£1.7bn tunnel under Stonehenge and new hospitals set to be axed by Chancellor in bid to plug £20bn 'black hole left by Tories'

The proposed tunnel under Stonehenge and new hospitals are set to be axed by Chancellor Rachel Reeves as part of her bid to fill a £20 billion 'black hole' in public finances she claims the Tories have left.

Ms Reeves will use a Commons statement tomorrow to announce the 'immediate action' she plans to fix 'broke and broken Britain'. 

But the move has been dismissed by the Tories as a device to justify raising taxes, with high-earners likely to take the hit.

Having ruled out hiking income tax and National Insurance during the election campaign, Ms Reeves is expected to concentrate in the short-term on axing infrastructure projects such as new hospitals, with the savings helping to fund the £8 billion cost of a 5.5 per cent pay rise for public sector workers.

The £1.7 billion Stonehenge road tunnel, which would have moved the notoriously congested A303 under part of the World Heritage Site in Wiltshire, is among the capital projects inherited by the Government that Ms Reeves has concluded are 'unfunded with unfeasible timelines'.

The tunnel was first proposed in 1995 and approved in 2020 but has become mired in legal challenges over possible damage to the historic site.

Immediately after the election Pat McFadden, Chancellor of the Duchy of Lancaster, wrote to Cabinet colleagues asking them to 'bring out the dead' in terms of problems they had found in their departments. 

There was a particular focus on projects which are delayed, badly over budget, poor value for money or which have a high risk of fraud.

Ms Reeves is also expected to commission a forecast by the Office for Budget Responsibility and announce the timing of the next Budget.

Sources said she will claim that the Government has inherited 'the most acute housing crisis in living memory', with 'a planning system broken by short term and self-interested decisions that have obstructed the delivery of homes and have put a brake on our economy'.

She will add that record levels of sewage are 'poisoning our rivers, lakes and seas'.

Tories even get the blame for leaving Britain 'one of the most nature-depleted countries in the world, with a third of our wildlife species at risk of extinction and our beautiful countryside in decline'. 

Ms Reeves will add that the NHS will require long-term, fundamental reform.

On migration, the sources said Labour has inherited 'record small boats crossings...a damning indictment of a Tory party that lost control of Britain's borders so badly that it put economic and national security at risk'. 

On education, the 'alarmingly high rate of severe and persistent absence' will be highlighted.

As part of the 'don't blame us' strategy, the Government will also point to 'hollowed-out' Armed Forces and the 'inefficient' transport network.

Shadow chancellor Jeremy Hunt said: 'Their motive is clear: having promised not to raise taxes 50 times before the election they now need a pretext but trying to scam the British people so soon after being elected is a high-risk strategy doomed to fail.'