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Government axes £2bn of projects Government axes £2bn of projects
(40 minutes later)
The coalition government has cancelled 12 projects totalling £2bn agreed to by the previous Labour government since the start of 2010.
These include an £80m loan to Sheffield Forgemasters and new programmes for the young unemployed, Chief Secretary to the Treasury Danny Alexander told MPs.
Mr Alexander said the cuts were necessary to tackle the budget deficit and would be done in a "fair" way.
Labour accused him of an "attack on jobs" and industries of the future.
But Mr Alexander said the previous government had gone on a "pre-election spending spree in the full knowledge that the government had long since run out of money".
'No money'
He told MPs: "We are determined to tackle the unprecedented budget deficit and bad financial management we have seen over the past decade, but are equally determined to do this in a way that is fair and responsible.
"As a result of the poor decisions made by the previous government, I have taken the decision to cancel certain projects that do not represent good value for money, and suspend others pending full consideration in the spending review.
"We have also found another spending black-hole in the previous government's plans - projects had been approved with no money in place to pay for them.
"I am determined to deal with this problem head-on and ensure we never see this kind of irresponsible financial planning in government again."
The 12 projects were axed - and a further 12 suspended - after a review of 217 projects worth £34bn was ordered, amid claims the previous Labour government had embarked on a pre-election "scorched earth" spending policy.
In an angry response, shadow chief secretary Liam Byrne accused the Lib Dem minister of a U-turn over public spending and asked how many jobs would be lost as a result.
He told Mr Alexander: "Both the country and the Liberal Democrat party beyond will be aghast this afternoon at your attack on jobs, your attack on construction workers, your attack on the industries of the future and the cancellation of a hospital.
"Let me ask you: what could be more front line than this? In five minutes this afternoon you have reversed three years of Liberal Democratic policy of which you were the principal author. What a moment of abject humiliation."
He also said the spending projects being axed amounted to just 0.05% of government spending, "nailing the myth" that Labour had operated a "scorched earth" policy in the run-up to the general election.
'Crucial military equipment'
The £2bn includes £370m of cuts to government employment schemes that had already been announced as part of a separate plan to cut £6.2bn of public spending this year.
Mr Alexander said a further 12 projects with a value of £8.5bn approved since January would be suspended or referred for consideration by the spending review process over the coming months.
They included the health research support service, the Kent Thameside strategic transport programme and the libraries' modernisation programme.
And they include a £7bn PFI deal for a new generation of search and rescue helicopters, which the Treasury says will be reviewed "as a matter of urgency".And they include a £7bn PFI deal for a new generation of search and rescue helicopters, which the Treasury says will be reviewed "as a matter of urgency".
Mr Alexander said only the highest priority hospital schemes would go ahead and the education secretary was looking at the "building schools for the future" programme which had been "heavily over-committed".Mr Alexander said only the highest priority hospital schemes would go ahead and the education secretary was looking at the "building schools for the future" programme which had been "heavily over-committed".
He said the government had acted to confirm approval of a number of projects including funding for essential medicines in case of a flu pandemic, some hospital projects, support for post offices and spending on "crucial military equipment" in Afghanistan.He said the government had acted to confirm approval of a number of projects including funding for essential medicines in case of a flu pandemic, some hospital projects, support for post offices and spending on "crucial military equipment" in Afghanistan.
Sheffield Forgemasters was told in March it would receive the £80m loan to build a world-leading 15,000 tonne press to supply specialist components for the nuclear industry. It aimed to create up to 180 jobs in the city and help the firm to bid for contracts on the next generation of nuclear power stations.Sheffield Forgemasters was told in March it would receive the £80m loan to build a world-leading 15,000 tonne press to supply specialist components for the nuclear industry. It aimed to create up to 180 jobs in the city and help the firm to bid for contracts on the next generation of nuclear power stations.
The announcement that it would be axed was met by cries of "shame" from Labour MPs.The announcement that it would be axed was met by cries of "shame" from Labour MPs.
Forgemasters Chief Executive Graham Honeyman said it was "a huge disappointment to all at the company," but he said it would now focus on other elements in its development.Forgemasters Chief Executive Graham Honeyman said it was "a huge disappointment to all at the company," but he said it would now focus on other elements in its development.
'Over-committed''Over-committed'
Energy Secretary Chris Huhne said it seemed like "a very strong commercial deal" adding: "I don't see any reason why it shouldn't be able to be financed from financial markets. I believe that company can go ahead with that project."Energy Secretary Chris Huhne said it seemed like "a very strong commercial deal" adding: "I don't see any reason why it shouldn't be able to be financed from financial markets. I believe that company can go ahead with that project."
Deputy Prime Minister Nick Clegg, a Sheffield MP, said in a statement that he regretted the government "cannot afford to support its expansion" but added "the truth is that this loan was promised by the outgoing Labour government as a calculated ploy to win support in Sheffield just ahead of the election".Deputy Prime Minister Nick Clegg, a Sheffield MP, said in a statement that he regretted the government "cannot afford to support its expansion" but added "the truth is that this loan was promised by the outgoing Labour government as a calculated ploy to win support in Sheffield just ahead of the election".
But TUC general secretary Brendan Barber said the withdrawal of the loan would damage manufacturing and threaten Britain's "transition to a low carbon economy".But TUC general secretary Brendan Barber said the withdrawal of the loan would damage manufacturing and threaten Britain's "transition to a low carbon economy".
A string of North-East Labour MPs attacked Mr Alexander in the Commons over the decision to cancel a project at North Tees hospital, accusing the Tories and Lib Dems of tearing up their manifesto commitment to protect front line health spending.A string of North-East Labour MPs attacked Mr Alexander in the Commons over the decision to cancel a project at North Tees hospital, accusing the Tories and Lib Dems of tearing up their manifesto commitment to protect front line health spending.
He was also attacked for scrapping the Future Jobs Fund and the planned extension to a scheme guaranteeing work or training for the young unemployed. He said it would be replaced by a more effective scheme next year.He was also attacked for scrapping the Future Jobs Fund and the planned extension to a scheme guaranteeing work or training for the young unemployed. He said it would be replaced by a more effective scheme next year.
The chief secretary also announced an urgent review of inherited spending commitments for 2010-11, totalling at least £1bn, where funding was reliant on underspending.The chief secretary also announced an urgent review of inherited spending commitments for 2010-11, totalling at least £1bn, where funding was reliant on underspending.

