Rachel Reeves has instructed cabinet colleagues to award government contracts in four critical industries directly to British companies, making clear her irritation that ministers have been sending too much government business abroad.
In a letter seen by the Guardian, the chancellor tells every cabinet minister in charge of a spending department to “buy British” wherever possible, adding that she is disappointed they are not already doing so.
Officials in the Treasury and Cabinet Office say they will now monitor billions of pounds’ worth of contracts in shipbuilding, steel-making, energy and artificial intelligence – and if necessary, override decisions taken by departmental ministers.
Reeves’s letter was sent last week as she attempted to stamp her authority over her restive party, many members of which are expecting a change of prime minister within months.
It comes amid a wider battle over who should be chancellor if Keir Starmer is replaced during this parliament, with allies of both Reeves and the energy secretary, Ed Miliband, insisting their chosen candidate should be given the keys to No 11.
In the letter, which was co-signed by the Cabinet Office minister Chris Ward, the chancellor wrote: “We should all 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.”
She added: “Therefore, it is disappointing that we are still seeing too many government contract awards where this is not happening. We have instructed officials to take further steps to ensure your departments act in the wider national interest rather than solely focusing on narrow operational priorities.”
There are also fears over how badly the UK economy will be hit by the Iran war, given how reliant the country is on importing its energy supply. Earlier this year the International Monetary Fund warned that the UK would suffer the biggest hit to growth of any developed economy as a result of the war.
Reeves is understood to be extremely unhappy that a series of high-profile contracts have either been awarded to foreign bidders or have gone out to open tender rather than being given directly to a British contractor.
They include a £200m a contract for navy support vessels, which was awarded to the Dutch shipbuilder Damen, and a £9m deal to refit the research ship David Attenborough, which was signed with the Danish shipyard Orskov.
The chancellor is also said to be disappointed that a £1.9bn contract to upgrade the Faslane shipyard, which services Britain’s nuclear submarines, could go abroad as part of a competitive tender.
And she is said to be uneasy about the possibility that turbines at a major offshore windfarm in the North Sea could be made by the Chinese company Mingyang.
Some of those decisions have been greeted with protests from some of Britain’s biggest unions.
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