The £1.7bn A303 Stonehenge tunnel scheme has been scrapped by chancellor Rachel Reeves, as part of cutbacks she blamed on a £22bn inherited overspend this year.
Ms Reeves accused the previous Conservative government of trying to cover up the extent of the day-to-day overspending on the books, forcing her to make what she claimed were unplanned cuts.
She detailed an overspend of £1.6bn in the transport departmental budget, which she attributed to the Government having failed to budget for the decline in rail demand in the wake of the pandemic.
'Instead of developing a proper plan to adjust for this new reality, the Government handed out cash to rail companies to make up for passenger shortfalls but failed to budget for this adequately. Because of that and because of industrial action there is now an overspend of £1.6bn in the transport budget. That was unfunded and undisclosed,' she said.
She added that there were '£1bn of unfunded transport projects that have been committed to next year'.
As a result, transport secretary Louise Haigh has been tasked with undertaking a review of these commitments.
Ancient history: designs for the previously planned Stonehenge tunnel entrance on the A303.
Ms Reeves told the Commons: 'As part of that work, [Ms Haigh] has agreed to not move forward with projects that the previous government refused to publicly cancel despite knowing full well that they were unaffordable.
'That included proposed work on the A303 and the A27. My right honourable friend will also cancel the "Restoring our Railway" programme saving £85m next year, with individual projects to be assessed through her review.'
The A27 Arundel Bypass project, currently costed at around £320m by National Highways, had already been earmarked to be postponed in the Labour manifesto, with the money re-directed at fixing a million more potholes a year over the course of this parliament.
Describing the wider financial crunch, the chancellor said: 'The [previous] Government published its plan for day-to-day spending in the Spring Budget in March. When I arrived at the Treasury, on the very first day, I was alerted by officials that this was not how much the previous government expected to spend this year.'
'In fact, the total pressures on these budgets across a range of areas was an additional £35bn. Once you account for slippage in budgets you usually see over a year and a reserve of £9bn designed to respond to genuinely unexpected events, we have inherited a projected overspend of £22bn this year.'
Ms Reeves also set a date of 30 October for her Budget and a multi-year spending review, which 'will set departmental budget for at least three years'.
This move brings the prospect of some relief for roads spending - as it means a potential mult-year settlement for maintenance.
Final budgets for this year and for next will be set alongside the Budget in late October.
The Government has already committed £9bn extra spending to public sector pay rises, with a large chunk being spent on a deal with junior doctors that will see them get a 22% payrise to avoid further strikes.
However, all departments have been asked to find savings to absorb at least £3bn of the projected overspend.
Ms Reeves attributed much of the overspending to the previous government's failure to budget for contingency spending such as rail use, and pressures from migrant arrivals.
However, the Conservative opposition accused the chancellor of political spin to pave the way for pre-planned tax rises.
Shadow chancellor Jeremy Hunt said Ms Reeves was 'shameless' and October's Budget will be a 'biggest betrayal in history by a new chancellor'.
