Nick Clegg is forced to raid school maintenance budget to plug shortfall – initially feared to be as high as £200m

The coalition is having to raid its school capital budget to find cash to build new school kitchens and fulfil its pledge to let all primary schoolchildren aged five to seven receive a free school meal, a pledge announced by Nick Clegg at his party conference in September.

Whitehall sources said Clegg had been forced to take money from the schools maintenance budget to fund emergency construction and improvement of school kitchens. The £150m shortfall stems from higher demand for school meals.

The need to build extra kitchens had not been foreseen at the time of the £600m announcement.

Initial leaks had suggested the shortfall amounted to £200m, but after the overspending story initially leaked, the Lib Dems said the one-off capital allocation was in fact £150m. Of this £80m will be from the Department for Education schools maintenance budget, while another £70m will be new money coming from the Treasury.

In an issue that was taken to the quad – the group of four most senior ministers in the coalition including Clegg, David Cameron and George Osborne – the Department for Education complained that the extra money could require ministers to raid its basic needs budget, the fund used to deal with the rise in the number of primary schoolchildren caused by a baby boom.

However, instead it was agreed that unspent money from the DfE's maintenance budget would have to be deployed.

Cameron sided with Clegg in the Quad meeting, according to coalition sources, in return for the Liberal Democrats ceding some ground on environmental issues.

A DfE source said: "There is no spare money in either the basic needs or maintenance budget to pay for Clegg's kitchens."

The source denied the money due to be announced in the autumn statement would be new, but said it would be taken from elsewhere in the department's budget. One Whitehall source said: "Even for Clegg, this gimmick does not work if he has to raid the budget for primary school places." Negotiations were continuing on Wednesday.

Clegg won the extra £600m for free school meals for the scheme to begin in September 2014 as part of last-minute autumn deal that allowed David Cameron to spend on a marriage tax allowance.

It is thought that Michael Gove, the education secretary, regarded the free school meals proposal as political showmanship designed to win Clegg votes at the election, but unlikely to do anything substantial to improve schooling.

There are also wider reports of increasingly tense relations between Clegg and the education secretary, with Clegg telling the cabinet secretary, Jeremy Heywood, at one point that he found it increasingly difficult to work with Gove.

At education questions on Tuesday Gove went out of his way to praise Clegg in a bid to pour oil on troubled waters.

The two sides are at loggerheads over the decision of Clegg, without warning, to announce that he wanted qualified teachers to work in free schools, something the Liberal Democrats had endorsed before but had never been highlighted by the deputy prime minister.

At the outset of the coalition the two men appeared to be ideological allies.

Part of the difficulty is that Clegg is taking an increasing interest in early-years education, partly to mark out some distinctive personal ground before the election. Clegg has been closely involved in announcements extending childcare support, the pupil premium and helping the young unemployed.

The autumn statement is expected to include a commitment to lift employers' requirement to pay national insurance for workers aged under 21. This would cut the cost of employing young people by an average of £520 a year per worker.

The free school meals pledge has been popular with the public, but led to some criticism within Clegg's own party.

Nick Harvey, the former Liberal Democrat defence minister, described the announcement as "absolutely astonishing".

He told the Huffington Post he wanted the money to be better targeted so free lunches would be given to poor children from when they started school at five to when they finished at 18.

He said: "Someone, somewhere, has found £600m a year we didn't know about down the back of a filing cabinet and has come up with the brilliant brainwave that the best way to spend it is to give a free school meal to all five-, six- and seven-year-olds – regardless of their income level. I am sitting there, gawping in open-mouthed astonishment."

The Liberal Democrat schools minister, David Laws, said: "Free school meals have multiple benefits – children concentrate more in school when they get a proper, healthy, lunch; they eat more healthily; pressure on household budgets is relieved; and families on low incomes who go back to work are helped too – by no longer losing all their free school meal entitlements."