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George Osborne has pocketed a spare £1bn before the budget next week to help fund a series of road and other infrastructure projects as the chancellor moves to reassure Tory heartlands that the government has ideas well beyond its divisive high-speed rail project.

The move was signalled in a little-noticed element of the public sector pay settlement which was otherwise dominated by warnings of possible strike action from NHS unions after the government denied staff an expected 1 Percent pay rise. The curb will save just £200m from the health department's £110bn budget next year. Representatives of the NHS's 1.2 million nurses, midwives and other non-medical personnel in England accused the health secretary, Jeremy Hunt, of showing "complete contempt" for the 55 Percent of NHS staff on "progression pay".

The news that Hunt had rejected a recommendation for approximately 600,000 NHS staff to be given a 1 Percent rise dominated the reaction to the pay round. The Treasury also announced that individual departments would have to make a greater contribution to pensions. This will give Osborne an extra £1bn that will help fund infrastructure projects to "balance" the HS2 high-speed rail line amid fears of ministerial resignations over the introduction of the hybrid bill on the project next month.

Sources close to the chancellor say that a series of road and other infrastructure projects, which have been drawn up by the Treasury minister and former Olympics chief Lord Deighton, will speak to the Conservative faithful opposed to HS2. One source said: "A strong focus on roads will speak to the heartlands that oppose HS2. This is very much in George's DNA."

The chancellor has room for manoeuvre after the Treasury moved around £1bn in public sector pension contributions from its "annually managed expenditure" pot to the "departmental expenditure limits". These have to be paid by individual departments.

The Department for Education will have to pay an extra 2.3 Percent, working out at £330m in 2015-16 and £560m in 2016-17. For the civil service it will mean an extra 2.2 Percent, working out at £275m a year from 2015-16 onwards. For the NHS it will be a 0.3 Percent increase, working out at £125m a year from 2015-16.

One Whitehall source said: "There will be a £1bn figure in the budget roughly – just under. This will be scored – it will be a saving to the treasury which has been picking up this bill before. Instead it will fall into departmental budgets. The taxpayer has been picking it up in AME."

Government sources insist Osborne has not embarked on a pensions raid to secure an extra £1bn for the budget. Sources said that the chancellor had followed the recommendations in the pensions report by the former Labour minister Lord Hutton. The extra £1bn is a "consequence" of the Hutton recommendations.

One senior government figure said of the infrastructure spending plans: "George Osborne is going to be looking for ways of helping our people – that does not mean people who might vote Conservative but Conservative MPs in marginal seats. It is not necessarily things that will have Tory MPs excited ideologically. It is more about things that are going to affect their constituencies.

"He is going to look at ways of investing in infrastructure – visible things, road and rail. He is going to want to do things to balance HS2. It is not to demolish HS2. It is going to be in addition to HS2. He will also want to do things on flooding." But Osborne faces a battle on another front after the furious reaction to the pay deal. Unite, which represents 100,000 staff, and the GMB, which has 30,000 members in the NHS, are now considering industrial action in protest at the settlement.

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