Chancellor Rachel Reeves could shelve major capital projects to help fund hefty public sector pay rises in a move which is already risking ‘civil war’ from some of Labour’s MPs.

Ms Reeves is widely expected to tell Parliament that the Tories left Labour with a £20 billion black hole in the public finances.

As a result it’s reported that she could delay a string of key hospital and road schemes to plug the gap and the extra strain that she could impose on the accounts by nodding through a pay increase for public sector workers of 5.5 pecent.

But it could spell internal warfare for the party as MPs try and guard projects within their own constituencies from falling by the wayside.

One such project is the Lower Thames Crossing, a 14 mile road and tunnel east of London that is projected to cost £9bn. A decision on its future had already been delayed by six months because of the general election.

Jim Dickson, MP for Dartford, took to social media platform X to express his concerns.

He said: “It’s vital for Dartford & the UK that the Lower Thames Crossing is approved & built as soon as possible.

“Today I’ve written to @LouHaigh our great new Secretary of State @transportgovuk to urge her dept to agree the plans for @lowerthames when they come for decision on 4th Oct!”

It’s thought that the Chancellor will approve a pay increase for millions of public sector workers in response to the recommendations of independent pay review bodies.

Teachers and some 1.3 million NHS staff could be in line for a 5.5 percent pay boost, which could cost about £3.5 billion more than had been budgeted for.

Economists believe this could rise to about £10 billion if other pay review bodies give similar advice on workforces such as police and prisons officers and doctors and dentists.

Prime Minister Sir Keir Starmer had acknowledged there would be a cost for failing to follow the recommendations – with possible strike action gripping the public sector, with a suggestion that strikes could cost the economy more than issuing a payrise will.

The findings of a Treasury spending audit will reveal “the true scale of the damage the Conservatives have done to the public finances”, a Labour source said.

Labour have ruled out lifting income tax, VAT, national insurance and corporation tax.

Meanwhile, a Conservative MP says Rachel Reeves and her Labour colleagues are about to tell “the biggest lie in British politics” to hike taxes.

Nick Timothy Conservative MP for West Suffolk, wrote a lengthy X post explaining exactly why he thinks that Labour is “pretending everything is worse than they realised.”