GEORGE Osborne will today try to grab the centre ground from Labour by announcing £5 billion of new spending on roads, rail and energy, including about £500 million for Scotland.
It is an attempt to boost economic growth and prove that the Tories are a party of public investment.
Mr Osborne will also welcome one of Gordon Brown’s former ministers to run a new commission on infrastructure. Former Labour transport secretary Lord Adonis is to head the commission and leave the party now led by Jeremy Corbyn to sit on the crossbenches in the Lords.
The Chancellor will use his speech to his party’s conference in Manchester to confirm that he will offer paid maternity-style leave to grandparents who take time off work to help look after newborn grandchildren.
But in a sign that he will not budge on welfare, Prime Minister David Cameron has confirmed there will be no rowing back on plans to slash working tax credits for poorer families.
As well as enlisting Lord Adonis – who also used to be a Lib Dem and has reportedly flirted with joining the Tories – Mr Osborne has grabbed Labour’s idea for a National Infrastructure Commission.
He will tell delegates: “Where would Britain be if we had never built railways or runways, power stations or new homes? Where will we be in the future if we stop building them now?”
The message is seen as a defiant attack on critics of a new runway at Heathrow and the new High Speed 2 railway which is due to run to Manchester and ultimately to Scotland.
The Chancellor will add: “We have to shake Britain out of its inertia on the projects that matter most.”
His proposed commission could come up with plans involving Scotland, although capital spending north of the Border is mostly controlled by the Scottish Government.
The new money will be raised through the sale of government land and assets.
In addition, English councils are to be forced to use their pension pots to fund infrastructure projects.
The commission is also meant to provide independent, dispassionate advice for the government on what needs to be done to take the political heat out of some decisions.
But one change that will not be in Mr Osborne’s speech is on the decision to slash tax credits. Yesterday, Mr Cameron resisted pressure to back down on tax credit cuts, as tens of thousands of anti-austerity protesters marched outside the annual conference venue.
There will be no review of the cuts in next month’s Autumn Statement, he said, brushing off calls from within his own party for a rethink of the changes announced in Mr Osborne’s Budget.
The independent Institute for Fiscal Studies has warned millions of people will lose up to £1,300 a year from the changes, which were condemned by trade union Unison as a “cruel tax credits snatch-and-grab”.
Tory former minister David Willetts urged Mr Cameron and Mr Osborne to “ease” the policy, telling a newspaper: “There is a real risk that it could turn sour as some of those hard-working families that politicians love realise they are heavy losers.”
Mr Cameron said the introduction of the £7.20-an-hour “national living wage” and continued increases to the personal tax allowance would protect the poorest.
Before Tories entered office in 2010, the tax credit bill had spiralled from £6bn to £30bn, with nine families out of ten entitled to receive the benefit, he said.
He told the Andrew Marr Show: “We are moving to an economy where you get paid more and where you pay less in tax, rather than paying more in tax and getting the money back in tax credits. That is a better system.
“If you don’t tackle excessive welfare and make reductions there, you have to either put up people’s taxes or cut the NHS or cut education, which I don’t want to do.”