget is moving back to centre stage.

The defence secretary, Philip Hammond, has publicly demanded that welfare be cut, not his budget. Around the Cabinet table, Home Secretary Theresa May has made the same argument. While those close to Chancellor George Osborne lament that the Liberal Democrats would only accept £3.6bn of welfare cuts when he wanted £10bn of them.

Iain Duncan Smith, the welfare secretary, is not unsympathetic to these demands. His allies point out that he has offered up £10bn of cuts already and that it is not his fault that the Quad, the coalition's decision making body of top ministers could only accept £3.6bn of them.

But there are various options being discussed in Whitehall.

Tories like to point out that if you were to freeze, not uprate by 1%, all benefits for two years, including disability living allowance and pensions - which would mean taking the huge political hit of unlocking the triple lock for pensioners, which ensures state pensions rise by whichever is higher out of RPI, average earnings or 2.5% - then you could raise some £9bn.

The £9bn figure would go a long way to making the numbers work. But they know the political costs would be huge - there would be the double whammy of breaking a promise and hitting the grey vote where it hurts.

Another idea that has been worked on is taxing benefits. Official Treasury numbers seen by Newsnight show that taxing child benefit would raise £1.5bn, taxing DLA £800m and if you taxed the Winter Fuel Payment (which Vince Cable advocated on Thursday), you would raise £200m.

But the trouble with this is that the Treasury hate it. They point out that it would pull huge numbers of people into self-assessment, making it very messy administratively and politically. The Inland Revenue would probably have to hire 5,000 extra staff to deal with the extra work. But it is £2.5bn and every penny counts.

The other problem is that the Autumn Statement was the last moment in the parliamentary calendar when it was feasible to introduce changes to welfare, and be able to legislate for them. Back then it was briefed that it was the last possible moment to make serious change. Now, you cannot - even if the Lib Dems allowed it - introduce a regional benefit cap, or end housing benefit for under-25s and so on - because there is not the time left.

So there they have it - options are either too technical (taxing benefits), too legislatively time consuming (regional benefit cap, no child benefit for +2 kids) or too sensitive (elderly benefits/working age benefits).

You can see why many increasingly think they have to do a structural rethink. They want the ring fences protecting departments and various bits of government spending torn down.

"The question we keep asking ourselves is, does this government believe we are in an economic emergency or not?" one source said to me. "And if they do believe it, we have to go for some of that stuff that wasn't on the table". This approach would see the Department for International Development, education and pensioner benefits all cut. But it would also see "ring fences" within welfare dismantled. So that's pensions, if not pensioner benefits.

For Mr Osborne, the spending review threatens to be a bigger challenge than the Budget on 20 March. As soon as he sits down from delivering that statement, the argument about where to cut next will begin in earnest.

One final thought - just as the Lib Dems have in recent weeks begun to harden their party's position on immigration, I gather a similar shift in their position on welfare might be on the horizon.

William Beveridge - father of the modern welfare state - was a Liberal politician, after all, and there are elements in our system today historians agree he would not recognise.

My coalition sources are braced for the gross domestic product (GDP) figures being bad when they are published at the end of the week.

There will be calls for "Plan B" from the opposition. These will, of course, be rejected by the government.

Some inside government believe 2013 will see growth, eventually - the "zig".

In fact, because oil prices are no longer soaring and there are signs of a recovery in the Far East, some government sources do predict privately that 2013 will eventually see what they could call a zigzag - proper growth. (These voices are currently outweighed by many other Cabinet ministers who are more bearish. They think the economy will have a tough time, for longer).

At the weekend the Ernst & Young Item Club piled on the pressure - they said that the Bank of England should have a target of nominal GDP - NGDP.

"NGDP" is this - an economy's total output without adjusting for inflation.

The Bank of England is currently tasked with keeping inflation down at 2% and has to write to the Chancellor of the Exchequer to explain when it goes above that; quite a common occurrence.

The idea is that instead of targeting inflation, the Bank of England would instead have to target a particular amount of GDP growth and then go "all guns blazing" for it, triggering spending in an economy - and if the logic works, triggering a recovery.

I over-simplify - but the question of how to simplify this policy is relevant to the politics of it (more of which later).

Its champions pointed to what has been happening in the United States. This is what, last weekend, Prof Peter Spencer, chief economic adviser to the Item Club, said:

"[America] now actually has a target for unemployment - 6.5% unemployment with an inflation override - that's the sort of imagination that is actually putting a floor under the US economy and allowing it to continue to move forward."

The incoming Bank of England governor Mark Carney alluded to the desirability of NDGP in an interview at the back end of 2012.

And when he did so, the Chancellor of the Exchequer George Osborne told a group of MPs he was "glad" Mr Carney had done so (though he may of course have meant he was "glad" to be having the debate, rather than "glad" of any outcome of that debate).

Vince Cable's special adviser, Giles Wilkes, wrote a laudatory piece about NDGP years before he entered government and I know that two Tory ministers with economic portfolios support it.

Ahead of Mr Carney's arrival in June, it is an idea we should get our heads round - even if our more illustrious colleagues got their heads round this many moons ago.

Kick-start

Firstly, an explanation, before some observations on the politics of it.

Targeting inflation has been the wrong measure to target, NGDP's champions argue. Because inflation is expected to be kept low, it cannot go up and down freely in response to the economy's rhythms.

In 2011, for instance, government sources point out that inflation rose in a slowdown, which prompted policymakers and markets to tighten things up when actually they should have been loosening to help kick-start the economy.

This sends the wrong signals.

One government source told me: "It's like the thermostat of the British economy hasn't worked." The Bank of England, they believe, has a "dodgy measuring implement".

Instead, the argument goes, the Bank of England should have another remit - to have a target for what GDP should be, or what the economy should be growing at.

This would see the Bank (of course still independent of ministers) telling people - businesses and consumers - that they will keep on stimulating - its foot will go down on the pedal until, most likely, 5% growth has been achieved.

In the debate in the United States, 5% is reached because it takes the 3% rate of growth that economies should have, outside of a recession, and adds it to the supposedly ideal inflation rate of 2%. This makes it nominal - ie, it is the amount of growth, plus the actual value of all goods and services produced.

To this end, it would set about buying government bonds and other assets.

At the most extreme end, it would help the government with its public spending programme. But this would be the extreme end of things, and is extremely unlikely.

This is "hot potato economics" because there would be more money swilling around. Banks would have more money. The "hot potato" of credit would be passed on to financial services.

Because it would be cheap. Companies could make longer-term investments without fear of rates ratcheting up. These companies would then lend it out to make money on it.

There would be, the argument goes, a trickle-down of credit to mortgage seekers, to small businesses and to stores like HMV who are teetering on the edge.

"What really matters are growth expectations," one government source tells me. "Businesses and consumers all base their plans on how they think things will be, as opposed to the current static constraint on current income.

"But if they have been told to expect high future nominal GDP, they are more likely to consume or invest now.

