Rachel Reeves tells ministers to ‘buy British’ in four key industries | Rachel Reeves

Rachel Reeves has made clear her dismay at ministers sending too much government work abroad by instructing her cabinet colleagues to award government contracts in four critical sectors directly to British companies.

In a letter seen by the Guardian, the chancellor tells every cabinet minister responsible for the spending department to “buy British” wherever possible, adding that he is disappointed they are not already doing so.

Treasury and Cabinet Office officials say they will now monitor contracts worth billions of pounds in shipbuilding, steelmaking, energy and artificial intelligence and override departmental decisions if necessary.

Reeves’ letter was sent last week as he sought to stamp his authority on his restive party, many of whose members are expecting a change of prime minister within months.

It comes amid a wider fight over who should be chancellor if Keir Starmer is replaced in parliament, with allies of Reeves and energy minister Ed Miliband insisting their chosen candidate be given the keys to No 11.

In the letter, also signed by Cabinet Office minister Chris Ward, the chancellor wrote: “We must all see more businesses growing and thriving here in Britain and creating good, skilled jobs and apprenticeship opportunities. Every secretary of state can and must lead this agenda within their departments if we are to deliver the change the public expects.”

He added: “It is therefore disappointing that we are still getting so many government contracts when this is not happening. We have instructed officials to take further steps to ensure your departments are acting in the broader national interest rather than focusing solely on narrow operational priorities.”

There are also fears about how badly the UK economy will be hit by the Iran war, given how dependent the country is on imports for its energy supply. Earlier this year, the International Monetary Fund warned that Britain would take the biggest hit to growth among advanced economies as a result of the war.

Reeves is understood to be extremely unhappy that a number of high-profile contracts have either been awarded to foreign bidders or put out to open tender rather than awarded directly to a British contractor.

They include a £200 million contract for naval support ships£9m deal awarded to Dutch shipbuilder Damen to refit research vessel David AttenboroughThe agreement signed with the Danish shipyard Orskov.

The Chancellor is also said to be disappointed with the signing of a £1.9bn contract to modernize the Faslane shipyard, which services the UK’s nuclear submarines. can go abroad As part of a competitive tender.

He is also said to be uneasy about the possibility that turbines at a large offshore wind farm in the North Sea could be manufactured by Chinese company Mingyang.

Some of these decisions were met with protests from some of Britain’s largest unions.

Speaking about the Faslane contract, GMB Scotland secretary Louise Gilmour said: “It is hard to imagine another country in the world being so keen to send this type of work overseas… It is long past time for the Ministry of Defense to start defending our workers and their communities.”

But others in the government say allowing companies to bid competitively for contracts allows the UK to get the best products at the cheapest price. They add that awarding contracts directly to certain preferred companies would increase costs for British taxpayers.

Healey’s aides said he was as determined as the chancellor to buy from Britain, saying: announced new financing Last week to help British defense companies grow.

They point out that the Faslane agreement has not yet been signed and that the £200 million contract for naval support vessels was actually awarded by main contractor Serco.

UK Research and Innovation, meanwhile, defended the Orskov deal, saying it was made following an extensive competitive tender process.

The chancellor’s allies say his irritation is not directed at individual cabinet ministers but at what he sees as the “inertia” of civil servants following rules that prioritize cost over the nationalities of contractors.

Experts say the trend of awarding contracts to foreign companies risks harming Britain’s national security, for example in the energy sector, where experts have raised concerns that China could gain a level of control over critical infrastructure.

In March, Ward said the government would issue guidance clarifying that it viewed four identified sectors as critical to national security.

Ministers argue this will allow departments to award contracts in these sectors directly to companies rather than running a competitive tender process.

Under the provisions of the 2023 Tender Law, ministers can ban companies deemed to pose a national security risk from bidding on certain tenders.

But government insiders admit the promise of new guidance is not enough to change the way Whitehall spends government money and hope Reeves’ warning will also add “rocket boosters” to the policy remit.

In his letter, he promised to issue further instructions to government accounting officers telling them to take into account the nationality of contractors as well as their costs.

And he warned: “We look forward to confirmation that your departments have complied with the new guidance to be published this summer. Each department will be held accountable for progress made.”

Government insiders said this would require the Cabinet Office to review individual contract decisions and, if necessary, “call in” decisions officials are concerned about and potentially override them.

The letter was sent last week amid intense activity from the chancellor, whose allies are openly campaigning for him to remain in office if Starmer is replaced by Makerfield MP Andy Burnham.

In the past few days, Reeves has also announced a package of measures to make summer activities cheaper for families, engaged in a public spat with supermarkets over their prices and launched his own TikTok account.

A government spokesman said: “For the first time, shipbuilding, alongside steel, AI and energy infrastructure, will be recognized as critical to national security.

“We will also publish new guidance prioritizing contracts for British business where necessary to protect our national security.”