The two biggest political parties are set to make pledges today to increase spending on school buildings by increasing borrowing.

In a speech today, Labour’s shadow chancellor John McDonnell will announce a new £150 billion “social transformation fund”, which will be used to upgrade and expand schools, hospitals, care homes and council houses.

And Conservative chancellor Sajid Javid is set to announce that a new Conservative government would raise government borrowing to fund extra capital spending on schools, hospitals, transport and infrastructure projects.

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The Tories are expected to exclude capital spending from borrowing targets to ensure that big projects can be funded, according to a report in The Times.

Labour’s social transformation fund is part of a plan for a national transformation fund unit of the Treasury, which will be based in the North of England. 

As part of this plan Labour has also committed to spending £250 billion through a green transformation fund.

In a speech in Liverpool, Mr McDonnell will say: “Spent over the first five years of our Labour government, the social transformation fund will begin the urgent task of repairing our social fabric that the Tories have torn apart.

“A hundred and fifty billion pounds to replace, upgrade and expand our schools, hospitals, care homes and council houses.”

The Labour Party has not said what proportion of the £150 billion would be spent on schools or how it would be allocated.

The shadow chancellor said the fund would  mean “investment on a scale never seen before in this country and certainly never seen before in the North and outside of London and the South East”.

The Labour Party said the capital investment would be paid for by issuing government long-dated bonds.

The Conservatives are also set to commit to borrowing more on capital spending.

Rishi Sunak, chief secretary to the Treasury,  has denied that the Conservatives had turned into a tax-and-spend party but did not dispute that they were shifting their fiscal rules.

He told the BBC Radio 4 Today programme that it was sensible economics to be “disciplined on day-to-day spending: balance what’s coming and going out, but to differentiate that from long-term investment in infrastructure”.