The biggest project casualty is the £450m North Tees and Hartlepool hospital, which was just about to go out to tender and is a big blow for Turner and Townsend already signed up as project manager.

The Treasury’s axe also falls on funding for a £25m visitor centre at Stonehenge and an industrial park in Sheffield.

Chief Secretary to the Treasury Danny Alexander said several big projects were also being suspended for the time being.

These include the £1.1 billion A14 road scheme, £50m Leeds Holt Park Well-being Centre and the £94m Birmingham Magistrates Court.

Smaller projects on hold include the £23m Kent Thameside Strategic Transport Programme, £12m Sheffield Retail Quarter and the Libraries Modernisation Programme costing £12m.

Alexander said: “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.”