"Setting a high stable path for NGDP growth, therefore, anchors the economy - hopefully triggering the building of more roads next week or inducing more consumption this year."

"Spending is depressed," another government source says. "There is clearly a problem... People don't feel they have enough income. People are holding on to their cash.

"If the Bank of England had to spend more, it would stimulate the economy by pumping liquidity into it."

That is the theory, though remember the idea with quantitative easing was similar - and its opponents have argued banks hoarded that money rather than disbursed it. NDGP's champions do not think that, properly executed, this need be true.

Its sceptics think the following (and these are clearly and succinctly rehearsed here by economist Chris Dillow):

I will stick to the politics and let Dillow et al enlighten you to the economics.

Labour voices are quite pro. In fact they are dispirited that their party leadership have not sought to embrace it themselves.

"Mark Carney is one of the most trusted economists in the world," said one Labour source. "Why not make the running on this?"

What is stopping those inside government is that it looks panicky and there are people inside the Treasury who cannot see how it could be done without losing credibility and triggering a stampede on the bond markets. And it sounds opaque and a tad occult.

In the words of one government source, it sounds like it might not very easily pass "the Newsnight test". How would you explain it, in one sentence, to Jeremy Paxman?

We do not know what the government will do, but what we do know is that:

a) Excepting hopes for oil price stability and so on, this government is deeply worried about the non-appearance of growth, and (b) that it has long believed in loose monetary policy, alongside a tight fiscal policy.

Given they are desperate for growth, but equally desperate not to go for something that could be described as "Plan B", they might opt for plan NGDP. Or more pithily - "Plan M". "M" for monetary.

Hot potato economics. It is something us lay people need to get our heads round.

Newsnight is broadcast weekdays at 2230GMT on BBC Two. Or watch afterwards on the BBC iPlayer.

The funds will come from house developers paying a levy when they are granted planning permission.

The plan is the latest push to reduce opposition to house building.

But house developers are concerned it could make land more expensive and affect affordable homes.

Mr Boles explains the incentive could see groups such as parish councils and residents groups up and down the country receive hundreds of thousands of pounds should they support proposals for more house building.

He jokingly refers to the policy as "bribes" and "Boles' bungs" and suggests communities might use the funds to build a new swimming pool or village hall.

On Newsnight Mr Boles says that the failure to increase the rate of house building is, in his opinion, "the biggest social justice crisis we have".

"It is a huge national crisis. For my money I think it is the biggest social justice crisis we have," he says.

"It is bigger than bad schools - though we have plenty of bad schools - and it is bigger than people without jobs -though we have lots of people without jobs."

Mr Boles says the housing problem lies at the root of many other problems because if people are unable to get houses they cannot bring their children up well or move to an area with jobs.

"We completely understand the situation, that's why we want to try and support some of this stuff," he says.

His policy revolves around this government's innovation of neighbourhood plans - groups of residents, villages, parish councils, interest groups set up to shape planning decisions in a given area but whatever mix, all designated by a local authority.

The new money will flow to those communities who have neighbourhood plans, but in cities where there are no parish councils and where neighbourhood plans have been designated by local authorities by different criteria, the money will be allocated to the district council to be spent only on the direction of the group behind the neighbourhood plan.

In areas with no constitutional status, officials told BBC Newsnight the local council would hold the funds on behalf of the neighbourhood group and wait for a stipulation on how that neighbourhood would like the funds to be spent.

The funds are to be provided by house developers who pay a tax - the community infrastructure levy (CIL) - when they are given planning permission.

In total, Mr Boles says the Treasury has estimated this levy could bring in a total of £1bn.

Not all councils will charge the CIL, but the government expects that they will all move towards it otherwise they will not be asking developers to help them meet the expense of an increase in infrastructure costs in any given area.

This government and the previous Labour government believed this necessary to reflect the fact that developers have seen an increased price of land with newly granted planning permission, and that developers must help a community with extra infrastructure to deal with the increased numbers of inhabitants.

Though the policy was developed by the Labour government, government officials said they had yet to set out how the revenue from the levy should be spent.

In order to assuage local communities opposing developments, the government is announcing that local communities who get involved in neighbourhood plans - and whose community puts them to a vote - will be given 25% of the CIL to spend on infrastructure of their choosing.

Those groups where there is no neighbourhood plan and no referendum on the plan, will also receive 15% when planning permission for a development is approved.

Officials have told BBC Newsnight that the plans could see communities finding themselves in direct receipt of anywhere between £236,500 and £652,500 of funds depending on the number of new properties they accept. The sole proviso is the new money is spent on infrastructure from an approved list.

Because the levy is calculated based on the rates payable in any given area, the higher figure of £652,500 would be an outlier - central London or another high value area.

Officials said £200,000 to £300,000 "would be a very reasonable expectation for average neighbourhoods".

The (CIL) was proposed in 2008 by the previous government and legislated for by the coalition in their first weeks in power in 2010. Having criticised it, the coalition decided to adopt it and on Wednesday are announcing they will significantly scale it up.

For the past two and a half years of government ministers have resisted setting out who would receive this money and some in government had fought for the monies to go to direct to national infrastructure programme.

It had been expected the council or local authority would be given it, to pay for the increased amenities required in the area of increased building but now ministers are insisting 25% is put directly into the hands of local people and not all given to the council or local authority to spend.

Mr Boles caused controversy last month when in his first interview since becoming the minister for planning, he said that green field sites would have to be built on if Britain was going to meet the demand for housing.

He said he believed part of the opposition to housing was driven by a dislike of the designs of the new builds which he called "pig ugly". If design could be improved, opposition might reduce.

Previously, under the legal requirement of "section 106", developers had to make a contribution to local infrastructure to help it cope with the new burdens placed on it by an influx of new dwellings.

However these had to be negotiated on an individual basis and were cumbersome. Local people were not in charge of what it was spent on.

Housing developers have expressed concerns about the imminent implementation of the CIL, saying it could actually end up making land more expensive. When costs go up, they predict, the element of house building that ends up suffering are those less expensive affordable homes.

Watch Allegra Stratton's report on BBC Newsnight on Wednesday, 9 January 2013 at 22:30 GMT on BBC Two or afterwards on BBC iPlayer.

The MPs say young people need to be taught about relationships as well as contraception.

The UK has twice the level of teenage pregnancy of France and Germany.

The government said it would be publishing its plans next year.

The inquiry by Amber Rudd MP (Parliamentary aide to Chancellor George Osborne), Liberal Democrat Lorely Burt and Labour's Sandra Osborne concluded that the teenage pregnancy strategy of the previous government had been a success, and should be resumed and extended to cover older age groups.

While the level of teenage pregnancy was brought down by the previous government's efforts - between 1998 and 2010 it came down by 24% - the numbers of babies born to women aged between 15 and 19 remains the highest in Western Europe.

The previous government's ambition to halve the teenage pregnancy rate was not realised.

