Rachel Reeves has directed cabinet colleagues to award government contracts in four critical industries directly to British companies. She expressed frustration that ministers have directed too much public business overseas. In a letter seen by the Guardian, the chancellor instructs every cabinet minister overseeing a spending department to buy British wherever possible and notes disappointment that this is not already standard practice. Treasury and Cabinet Office officials say they will monitor billions of pounds in contracts across shipbuilding, steel production, energy and artificial intelligence, and override departmental decisions if required. The letter was sent last week as Reeves sought to assert authority within a restless party, with many members anticipating a change of prime minister within months. It occurs amid debate over who should serve as chancellor if Keir Starmer departs during the current parliament, with supporters of both Reeves and energy secretary Ed Miliband advancing their preferred candidate. Co-signed by Cabinet Office minister Chris Ward, the letter states that more businesses should grow, prosper and create skilled jobs and apprenticeships in Britain. Every secretary of state must lead this effort within their departments to deliver the change the public expects. Reeves added that it is disappointing to see too many government contract awards where this is not occurring. Officials have been instructed to ensure departments act in the wider national interest rather than focusing solely on narrow operational priorities. Concerns also exist about the impact of the Iran conflict on the UK economy, given reliance on imported energy. The International Monetary Fund earlier warned that Britain would face the largest growth reduction among developed economies due to the conflict. Reeves is understood to be unhappy that several high-profile contracts were awarded to foreign bidders or opened to competitive tender instead of direct award to British firms. These include a £200 million navy support vessels contract given to Dutch shipbuilder Damen and a £9 million refit deal for the research ship David Attenborough signed with Danish yard Orskov. She is also disappointed that a £1.9 billion upgrade to the Faslane shipyard servicing nuclear submarines could go abroad through tender. She is uneasy about turbines at a major North Sea offshore windfarm potentially being supplied by Chinese company Mingyang. Some decisions have prompted protests from major British unions. GMB Scotland secretary Louise Gilmour said it is difficult to imagine another country so willing to send such work abroad and that it is time the Ministry of Defence defended British workers and communities. Other officials argue that competitive bidding secures the best products at lowest cost, while direct awards to preferred companies would raise costs for taxpayers. Aides to defence secretary John Healey say he shares the chancellor’s commitment to UK suppliers and note new funding announced last week to support British defence firms. They add that the Faslane contract has not been finalised and the naval vessels deal was made by prime contractor Serco. UK Research and Innovation defended the Orskov contract as the result of extensive competitive bidding. Allies of the chancellor say her concern targets civil service inertia in following rules that prioritise cost over contractor nationality, not individual ministers. They warn that awarding contracts to foreign firms risks undermining national security, particularly in energy where experts fear China could gain control over critical infrastructure. In March, Ward said he would issue guidance identifying the four sectors as critical for national security, allowing direct awards without competitive tender under the 2023 Procurement Act.
