LONDON (Reuters) – Britain's Conservative-Liberal Democrat coalition said yesterday it would cancel or suspend £11.5 billion ($16.9 billion) of government projects, offering a taste of the deficit reduction pain that lies ahead.

Lib Dem Chief Secretary to the Treasury Danny Alexander accused the previous Labour administration of spending money it didn't have and said the measures were necessary to tackle the country's biggest peacetime fiscal gap.

Alexander's statement followed a review of all 217 government projects approved since the start of the year at a total cost of £34 billion.

"We are determined to tackle the unprecedented budget deficit and bad financial management we have seen over the past decade," he told parliament. "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."

The one-month-old coalition, due to present an emergency budget on Tuesday and a detailed spending review later in the year, said 12 programmes that would have cost nearly £2 billion would be scrapped. A further 12 programmes, costing £8.5 billion, would be suspended.

The frozen projects include a £7 billion contract for search and rescue helicopters. The preferred bidder – a consortium including French defence firm Thales, Sikorsky and Royal Bank of Scotland – must wait to see if it gets the nod.

Costain, Skanska, WS Atkins and WSP Group are among infrastructure companies involved in a £1.1 billion road upgrade in eastern England which has also been put on ice.

In a sign of what cutting a deficit that stands at £156 billion will mean in practice, the government cancelled a £450 million project for a hospital in northern England, scrapped guarantees to help the unemployed find work and shelved road improvements.

A visitor centre at prehistoric monument and UNESCO World Heritage Site Stonehenge also fell under the axe.