Experts told the inquiry that increased access to contraception had helped bring about the 24% reduction, but in order to make further progress there would now need to be an emphasis on relationship education.

The three MPs heard evidence from stakeholders across the profession, as well as young men and women about their experience.

Many agreed that while there was, in the words of their report, "plenty of information and availability of contraception... the relationship advice that should go with this is totally absent."

It is compulsory to teach sex education in biology classes, but it is not currently compulsory to teach sex and relationship education.

"This means individual schools determine how to approach delivery of it... if they do so at all," says the report.

The MPs say guidance on sex and relationship education (SRE) and personal social health and economic education (PSHE) is "confusing".

They believe that placing sex and relationship education within or alongside citizenship classes would help address the problem.

This would come under the PSHE aspect of the curriculum, which is currently being reviewed by the government. The MPs hope the government reflects their findings.

If their recommendations were taken up, it would bring about a cultural shift in Britain's schools towards greater discussion of young people's relationships.

"The evidence that we received showed that there is a high level of knowledge about contraception in young people, but a desperate absence of information about relationships," says Ms Rudd.

"We are calling for relationship education in schools to prepare young men and women for adult life," she adds.

Looking at the persistently high incidence of unplanned pregnancies in young people, the MPs' report says that although there are many reasons for unplanned pregnancy, the failure of school-led sex education to cover relationship guidance was a big element.

They recommend that the government should make SRE statutory to allow a more consistent and comprehensive programme with clear guidelines for schools, but allow flexibility in how they deliver it.

The report also recommends that teacher training for SRE is introduced so teachers can be confident in covering the subject.

The inquiry finds that over the last decade there has actually been a "relative increase" in the level of unplanned pregnancy.

They show the age-standardised abortion rate (rate per 1,000) has increased by about 2.3%

They show the age average abortion rate increased by about 2.3%.

Abortion is very often the only perceived option of addressing an unplanned pregnancy.

The total number of abortions was 189,931 in 2011, 7.7% higher than in 2001.

"Whilst unplanned pregnancy in younger women is an important issue, there is strong evidence to demonstrate that not enough attention is being paid to unplanned pregnancy in older women," the report says.

The inquiry looked at the abortion rates in over-30s which has been rising and says that during the past three years the abortion rate in 30-34-year-olds has risen by about 10%.

To help tackle this trend, the inquiry argues there should be contraception given out - including in the workplace.

Ms Rudd also told BBC Newsnight that her party's debates about the current abortion age limit do not help the debate over how an individual should deal with unplanned pregnancies: "I do feel that the rising rates of abortion rates in this country are a cause for concern, and some of my colleagues in the Houses of Parliament think that the way to deal with that is sometimes to make access to abortion more difficult.

"My view is that the way to deal with that is to make access to contraception more effective... So that you don't have to go down that road."

She says having this conversation and discussing why women get pregnant can help provide better access to contraception and ultimately reduce the number of abortions, by making sure "young women don't get pregnant who don't want to".

"I think it is unproductive to constantly have a debate in the House of Commons about abortion.

"The right debate to be having is about to stop young women getting pregnant.

"To help them make the right choices for themselves... which is about self-respect and ambition to make sure that there is sufficient access to contraception so they can make those choices - in the way that is best for then.

A Department of Health spokesman said: "We will study this report carefully. We will publish our cross-Government plans on sexual health early next year, and this will include a focus on tackling unwanted pregnancies."

Watch Allegra Stratton's report on teenage pregnancy and the debate on Wednesday, 19 December 2012 at 22:30 GMT on BBC Two or afterwards on BBC iPlayer.

The plans are believed to include the Conservatives' aspiration to make some provisions tax deductible.

They also include changes to both the qualifications of child minders, and the number of children they are permitted to care for.

They are set to be announced by David Cameron and Nick Clegg in January.

The measures are being driven by Downing Street as it seeks to overhaul how childcare is provided and funded, sources say.

They are expected to outline a rise in the number of children a child minder can care for and changes to their qualifications in an attempt to improve the number of child minder places at the same time as maintain a high level of quality, sources say.

According to the Institute of Public Policy Research (IPPR), the current childcare ratio in England limits one child minder to looking after three children under the age of two.

Government sources Newsnight has spoken to say that this ratio will rise, although they are still unsure to what level.

A change in the ratios has been championed recently by Education and Childcare Minister Elizabeth Truss, who has been drawing on the example of France where five children aged between new born and two years old can be looked after by one minder, compared with three in England.

In France, for children under the age of four, the ratio is one to eight. In the UK, this ratio is one to four.

In recent weeks Mr Clegg, the deputy prime minister, wrote to Liberal Democrat party members saying he was "determined to make sure we do more" to ease the cost of child care.

Ms Truss believes the experience of France illustrates that quality is not jeopardised by higher ratios.

Downing Street sources said Liberal Democrat and Conservative figures alike were now convinced that looser ratios mean nurseries can take more children on which could see staff paid more, and so greater quality staff attracted.

Sources are also predicting a tightening of the qualifications required to set up as a child minder. This would see a change in the focus of the Ofsted inspections, but would also see a demand for greater qualifications from child minders.

One of the problems the government is trying to address is that it believes early years staff are poorly paid.

Government sources said they had done analysis that showed early years staff in the UK were paid less than their equivalents elsewhere in Europe. In England an average child minder's annual salary is less than the minimum wage at £11,400, whereas in France this is £13,500 and £14,600 in Germany.

Sources say the government plans to make some child care costs tax deductible - potentially up to a third of costs. But it is unclear how the plan would be administered, how many would qualify, or whether or not it will be limited to basic rate tax payers to ensure it is not criticised for funding those who can more easily meet their childcare costs.

Chancellor George Osborne has long held an ambition to allow some or all of the costs of childcare to be claimed back against tax, but sources told Newsnight the idea was "on the table" for inclusion sooner rather later.

Movement on childcare had been expected for inclusion in the government's mid-term review - the document of fresh policy ideas being published by the coalition partners next month - but many inside government now expect the publication of the mid-term review to slip back.

The government remains anxious to make progress on dealing with the costs of childcare so an announcement is currently pencilled in for the first week of January.

Measures on childcare are set to be one of six new policies announced by the government as they detail items they can agree to deliver in the second, more challenging, half of this parliament.

A push to make childcare tax deductible, but limited to women starting up a business, has been led by Mr Osborne's ally Claire Perry, the MP for Devizes, who has argued that over time the cost of the policy would pay for itself as greater numbers of women return to work and their taxes were recouped by the Exchequer.

This has become increasingly critical in the light of research by the Resolution Foundation showing as many as one million women are absent from the workplace because economically it makes more financial sense for them to care for their own children than to pay others to do so.

Figures in both the government and the Labour Party now agree with analysis showing that in order to help living standards recover their vigour of the early 2000s, women need to be encouraged to stay in work.

In 2003, Gordon Brown announced that childcare was at the centre of UK economic policy.

