Infrastructure projects have been axed as part of chancellor Rachel Reeves’ announcement on the state of the UK’s finances. 

Reeves said a Treasury spending audit showed the government had inherited a £22bn hole in public spending and that “difficult decisions” had to be made to restore economic stability. 

The spending audit has revealed nearly £800m of unfunded transport projects that have been committed next year.

Reeves said a “thorough review” of transport projects will now be carried out by transport secretary Louise Haigh. 

She added government is no longer moving ahead with unaffordable projects including proposed works on the A303 past Stonehenge and the A27 at Arundel.

Projects will also be cancelled in the Restoring Our Railways programme that have not yet started. 

Reeves said: “If we cannot afford it, we cannot do it.”

A complete review would also be carried out of the New Hospital Prgramme. Launched in October 2020 with the ambition of building 40 new hospitals by 2030, Reeves said less than half had even started construction. 

Reeves said she was also cancelling the £150m Investment Opportunity Fund, which was announced at last year’s Autumn Statement, but had yet to support any projects. 

A multi-year Spending Review was also announced, which will set departmental budgets for at least three years to provide “long-term certainty that has been lacking for too long”.

Final budgets for this year and budgets for next year – 2025-26 – will be set alongside the Budget on October 30.

Reeves said: “This is not the statement I wanted to give today, and these are not the decisions I wanted to make. But they are the right decisions in difficult circumstances.” 

Industry has reacted to the announcement. 

The Civil Engineering Contractors Association (CECA) said industry was “disappointed” by infrastructure cuts, but was looking forward to working with the government to drive economic growth.

CECA’s director of operations, Marie-Claude Hemming, said: “The chancellor’s announcements are disappointing but will not come as a shock to industry, not least because a shortfall in funding for public projects has been evident for some time.

“The Labour Party rightly identified economic growth as its core mission, but as ever cancelling or pausing projects that will likely need to be delivered at a later date - and at higher cost - is putting off the potential for schemes to drive growth, create jobs, and meet the needs of businesses and communities.

“As the UK’s public finances are clearly in a weakened state it is all the more important that government works with industry to identify how to move schemes towards delivery, rather than mothballing these crucial sources of growth.”

She said CECA would be working with its members and government to review schemes that have been put on hiatus and see how they might be brought back online in due course, and to identify other projects that can be unlocked in all parts of the UK.

“We urge the government not to repeat the mistakes of previous administrations in taking an axe to capital projects without regard to future growth, and to work with industry to identify opportunities for investment that will not only deliver value for money but will form the backbone of a net zero UK economy for years to come.”

David Hawkes, interim associate director of policy at the Institution of Civil Engineers, said the organisation had long called for more certainty, clarity and long-term strategic plans for infrastructure

“The announcements made today by chancellor Rachel Reeves that the government will undertake a multi-year spending review and commit to reviewing spending every two years, are welcome," he added.

“Whatever the level of investment and priorities that the government decides on, infrastructure professionals, stakeholders and the public need clarity and commitment to deliver.

“Now, it’s essential that the government make decisions about the infrastructure that should be invested in, in line with the priorities outlined by the National Infrastructure Commission in its second National Infrastructure Assessment.

“The government must quickly produce a National Infrastructure Strategy to lay out a 9vision and framework for delivering on its missions to kickstart economic growth and reach net zero.”

Kevin Green, policy director at Logistics UK, said that the lack of focus on infrastructure spending could hamper economic growth.

“For too long, investment in improving the UK’s infrastructure has been overlooked, making it more challenging for goods to be delivered to their customers. 

“Logistics underpins every sector of the economy and, as such, is ideally placed to help the new government get growth moving again. 

“However, to do that, it is imperative that key infrastructure projects like the planned A303 improvements and investment in rail freight capacity are reprioritised to keep goods flowing through the supply chain across the country and enable our industry to play its part in getting the economy back on track. 

“Our members appreciate that the books have to be balanced but ignoring the opportunities which logistics can create will hamper growth at a time when our sector stands ready to kick-start recovery across the economy.”