Rachel Reeves has launched a drive to prevent major Government contracts from being handed to foreign companies amid growing concerns over Britain’s industrial resilience and the economic fallout from escalating tensions in the Middle East.
The Chancellor has written to Cabinet ministers urging departments to prioritise British firms when awarding contracts linked to four strategically important sectors: shipbuilding, steel, energy and artificial intelligence.
In the letter, Ms Reeves told ministers that “every secretary of state can and must lead this agenda within their departments if we are to deliver the change the public expect”.
Reeves 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.”
The intervention comes amid mounting unease within the Government over the prospect of key infrastructure and defence-related projects being awarded to overseas firms.
According to reports, the Chancellor is particularly concerned that a £1.9 billion contract linked to upgrades at Faslane — the naval base servicing Britain’s nuclear submarine fleet — could ultimately go to a foreign company.
There is also growing political sensitivity surrounding plans for turbines at a major North Sea offshore wind project to be supplied by Mingyang, a Chinese manufacturer, rather than a British producer.
The push to strengthen domestic procurement comes at a time of increasing economic uncertainty for British businesses.
A new report from Barclays suggested that four in five UK firms are already experiencing negative effects linked to the conflict involving Iran, highlighting growing fears over energy costs, supply chains and global instability.
The bank’s Business Prosperity Index found that 80 per cent of businesses reported disruption connected to the Middle East crisis.
Rising energy and fuel costs were identified as the most significant concern, affecting nearly two-thirds of firms surveyed. Others pointed to increased shipping expenses, logistical disruption and delays across supply chains.
The findings add to broader concerns over the resilience of Britain’s industrial base as geopolitical tensions continue to place pressure on global trade routes and commodity markets.
Meanwhile, manufacturers are stepping up demands for reforms to Britain’s planning system, arguing that excessive bureaucracy is holding back investment and undermining efforts to stimulate growth.
Make UK, the manufacturing industry body, warned that without substantial reform, the Government risks failing to deliver on ambitions surrounding industrial strategy, regional growth and decarbonisation.
The organisation described the current planning regime as “not fit for purpose”, citing complexity, delays and mounting costs for businesses attempting to expand production or invest in infrastructure.
A government spokesperson said: “For the first time, procurement of shipbuilding, along with steel, AI and energy infrastructure, will be recognised as critical for national security.
“We will also issue new guidance prioritising contracts for British business where necessary to protect our national security.”
The combination of international instability and domestic industrial pressures is likely to intensify scrutiny of Labour’s economic strategy, particularly as ministers attempt to balance net zero goals, national security concerns and demands for stronger economic growth.
Ms Reeves’s intervention signals a growing recognition within the government that economic security and national resilience are becoming increasingly intertwined.
Leave a Comment