The price of childcare being met by British families has been diagnosed by both the coalition and the opposition as one of the most pressing issues, with the possibility that their differing ways of dealing with it may come into play as an issue in the next general election.

Policy makers across the political spectrum have been grappling with why state spending on childcare is seen as middling compared to other countries by some estimates, and incredibly high by others.

One report published last year by the Organisation for Economic Co-operation and Development (OECD) shows that Britain spends 1.1% of GDP on pre-primary spending for children, higher than the average national spend for other countries. This has been put at £7bn in total.

However the Institute for Public Policy Research in its recent report on childcare costs, Double Dutch, said this figure wrongly incorporated elements which should not be classified as childcare, such as the cost of school for five and six year olds.

A fairer calculation, they say, would put the amount spent by the government on childcare lower. The report authors write: "This makes the UK a middle ranking spender at best, well behind the Nordic nations."

However this has not brought down the costs met by families. According to the OECD's "Doing better for families" report published in 2011 an average British family pays 26.6% of their salary on childcare, while in Europe it is an average of 13% and in Sweden as low as 5%.

The Daycare Trust showed that for 2012, the average cost of childcare is £112 a week - £5,376 a year. They reported that while wages only went up by .3% in 2011, childcare costs increased by 6%.

Britain is ranked at number 16 of OECD countries in its proportions of mothers at work - 67.1% of British mothers compared to 84% in Denmark, 78.5% in Holland and 73.6% in France.

Ms Truss has pushed for reform to regulations imposed on child minders to increase the number of child minding places. If more places can be provided for parents, then the Conservatives believe prices might start to come down.

For a while the minister pointed to the experience of the Netherlands where child minders were more loosely inspected and could take on more children.

However her critics argued that Ms Truss had omitted the extra costs to the Dutch system borne by grandparents - who were already caring for their children - entering the system as child minders and scooping up state funding for a role they were already playing.

To counter her critics, Ms Truss has focused on the experience of France where she believes they manage higher ratios without jeopardising quality.

One particular bottleneck of funding appears where children are in between being cared for by their mother in her maternity leave, but too young for the funding stream which begins at three years old.

That's the contention of the newly appointed planning minister Nick Boles in his interview with our programme. He debated it on Wednesday's Newsnight along with a panel of experts - architects, residents and house builders - with, clearly, different points of view.

It was the first of a two-part series on the programme where we test Nick Boles' plans for building in the UK. The next will be run in a fortnight and we'll hear from the National Trust and the Campaign to Protect Rural England among others.

Boles starts from the perspective that, in his role, he must do more to free up planning.

In the last year we have witnessed a bitter battle over planning reform with the government and their opponents, including the National Trust, fighting each other to a standstill. What was born was the National Planning Policy Framework (NPPF).

What has made news so far is that in his interview with us, the new minister says the headline aim should be, over the next 20 years, that land equivalent to a third of that we currently occupy across the country must be released - if we are to begin to address this country's chronic housing shortage.

This will mean, he says, that while the green belt will be protected, other land - open land or "greenfield" - will have to be brought into play.

The government's new policy now calls for brownfield to be built on first - i.e. land often in town centres, and quite unloved - but makes little mention of greenfield, which is land that has never been built on, or where the remains of any structure have blended into the landscape over time.

We can pick at how much a third more really is - right now various experts put us at occupying anywhere between 6% and 10% of land - homes, roads, parks, everything. Boles' point is that it is not actually that high as things stand.

But the key idea is that greenfield is now up for grabs.

Unaffordable luxury

This idea is contained within the NPPF, but it is not something that has been particularly clearly spelt out until Wednesday's programme. And it is something that has not gone down well with some of the people who have emailed me - that just because land is not in a green belt, doesn't mean that it should not be kept green and pleasant.

Boles believes that such protections for greenfield land is a luxury this country can't afford. It's about generational equality, he argues: if people are to stand a chance of getting on to the housing ladder, then more land must be got on to the housing market.

And so he has turned his attention to how he thinks you can begin to persuade people typically hostile, that they in fact might not mind more homes coming to a field near them.

He argues in our film that if design can be improved, it is possible that - just as with the design of somewhere like the Lincolnshire town of Stamford in his own constituency - people might start to accept new homes. When they were built, the beautiful houses of Stamford were really quite affordable and they served all sorts of people in the community, not just the rich landed earls.

Right now we are a long way from that. His argument goes like this: because there is a relatively short supply of land on the market, a handful of housing developers dominate the market. And because of the expense of that land, and the costs of developing on it, new entrants do not enter the market. Developers with a particular way of designing houses design the same houses over and over again and the result is "ugly rubbish" or "pig ugly" buildings in Nick Boles' opinion.

This then makes sky high land prices worse - because local communities oppose developments making it even tougher for buildings to get built. It's classic supply and demand. Except with a bit of aesthetics thrown in. You could call it "aesthetic economics".

His formulation goes like this: "Because we don't build beautifully, people don't let us build much. And because we don't build much, we can't afford to build beautifully."

His solution is this: if more land can be brought onto the market, then a series of things - positive in his view - can happen. More land in the system would drive down the price of land. This could encourage into the house development business smaller, more unusual designers who might design differently. More creatively.

In bringing in more providers, choice is increased for house buyers, and that could have a positive effect on the developers - that they would want to take more risks with their housing too.

If the aesthetics of house design can be improved then a vicious circle currently depressing our house building behaviour can be disrupted.

Watch Newsnight 's Allegra Stratton's report on BBC iPlayer .

He told BBC Newsnight building on another 2-3% of the land in England - bringing the total to about 12% - would "solve the housing problem."

Mr Boles said open land would be built on in exchange for commitments to defend greenbelt spaces.

He called for "beautiful" housing that was sensitive to its local area.

In his first interview about his portfolio since he entered government, Mr Boles has reopened the debate over how much more housing Britain needs and where.

Describing current housebuilding as "ugly rubbish", he argued that improved design might persuade local communities currently opposed to more development to support further building.

"The built environment can be more beautiful than nature and we shouldn't obsess about the fact that the only landscapes that are beautiful are open - sometimes buildings are better," he said.

To this end, the minister says that new housing will not be on the greenbelt, but he does say that open land will be targeted.

"We're going to protect the greenbelt but if people want to have housing for their kids they have to accept we need to build more on some open land.

"In the UK and England at the moment we've got about 9% of land developed. All we need to do is build on another 2-3% of land and we'll have solved a housing problem."

Mr Boles also told Newsnight that having a house with a garden was a "basic moral right, like healthcare and education".

"There's a right to a home with a little bit of ground around it to bring your family up in," he said.

After a battle over planning reform, in the spring the government and a range of opponents appeared to reach a truce. Now Mr Boles has set out what the government's proposals will entail.

He was made planning minister by David Cameron in the September reshuffle and is a well-known proponent of liberalising planning regulations in Britain.

Before his appointment, in a speech to Tory colleagues, he had described opponents of the government's planning reforms as "scaremongering Luddites".

