Plans for a £9bn investment in the rail network and a boost for housebuilding will be announced by the government this week as it focuses on the economy and seeks to heal the rift between the coalition partners over reform of the House of Lords.
The string of announcements begins on Monday when the Cabinet travels to the Midlands for its weekly meeting, and at a joint event where David Cameron and Nick Clegg will announced £9bn of investment in the rail network including major electrification of railway lines, and a fund to pay for reopening lines and stations.
Later in the week there is expected to be a significant announcement about plans to boost housebuilding – a high-profile issue because it is considered one of the quickest ways to generate spending and new jobs – which would be spread around the country. A further proposal for an increase in road building had been scheduled for the end of this parliamentary term, but is now more likely to be in the autumn. Last week the Treasury also announced a "funding for lending" scheme, designed to give banks more confidence to lend to businesses.
The schemes will be scrutinised for evidence that the government has accepted criticism that it is not acting fast or hard enough to reverse the continuing slump in the economy, with ministers braced for further bad news on jobs and investment over the summer.Last night government insiders said the announcements were planned in close succession to make a "bigger splash" and draw public attention before the Olympic games and summer holidays. But they denied they indicated that the government had accepted that it needed a "plan B" for the economy – a bigger focus on investment which has been demanded by critics from big business groups to the Labour party. One official has suggested it is "plan A-max". The coalition says it is still committed to cutting back on public spending.
There are already concerns about whether there is any new public spending, and how quickly the projects can begin. There is a particular worry that the railway projects will not begin until 2014, and will be largely funded by fare increases.
"I hope all these little things add up to something material, but it doesn't seem like the comprehensive plan for jobs and growth that the country needs," said Rachel Reeves, Labour's shadow chief secretary to the Treasury.
The launches follow a turbulent weekend in which the Conservative leader moved to heal rifts with Liberal Democrat partners in government after a Tory backbench rebellion forced the government to backpedal on Lords reform.
In a Sunday Times article Cameron said it "would be insulting the public's intelligence to pretend there aren't profound areas of disagreement" between the Conservatives and the Lib Dems, citing Lords reform and Europe in particular. "What's far more significant is that we are working together on so much else – and after last week, it's vital that everyone reminds themselves of that fact."
But former Lib Dem leader Sir Menzies Campbell stirred the controversy by confirming rumours circulating in Westminster for weeks that many of his party's MPs would not be willing to vote through proposed changes to Commons constituency boundaries if the Lords bill was not passed, saying it would be "very hard to swallow".
The former Tory defence secretary Liam Fox also risked stoking bad feeling by stressing the Lib Dems were only "a sixth" of the coalition (by MPs and ministers) and urging Cameron to be more "driven" in pushing Conservative policies, even when they are opposed by the Lib Dem leader Nick Clegg and his party.
Another former Conservative cabinet minister and ex-MP, David Mellor, was even more scathing, describing the Tories under Cameron as "this pale sad shadow of what the Tory party used to be" and warning that it was "ripping itself apart now because of the sense that David Cameron is a prisoner of Nick Clegg and the Lib Dems."
The Tory defence secretary Philip Hammond said that on the economy and other important issues there was not "a cigarette paper" between the two parties.
