The coalition government today froze or cancelled £10.5bn worth of projects announced in the dying days of the Labour government, suspending new libraries, hospitals, job schemes for young people and an £80m investment in the nuclear industry in Sheffield.
The symbolic Labour policy of free swimming for children and pensioners was also scrapped outright. The government said it was forced into difficult cuts by the "irresponsible planning" of its predecessor, but Labour accused the Tory-Liberal Democrat coalition of being ideologically driven to reduce the size of government and its involvement in stimulating the economy.
David Cameron, speaking from Brussels, said the biggest threat to jobs and economic recovery would be failure to deal with the deficit. "You can't put a blindfold over your eyes and pretend that the world is not like that, because it is," the prime minister said.
Danny Alexander, the Liberal Democrat chief secretary to the Treasury, announcing the review of 217 schemes signed off by Labour since January, said £2bn worth of projects would be scrapped completely. They include an £80m loan to Sheffield Forgemasters, the £450m North Tees and Hartlepool hospital building project, nearly £1bn in programmes to help the unemployed and the government's £25m contribution to the new Stonehenge visitor centre. He said that Labour was spending money it "simply didn't have".
A further £8.5bn of projects have been suspended and will be revised in the autumn spending review, including a libraries modernisation programme, the Sheffield retail quarter, a Department of Health-funded wellbeing centre for Leeds and a new magistrates court for Birmingham. The bulk of the potential savings – £7bn in total – come from suspending plans to purchase a new fleet of search and rescue helicopters.
Liam Byrne, the shadow chief secretary to the Treasury, said the projects 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 election.
"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," Byrne told Alexander in the Commons. "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."
A loan to Sheffield Forgemasters, which manufactures components for nuclear power stations, fell victim. Pat McFadden, Labour MP for Wolverhampton South East, said: "I'm not sure whether this was traditional Treasury orthodoxy or Liberal Democrat hostility to the nuclear industry. I do know that the effect is a huge setback for jobs."
A new retail quarter for Sheffield was also put on hold and a £13m grant to buy the old Outokumpu steelworks in the city was scrapped, in a further sign that many traditionally Labour areas are now losing out under the coalition government. Others include Leeds, Birmingham and Hartlepool.
The Department for Culture, Media and Sport separately spelled out a raft of cuts, some additional to the Treasury's announcements. It included scrapping the £45m British Film Institute film centre, which Gordon Brown had championed. The centre, on London's Southbank, was to include five screens and rival Leicester Square in hosting international premieres. The BFI said in a statement: "We are concerned that film is bearing the brunt – over 50% of the department's cuts that have been announced are coming from film."
The new Stonehenge visitor centre will lose £45m in public funding, though the government said it could still go ahead if private funding could be found.
The sports minister, Hugh Robertson, announcing the scrapping of Labour's free swimming policy, said: "This is not a decision that gives me any pleasure. However, the research shows that the great majority of free swimmers were swimming already, and would have paid to swim anyway. With a crippling deficit to tackle and tough decisions to take, this has become a luxury we can no longer afford."
The announcement came as the deputy prime minister, Nick Clegg, was separately promising to improve child and family wellbeing, including by tackling childhood obesity, one of the key aims behind the free swimming.
The roll-out of the Future Jobs Fund, an extension of the Young Person's Guarantee to 2011/12 and the two year Jobseekers guarantee – all programmes to help guarantee work or training for longer term unemployed people in the recession – were cut altogether, saving £995m.
Yvette Cooper, the shadow work and pensions secretary, said: "This is shocking short-termist and shows that the Tory-Liberal government clearly thinks unemployment is a price worth paying … it will cost us all far more in the long term in higher unemployment benefits and damage to our communities."
A Treasury spokesman insisted that the schemes would be replaced by a new Single Work Programme, but the government could not give details of how this would operate, or what it would cost.