But his plans will be controversial with his Conservative colleagues.

In recent weeks, Tory MP Nadhim Zahawi has reacted angrily to the adjudication by Secretary of State for Communities Eric Pickles, who oversees planning, to give the go-ahead to a greenfield development on the edge of Stratford-upon-Avon.

There was also local unhappiness in Winchester when Mr Pickles approved a development at Barton Farm.

"It's my job to make the arguments to these people that if they carry on writing letters, their kids are never going to get a place with a garden to bring up their grandkids," said Mr Boles.

"I accept we haven't been able to persuade them. I think it would be easier if we could persuade them that the new development would be beautiful."

Talking about the historic town of Stamford, situated in his own Lincolnshire constituency, he said: "Local tradespeople... decided they wanted to build nice places to live.

"We've somehow forgotten to do that, which is why people object to us building on open farm and land - they build ugly rubbish. If we remember to build places like Stamford, people won't mind us building in fields."

Watch Newsnight 's Allegra Stratton's report on Wednesday, 28 November, 2012 at 22:30 GMT on BBC Two or watch afterwards on BBC iPlayer.

While many MPs were in their constituencies, a quorum of be-suited Eurosceptics had stayed in Westminster for a key occasion.

The MP Douglas Carswell secured a slot in the Commons chamber for Parliament to debate the proposition that Britain should leave the European Union.

It only lasted half an hour, but Carswell and his fellow travellers had succeeded in hijacking the "cock pit of the nation" to turn the plane around and pilot Britain out of Europe.

This debate has no binding impact on the government, but Carswell speaks - to varying degrees - for a growing number of backbenchers and frontbenchers on Britain's relationship with Europe.

David Cameron has two flash points on Europe ahead this autumn.

The first comes towards the end of November, when the new European budget will have been approved.

The PM will be pushing for only a rise in line with inflation - he needs to get movement his way on this in order to be able to sell his deal to an increasingly restive brood.

The second one comes in December, when the EU will likely agree some kind of banking integration for Europe.

The prime minister has played hardball in EU budget negotiations - the government line is that we can't cut back in country and allow expansion elsewhere.

But a benign side effect for the prime minister is that talking tough on Europe has worked for him before.

When, last December, he vetoed that EU deal of almost a year ago - the cognoscenti were not sure what the purpose of his veto had been but you, the public, liked it - David Cameron enjoyed a seven-point poll boost in the Ipsos Mori series.

The problem is that new analysis given to Newsnight shows that even if David Cameron is successful in killing the EU budget rises dead - well, it won't be anything of the sort.

Open Europe, an independent think tank pushing for EU reform, has worked out that because of peculiarities of this next EU budget, even though the prime minister will talk about a freeze... our net contributions will actually go up.

Right now, the European Commission proposes that between 2014 and 2020 the European Union budget should rise by 5% to 972bn euros.

The UK has suggested it should only be increased in line with inflation - to 886bn euros.

If the Commission got its way, Britain's own net contribution would go up substantially, which is why Mr Cameron is wielding his veto.

But Open Europe's analysis shows that, because of the new break down of the next budget, even if the prime minister gets his freeze, it won't actually be a freeze.

More money will go to the new EU member states (the 2004 entrants) - spending on these countries is not covered by our famous rebate. Open Europe says this means that the UK gets no cash back for the money it spends there.

Their criticism is less that new European countries are getting funds and more that those funds are not being redirected from existing EU funds.

But they are not, and so the bill has to go up.

Open Europe says that, at the lower end, it calculates the UK's net contribution could go up by 130 euros a year - 970m euro or nearly 1bn euros over seven years. And at the upper end, it could be 2.37bn euros over the period.

It suggests that when Mr Cameron comes back with what he thinks will be a victory in November, some of his critics might actually think he's made more of a votive offering to Europe.

It could backfire quite badly.

It decides what public spending will be in the future, and this pending one will divvy up resources from April 2015 onwards.

We have seen the beginning of a debate about when we will learn about what cuts, and what public spending, we will see in the second half of this decade.

I revealed on Newsnight at the beginning of the summer that many Whitehall sources were contemplating the spending settlement of 2015 and were unable to see how the coalition partners could agree what their spending priorities would be without lashing themselves together for the next election.

For many senior players it was more or less a dead duck: what is the point of beavering away on a magnum opus - intricate-as-clock-work spending allocations for every crevice of government, a whole basket full of Faberge eggs - when it was unlikely to see the light of day?

Then the prime minister gave an interview to the Telegraph suggesting just as much - that it was very hard to see how he and the Lib Dems could agree joint spending totals beyond the next election.

Those Treasury civil servants still ploughing on, downed pens... But at the time Lib Dems were the sole voices of caution. That the CSR wasn't yet buried.

Well, this opening 24 hours at their conference appears at first glance to have seen that CSR ceremonially wounded if not killed.

David Laws and Danny Alexander yesterday, and now today Nick Clegg, have said that in April 2015 it is likely there will be an agreed spending pot for a year - as I reported was the likely outcome on Newsnight in July - to tide over councils and civil servant salaries, but probably no more.

No CSR lasting until 2018-19... An alphabet and numerical soup. Why does it matter? Well... it is fundamental. Through what you would spend, and what you would cut, you reveal what kind of party you are, ahead of the next election.

The chancellor is insisting that for him to reach his deficit reduction target by 2017, there must be £10bn further cuts to welfare to allow cuts elsewhere to remain at the same rate as we are experiencing right now.

A fascinating IPPR piece of work we broadcast on Wednesday night's Newsnight suggested that if you do do these £10bn of welfare cuts, you can halve the level of cuts you have to visit on other spending areas like defence, the police and so on.

This is why, as revealed on Monday's Newsnight, they are eyeing the freezing of benefits for two years. As I said at the time, they are looking at, but are likely to dismiss freezing them all. Instead they have three options and the one most favoured brings in £2bn to £3bn, Treasury sources say.

Eagle-eyed sources point out that the Lib Dem leader in his Independent interview on Saturday did not rule out freezing any benefits, just freezing all. He focused on the more harsh option - one he will know isn't seriously up for consideration.

But, two things. Firstly, some kind of comprehensive spending review is possible. I understand that what could be struck is some kind of headline spending figures, which could be announced by the coalition partners ahead of the next election to last them until almost the eve of the election after that, 2020.

Senior coalition sources tell me that the two parties could agree a "glide path". So what the level of spending should be in 15-16, 16-17, 17-18 and 18-19 but that that would be all. They would then be free to disagree as to how you get to these targets - whether by Concorde, Hercules or a paraglider.

The virtue of this would be that Labour would have to accept the glide path, or be in a tight spot with the electorate - having to explain why their spending plans are affordable, and costed.

And that is why even though the Lib Dems in Brighton today are trashing the idea of finding a set £10bn figure, they are coming up with their own ways of finding some of it.

