Osborne promises to fund infrastructure, poaches rival's policy

By Elizabeth Piper and William James MANCHESTER, England (Reuters) - Chancellor of the Exchequer George Osborne will launch a programme on Monday to spur infrastructure investment in Britain, poaching the policy from the left-wing opposition to stake the government's claim to the centre ground. At the Conservative Party conference, Osborne will say the government will invest 5 billion pounds ($7.6 billion) by 2020 and pool local government pension pots into six wealth funds worth 25 billion pounds each to invest in vital infrastructure. Alongside incentives for grandparents to help with childcare, Osborne's new policies move to address criticism over his austerity drive, and strike at the heart of the opposition Labour Party's attempts to rally support for its new leader. Positioning the Conservatives in traditionally Labour territory, Osborne's efforts to bring the party into the "centre ground" will feed suggestions that he is the prime minister in waiting after David Cameron said he would step down by 2020. "Where would Britain be if we had never built railways or runways, power stations or new homes? Where will be in the future if we stop building them now?" Osborne will say at the conference in the northern city of Manchester. "I'm not prepared to turn round to my children - or indeed anyone else's child - and say: I'm sorry, we didn't build for you ... We have to shake Britain out of its inertia on the projects that matter most," he will say, according to extracts of his speech released in advance. Labour's new far-left leader Jeremy Corbyn has struggled to overcome divisions over some of his defence and foreign policies, but his main argument - that Britain suffered from a lack of infrastructure and housing investment - had found strong support among economists and industry groups. As well as securing 5 billion pounds ($7.6 billion) from asset sales, funds for infrastructure will also come from pooling 89 local authority pension funds into six new British Wealth Funds - each with assets of over 25 billion pounds, Osborne will say. While the funds can use the money for different investments, Treasury aides expect larger amounts to go into infrastructure. Rules protecting brownfield sites from development will be swept away, he will say, adding that the government will set up a new commission to work out what needs to be built, headed by the former Labour cabinet minister and transport secretary, Andrew Adonis. Asked if this was stealing Labour policy, a Treasury aide said: "The Chancellor is open to good ideas." The International Monetary Fund has encouraged Britain to spend more on infrastructure, and the Organisation for Economic Co-operation and Development says British government capital spending ranked 18th out of 24 developed countries in 2013. Osborne cannot easily invest more after he toughened his commitment to fiscal austerity last year, but by pooling pension funds he may have got around it. It is not the first time Osborne has stolen Labour policy. A tactician, in July, he announced a big rise in the minimum wage to help plug the gap caused by cuts to welfare benefits for the working poor. Labour has long pressed for what it calls "a living wage". (Reporting by Elizabeth Piper; Editing by Ros Russell)