Reeves in £15bn spending pledge to placate fractious Labour MPs

Commitment to northern transport aims to counter fear of return to austerity

- Pippa Crerar and Jessica Elgot

Rachel Reeves is announcing £15bn for trams, trains and buses outside London as she launches a charm offensive to persuade fractious Labour MPs that her spending review will not be a return to austerity. The chancellor has begun meeting groups of backbenchers to say that the money - part of a £113bn investment in capital projects over the rest of the parliament, including transport, homes and energy - would have happened only under Labour.

Just three Whitehall departments are still to agree their multi-year budgets with the Treasury before the spending review, the Guardian understands, with the home secretary, Yvette Cooper, the energy secretary, Ed Miliband, and the housing secretary, Angela Rayner, all holding out.

The chancellor wants capital spending to be at the centre of the government's narrative at the conclusion of the review next week in an acknowledgment that MPs, many of them in marginal seats, need a better economic story to address rising discontent among the public.

With ministers looking for ways to combat the electoral threat of Reform UK, Labour officials are attempting to refocus anxious backbenchers away from expected cuts in day-to-day spending, and on to capital budgets. "We're investing to rebuild," one said. The spending review will be difficult for the government, however. The Institute for Fiscal Studies has said the chancellor faces "unavoidably tough decisions" as the demands of funding the NHS and defence raise the prospect of deep cuts elsewhere. "We have a big battle with how to frame this," one minister told the Guardian. "The big risk is that people get the [spending] review, turn to the back of the book and see the minus numbers and the story is big cuts.