It is likely the Lib Dems would cut the welfare budget by means testing universal benefits for the elderly which would save them £1.5bn (that budget costs them £4bn but £2.5bn is very hard to see how to cut).

One of the shrewdest observers of this CSR endeavour, Gavin Kelly of the Resolution Foundation, has suggested the Lib Dems could hypothecate these savings to pay for the Dilnot proposal for social care - illustrating that while there may be potential for savings, there are also fresh outgoings on the horizon.

What of taxes on the wealthy, if not wealth taxes? The Lib Dems will return to their stalwart pledge to end tax relief for higher rate pensions.

It could bring in some £7-8bn. If they did that, plus some action on universal benefits for the elderly, you can see that they are within sight of Osborne's £10bn.

But today they have made very clear that they will winkle some kind of wealth tax out of the Tories (in exchange for giving ground on what they don't say).

Put aside Danny Alexander's tax-avoidance crusade, any wealth tax will have to be iconic and their myriad clamp downs on tax avoidance are too disparate to count.

The last Budget saw a higher rate of stamp duty - 7% - on expensive properties brought in. Because the wisdom of this is a battle already won with the Tories, my Lib Dem sources wonder whether they couldn't reach some agreement to go further on this ahead of the next election.

And what of higher bands of council tax? In the last year this has been discussed within government, but the reason they couldn't bring in another level of council tax to whack higher-end properties was because the last, current, coalition agreement said that there would not be a council tax revaluation.

Both parties will be freed of that pledge when they come towards the next election. Senior Lib Dems tell me it is not inconceivable they bring in new bands for truly whoppingly expensive homes... Despite their party being broadly against the principle of council tax (remember, they want to localise tax rates).

Communities Secretary Eric Pickles will wince at this: it means every council tax band being re-evaluated with the consequence that, erm, everyone's council tax will go up. Popular stuff.

Elsewhere, not replacing Trident would bring in some billions, meaning the defence budget can be cut a bit.

So... Lots of numbers... Lots of what ifs. But at root, decisions that will affect what kind of country we are living in for the next decade... And now the possibility of a glide path to get there.

If implemented, the move would see many benefits frozen for two years, then rising only in line with average pay.

In recent years inflation has risen at a far higher rate than average earnings - Whitehall officials say a switch since 2008/9 would have saved £14bn.

The government needs to find £10bn of extra savings in the welfare budget.

Sources stressed the detail of how to make these cuts had not yet been discussed. They would not be drawn on which policies were being looked at.

Newsnight understands that the new £14bn figure is entering into fractious government debate over how to make a further cut to the welfare budget - something occupying minds at the top of government.

The move, under which millions of claimants' benefits would eventually inch up at the same pace as average earnings, would affect a wide range of working-age benefits including jobseeker's allowance and housing benefit.

Chancellor George Osborne has told the Department for Work and Pensions (DWP) it must come up with the extra £10bn reduction to allow cuts to other government departments, due to begin in 2015, to stay at the level they are now, rather than go deeper.

Mr Osborne tried to refashion the link between benefits and inflation last September when inflation came in at an unusually high level - 5.2% - but he was beaten back by an alliance of the Liberal Democrats and the Work and Pensions Secretary Iain Duncan Smith.

Though he was unsuccessful then, the idea has resurfaced. One Whitehall source close to the process said: "A freeze [to benefits] for a couple of years would help us get to the £10bn."

Tory strategists believe they have polling evidence which would put significant numbers in support of an end to so-called benefits uprating.

But the possibility of freezing benefits will anger Liberal Democrat activists as they prepare to gather in Brighton this weekend for their annual conference.

Many in the party believe the coalition should find the further £10bn of cuts through tax rises such as wealth taxes and there should be no further cuts to welfare.

An increasing number believe the welfare budget is already straining to bring in its current £18bn of cuts.

Historically benefits have often risen by less than wages, with inflation not typically as high as in recent years, and it is already falling this year.

Despite this, coalition sources say it is not clear wage growth will recover to its former health for a while, which will require the examination of the relative increase in benefits versus that for wages.

One option now being weighed up inside government is the freezing of 90% of benefits - which officials estimate would make savings of £7bn in one year.

However, coalition sources suggest this is likely to be discounted as too harsh, since it would include disability benefits.

Instead, other options are being discussed which coalition sources believe would be "fairer".

Senior figures are proposing a two-step change to the payment of benefits. At first there would be a freeze to a wide range of working-age benefits to last for two years. After that a new link would be introduced between benefit payments and increases in wages.

Officials said they did not want a huge increase in benefits should wages start to climb very sharply, so work was being done on the exact linking mechanism.

The IPPR think tank has estimated that had benefits been linked to earnings, not inflation, over the last few years, jobseeker's allowance would be a weekly £66.81 rather than £71.

Sources said they were mindful of the risk of pushing benefit claimants into poverty, but that there was potential for massive savings.

"Benefits are rising faster than earnings; this does not encourage people to go to work. Benefits were never meant to be a salary replacement," one told the BBC.

"We are aware that there is the effect on poverty to be considered but we believe that benefits have risen by so much over the last few years that a freeze for a couple of years would help people deal with the transfer. When you see the savings possible, it is simply mind-boggling," the informant added.

Sources believe the change would not be implemented quickly, but could be in place by 2014, suggesting it is being eyed as pre-election challenge to Labour and the Lib Dems.

One benefit which will not be affected is the state pension. Pensions are now protected by a "triple lock" which means they will go up annually by either inflation, earnings, or 2.5%, whichever is higher.

Having introduced this measure, the coalition will not touch it. But all other benefits are not protected in this way.

Throughout Westminster new ministers are in back-to-back meetings. Civil servants are reading up on the various think pieces their new charges penned when free to speak their minds.

I understand the PM told new ministers as he appointed them - swigging claret or not - that they had hitherto written very interesting things about the world, and said very interesting things. Now had come the time to get on with it.

The word has also gone out not to follow the Anna Soubry model - that is, do an interview before your feet have hit the floor. Disappointing if you are a journalist; probably sensible if you want to make cabinet level.

For those passed over there is crushing disappointment.

Some in the 2010 intake believe that Cameron was nobbled by the 2005 intake - that last week's appointments whiff of having-done-time, of having been in parliament for a sobering amount of time. That may, however, just be generational pouting by the new MPs.

The key thing keeping many chins up in Westminster is word being put around by Andrew Mitchell, who runs the whips office, that from now on there will be an annual shuffle.

That is certainly the sense those not appointed this time round, have got.

The surprise oversights include Margot James and Harriet Baldwin. These two have accepted roles as parliamentary private secretaries (PPSs).

What interests me, apart from such a change in strategy from the prime minister, is that male MPs I have run this idea past - both new ministerial appointments and those left out - have pooh-poohed it.

This leads me to wonder whether this is something only being said to female MPs.

I wonder whether there will not be another reshuffle in a year's time designed specifically to bring on another round of women.

