Chancellor Rachel Reeves has written to cabinet colleagues demanding that government contracts in shipbuilding, steel-making, energy infrastructure and artificial intelligence go to British companies.
A government spokesperson confirmed that procurement in those four areas will be recognised as “critical for national security” under new guidance issued by the Cabinet Office.
Reeves co-signed the letter with Cabinet Office minister Chris Ward, telling ministers they should “want to see more businesses grow and prosper and create good, skilled jobs and apprenticeships here in Britain”.
“Every secretary of state can and must lead this agenda within their departments if we are to deliver the change the public expect,” Reeves wrote in the letter, first reported by The Guardian.
The chancellor expressed frustration at the current state of procurement, writing: “It is disappointing that we are still seeing too many government contract awards where this is not happening.”
She added that officials had been instructed “to take further steps to ensure your departments act in the wider national interest rather than solely focusing on narrow operational priorities”.
Treasury and Cabinet Office officials will now monitor contracts across the four sectors and retain the power to intervene in departmental procurement decisions where necessary.
Among the contracts that reportedly frustrated Reeves was a GBP200 million deal awarded by outsourcing firm Serco Group PLC (LON: SRP) to Dutch shipbuilder Damen Shipyards Group NV to construct vessels supporting the Royal Navy.
A GBP9 million contract to refit the polar research vessel RRS Sir David Attenborough went to Danish shipyard Orskov Yard AS, and a competitive tender for upgrades at Faslane, home to the Trident missile system, also raised concerns about potential overseas awards.
Reeves was also reportedly troubled by the possible supply of wind turbines by Chinese firm Ming Yang Smart Energy Group Co Ltd for a major North Sea project, citing national security concerns over Beijing’s role in critical infrastructure.
The push follows rising concern about the UK’s exposure to international supply chain disruptions, with Iran’s blockade of the Strait of Hormuz serving as the latest example of how global trade can be interrupted.
In March, Ward announced plans to issue guidance directing departments to use British steel or provide a justification when sourcing it from abroad, covering contracts related to steel, shipbuilding, AI and energy infrastructure.
Those measures included a new “public interest test” requiring Whitehall departments to weigh whether outsourced contracts worth more than GBP1 million could be delivered more effectively in-house by the government.
Additional changes announced at the time included using AI to streamline procurement processes, simplifying contract structures and building a central platform to reduce administrative burdens on small businesses bidding for multiple contracts.
Reeves stated in her letter that “each department will be held to account on the progress being made” on complying with the new Cabinet Office guidance, which the government plans to publish later this summer.
The intervention arrives against a backdrop of speculation about Prime Minister Keir Starmer’s leadership and potential changes to the chancellor role should he leave office.
The letter follows a series of government announcements last week intended to ease cost of living pressures linked to the Iran war, including a reduction in VAT on tickets for theme parks, zoos and museums from 20% to 5% during the summer holidays.
Free bus travel for children was also announced as part of those measures aimed at reducing financial pressure on households during the ongoing conflict’s economic fallout.