YOUR VIEWS

Readers of the BBC News website have been sharing their views on the cuts. Here is a selection of comments.

YOUR VIEWS

Readers of the BBC News website have been sharing their views on the cuts. Here is a selection of comments.

I am currently on a six month placement that I got through the Future Jobs Fund. Before I got this position I had been on Job Seeker Allowance for nearly five months. Although I'm earning the minimum wage, I'm getting experience which looks good on my CV. Some people my age don't get the opportunity to work in a desired sector before university. Cutting this funding will hinder a lot of young people's ability to find jobs that not only they can do but will enjoy and therefore do productively.I am currently on a six month placement that I got through the Future Jobs Fund. Before I got this position I had been on Job Seeker Allowance for nearly five months. Although I'm earning the minimum wage, I'm getting experience which looks good on my CV. Some people my age don't get the opportunity to work in a desired sector before university. Cutting this funding will hinder a lot of young people's ability to find jobs that not only they can do but will enjoy and therefore do productively.
Tim, HastingsTim, Hastings
Cutting a loan to a manufacturer who was intent on investing in machinery which would help long-term employment, growth and provide a much needed world leading manufacturing capability is very short-sighted and wrong. The amount of money here was very small indeed.Cutting a loan to a manufacturer who was intent on investing in machinery which would help long-term employment, growth and provide a much needed world leading manufacturing capability is very short-sighted and wrong. The amount of money here was very small indeed.
Dave, MildenhallDave, Mildenhall
Sheffield Forgemasters were to be loaned £80 million for 160 possible jobs. At that rate it would be cheaper to pay 200 people a wage to clean the streets for several years. If this was a worthwhile project, why couldn't the banks make the loan instead of taxpayers? It beggars belief to see what proposed spending was still planned in spite of the financial situation Sheffield Forgemasters were to be loaned £80mn for 160 possible jobs. At that rate it would be cheaper to pay 200 people a wage to clean the streets for several years. If this was a worthwhile project, why couldn't the banks make the loan instead of taxpayers? It beggars belief to see what proposed spending was still planned in spite of the financial situation
Geoff, SwanseaGeoff, Swansea
I accept cuts have to be made but please don't describe improving visitor facilities at Stonehenge as a crazy bit of wasteful spending. It is one of the UK's most important cultural sites and a big tourist attraction. This is the government cutting back on vital investment and they should own up to thatI accept cuts have to be made but please don't describe improving visitor facilities at Stonehenge as a crazy bit of wasteful spending. It is one of the UK's most important cultural sites and a big tourist attraction. This is the government cutting back on vital investment and they should own up to that
Rob, St AlbansRob, St Albans
How can we be upset about any cuts the government makes? We are overspending by £3bn per week. We need to make cuts to start to pay off the £900bn we owe as a country. Sadly these finances are related to me as I live in this country and pay tax. I want them to cut as much as they can so that we can get rid of the terrifying debt mountain that is threatening to crush us as a country. Cut away!How can we be upset about any cuts the government makes? We are overspending by £3bn per week. We need to make cuts to start to pay off the £900bn we owe as a country. Sadly these finances are related to me as I live in this country and pay tax. I want them to cut as much as they can so that we can get rid of the terrifying debt mountain that is threatening to crush us as a country. Cut away!
Richard, LondonRichard, London
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