This would make sense if Cameron is to make good his pledge that government will be a third female by 2015.

By bringing so few women into junior government positions, the consensus is he has done little to solve his "conveyor belt problem" - namely that in order to promote someone to cabinet level you have to had made them a junior minister first.

This would be partially addressed if he shuffled his cards next year.

Alternatively, there will not be another reshuffle next year.

Instead, by putting around a suggestion that gives hope to the disaffected, the new whips office is already proving very, very effective.

But on Saturday, he will have to deal with something that might have even more of an impact on his party's chances at the next election, the £10.5bn question: welfare cuts.

On Saturday, Mr Clegg will be paying homage to the left of his party, the social democratic group Social Liberal Forum, when he delivers the annual Beveridge lecture on the "five giant evils" - squalor, ignorance, want, idleness and disease.

He has been asked to demonstrate how coalition policy slays Beveridge's five. Once that would have been a pretty hard sell (given the audience) but do-able (the government believes their reforms are helping people help themselves).

But on Saturday, his job will be even harder. For this will be the first gathering with social democrats since a new political fact entered the landscape - that with growth failing to materialise and in order to keep spending cuts across Whitehall the same as they currently are, the government needs to find a further £10.5bn of welfare cuts - £10.5bn just to stand still.

Having howled at those benefit changes already enacted by the coalition, this crowd will want to know how their party uncouples itself from this pledge.

Former MP and coalition critic Evan Harris will field the Q&A afterwards. Put it this way... I have been told that unless the deputy prime minister bends his knees adequately to Beveridge, he can expect boos.

This is what leads us to the more serious medium term political consideration, how can the two coalition parties agree a set of joint spending plans that spans the next election? Gavin Kelly, formerly of the Treasury, writes about this in an upcoming article.

It is unlikely Mr Clegg can sign up to the Comprehensive Spending Review (CSR) as currently envisioned by his coalition partners.

So great is the tension that Newsnight has heard from Treasury sources that there are many people planning for the CSR who feel they are going through the motions.

They simply cannot see any way that Nick Clegg can sign up to the next spending round.

For the Conservatives it is easier to see the headline attraction of going further on welfare (although hard, Nick Boles' speech suggests how: deep into tax credits and benefits).

Mr Cameron chose to give his first "what-I-would-do-running-my-own-government" speech on the specifics, quite detailed specifics, of how he would do more to reduce the welfare budget (again: cuts to housing benefit and benefits for out of work parents).

If Mr Clegg sanctions £10.5bn more welfare cuts then he could be expediting his own deselection, according to those on the social liberal and social democratic sides of his party.

The reception he will get on Saturday is nothing compared to what they would do to him if he signed up to Chancellor George Osborne's plan.

Now there are, of course, Lib Dem revenue raisers - scrap higher rate pension relief, bring in a mansion tax, kill off Trident. But these are a) only palatable to the Liberal Democrats and b) needed to pay for some of their future commitments - such as the already manifesto commitment to take everyone on the minimum wage - a salary of about £12,200 p.a - out of tax.

Many in Whitehall now think that given the state of coalition relations, the CSR will be delayed until late 2014 (one of Gavin Kelly's insights in his upcoming piece is that councils need to know their April 2015 budgets by autumn 2014).

It is my understanding this is almost certain. Even then it is also highly likely it becomes a slimmed down beast - with the Treasury simply handing departments one year spending chits to tide them over to the other side of an election.

Conservative MP Nick Boles is also urging a significant further scaling back of tax credits and housing benefit, and a re-examination of the "lazy sentimentalism" of the Sure Start programme of children's centres.

Mr Boles will appear on Newsnight on Monday to propose ways his party can best address the decline in living standards, faltering in the UK for the last decade.

Previewing ideas he will set out in full with a speech on Tuesday to the independent Resolution Foundation - whose work is devoted to diagnosing the problems affecting low to middle income earners - Mr Boles proposes a philosophical shift that should guide the next round of spending cuts due for 2013 or 2014.

He will say that only those tax and spending policies that can explicitly be seen to increase competitiveness of the UK workforce should be supported.

The ultra-modernising MP has worked alongside the current Conservative leadership since opposition.

He founded the think tank Policy Exchange - a petri dish of ideas for the Conservative leadership - and though the ideas in his speech to the Resolution Foundation are his own, he is close to many leading members of the government and suggests the next wave of Conservative ideas being contemplated as all parties consider further public spending cuts.

His proposal to re-evaluate the effectiveness of Sure Start will be uncomfortable for his Liberal Democrat coalition partners. Mr Boles is the parliamentary private secretary to Schools Minister Nick Gibb, in the education department which has oversight over Sure Start.

Mr Boles has devoted much energy to considering the issues affecting those on low to middle incomes as they struggle to keep their earning power up in the face of downward trends in earnings and living standards afflicting all developed economies.

In his speech Mr Boles will say: "It is my contention that politicians - of all parties - have barely begun to wrestle with the implications of the stagnation in living standards or confront the agonising choices that we will be forced to make in the decades to come."

He believes:

"If we are going to make any difference to the future productivity of working people and the competitiveness of our economy, we must abandon this soggy approach and demand that the programmes we invest in have a substantial and measurable impact. Otherwise, we should leave the money in the hands of taxpayers, from whence it came," Mr Boles will say.

"Productivity and competitiveness are my lodestars because I am convinced that the only way that we can restore sustained improvement in living standards is if most working people in Britain can command high and steadily increasing wages in the market place.

"It may be true that, for some, total household income has continued to grow because a previously unemployed partner has started work or one or both partners have increased the number of hours they work.

"It may also be true that increased financial transfers by government have helped many people on low pay enjoy rising incomes despite the stagnation in their wages. But it seems obvious to me that neither of these trends is sustainable - and, even if they were, we should not want them to be sustained.

"What will it do for our health and happiness (let alone that of our children) if the only way to achieve a growing income is to work longer hours? And which of us really believes that any government will be able to expand every year the amount of money it gives to those whose wages have stalled?" he goes on.

He will also challenge the Labour leadership to reveal which taxes they would raise to reconcile their public spending pledges with their declared commitment to deficit reduction.

Mr Boles becomes the most senior of modernisers around the prime minister to endorse the scrapping of benefits for the elderly, as well as proposing a delay in bringing in social care.

Work and Pensions Secretary Iain Duncan Smith has said before that universal benefits for the elderly might have to go, but in a recent speech on welfare the prime minister ruled out ending them within this Parliament.

I am sure there will be many of you who do not accept the premise that the over 65s should pay more back in at all.

Indeed that is what will be dissected by government minister David Willetts, author of "The Pinch - How The Babyboomers Took Their Children's Future And Why They Should Give It Back", and a large audience of said babyboomers.

One sore point for this group is that for some, this country's basic pensions have been meagre, complicated and occasionally demeaning.

Pensions Minister Steve Webb has long-believed this and he has spent a lifetime campaigning to reverse it.

So, on entering government he put his head down and came up with something embraced by the coalition - get rid of the complicated pensions with endless top-ups and add-ons and bells, and bring in the single-tier pension of £140-a-week.

Last week in his speech on welfare, the prime minister gave Webb's work a hefty plug: "If you have worked hard all your life, then you deserve real dignity and security in your old age... it's why we're bringing in the single-tier pension... It's about doing the right thing by those who have done the right thing all their lives and I'm proud that we are the government taking this forward."

Today, sources tell me the reforms have met a large high and thick wall in the corridors of the Treasury.

The problem is this: rolling the basic state pension (currently £107.45 a week) and second state pension into one single scheme will be excellent for those who have only been able to make small or indeed no pension contributions.

But what about those who have been paying quite a bit in? Quite a lot in?

The National Pensioners Convention has pointed out that someone retiring today with a 30-year contribution record would get a pension of £150 - this would become £140. So clearly they stand to lose.

It is this group Conservative ministers are looking to help. The trouble is, how can you mitigate the effects for this group, without costing the Treasury?

Any mitigation fund has to come from somewhere. Perhaps from those Barclays fines? This is why Treasury officials are concerned. As one source told me, they are "demanding to know where there are going to be savings down the track."

I understand there is enough political pressure to find a resolution from Steve Webb, flanked by Danny Alexander and Clegg and with prime ministerial power behind them. It was raised in the meeting of the so-called "quad" this week and there is demand for it to come out soon.

But it is a reminder that there are 50 shades of grey in the debate over generational inequality - there are the howls of anguish as inequality between the generations is discussed and ideas for redress are broached.

And it turns out there are similar howls when someone like Webb tries to bear down on inequality within the older generation too.

Watch Allegra Stratton's full report on Newsnight on Wednesday 4 July at 2235 BST.

He told BBC Two's Newsnight this was down to the coalition leadership trying to "appease their ideological environmental wing" of both parties.

The Mayor of London said he believes his colleagues in central government appear to be "tip-toeing back towards the electrified fence of the third runway," and says that if they go ahead they will get "the most powerful shock".

Mr Johnson says he will "die in a ditch" to prevent a third runway and instead urges the government to discard the coalition agreement and consider expanding at Stansted or Gatwick as an interim solution ahead of any new airport built in the South East.

He also dismisses a suggested proposal that RAF Northolt - close to Heathrow - should be brought into use as a third runway for Heathrow.

'Boris Island'

Some time in the summer the government is due to publish a consultation paper on expanding airport capacity in the South East. It is a fraught issue for the coalition.

Conservative cabinet ministers, including Education Secretary Michael Gove and Northern Ireland Secretary Owen Paterson, have demanded in recent meetings that the government expand airport capacity in the South East as a means to galvanise investment in the UK economy - both through a large infrastructure programme and through the economic activity it might enable. They are said to have persuaded the chancellor of the merits of their case.

The coalition agreement rules out the building of the third runway - something the Conservatives campaigned against at the last election and which the current Transport Secretary, Justine Greening, vociferously fought against. Her Putney constituency would be affected.

The mayor has long championed an idea of a new four-hub airport which, if built, would double the current capacity of Heathrow, something industry insiders have said risks undermining Heathrow.

Now Boris Johnson is renewing his bid for government backing, but says he believes his colleagues may not make a decision. He also voices fears they are looking again at the building of a third runway instead of backing his idea of an airport in the Thames Estuary, so-called "Boris Island".

"Let me explain what is happening", he said. "They are trying to long-grass it. Their whole strategy is that this is simply too difficult.

"It's difficult because they are trying to appease their ideological environmental wing - some of them in the Tory party some of them in the Lib Dem Party. They want to keep every ball in the air until past 2015. That's the strategy as far as I understand it."

On the government taking a second look at the building of a third runway at Heathrow, Mr Johnson said:

"I think it is very difficult for a government to go against the wishes of the population by greatly expanding an airport slap bang in the middle of London suburbs.

'Historical accident'

"London is unlike any other capital in the world. We ask our planes to fly in over the city and land in the western suburbs. Nobody else does it that way - it is an historical accident.

"We should not aggravate that mistake. I think there is now a risk that the government is going to tip-toe back towards the electrified fence of the third runway - you can hear some of the mutterings from some people in the Treasury and the Department for Transport - they are testing the water, to mix my metaphors.

"But when they get to that electrified fence they will have a most powerful shock. It is not deliverable - now or in the future, the third runway is, as they say in Brussels, Caduck. It is dead, it is over, move on."

Acknowledging it could take 15 to 20 years to build, he accepts there must be some "stop-gap" solution, and says that ideas ruled out by the coalition - such as the building of extra runways at either Stansted or Gatwick - might need to be reconsidered.

"In reality, you're probably looking at 15-20 years. That's with a certain amount of electro-convulsive shock therapy to the whole thing," he said.

"If we had a bit of get up and go we'd do it in six years. That's how quickly we did it in Hong Kong."

Mr Johnson told Newsnight: "You've got an irresistible force in the form of businesses desire to do this, you've heard what [Richard] Branson has to say.

"All my time as mayor I've been lobbied by business - this country's economic drivers, who say, 'We've got to have more airport capacity, particularly in the South East'. And then we've got the immovable object which is public aversion to a third runway at Heathrow.

"Politicians like me who will die in the ditch to prevent that from happening because it really would be a disastrous solution. So that means you've really got to look at alternatives and that's why the government is very sensibly having a review.

"You should not exclude the possibility of a clean, green, eco-friendly 24-hour hub airport. Conveniently located down river. Offering the chance to entrench this city's lead as the greatest economic commercial capital in Europe.

"The stopgap has to be some sort of expansion somewhere in the perimeter of London. I've got a very open mind. I understand the arguments from business that you need an interim solution, but what I don't accept that a third runway can't be that interim.

"It will cause huge numbers of extra planes over the City, because everybody knows that once you get an interim solution it will be permanent. Nothing survives like a provisional solution. It will greatly erode the quality of life."

Asked what that stop gap might be, given the expansion of Stansted and Gatwick have been ruled out, the mayor said: "Don't forget the coalition has moved quite some way already in the last few years because it began with a policy of no more runways anywhere ever in the South East. That was patently not economically sustainable.

"I think the coalition has moved quite a long way - not just Lib Dems who have been taking that line but many of my friends in the Conservative Party. I don't think that's economically sustainable."

When asked what would happen to Heathrow if his new four runway airport were built, Mr Johnson said: "You are creating a new hub airport... doesn't mean Heathrow couldn't be a local airport. But in terms of a new hub that would not be at Heathrow."

Watch Allegra Stratton's full interview with Boris Johnson on Newsnight on Monday 28 May at 22:35 BST.

One of the big themes I'm hoping to explore is how does the UK adapt to a flatter world in which power - both economic and political - is shifting eastwards. The parties have very different answers to this question and it is fast becoming the key battleground in British politics.

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