- Rachel Reeves has told ministers to prioritise British firms for key government contracts.
- The Treasury and Cabinet Office could now intervene in major procurement decisions.
- Recent contracts awarded to Dutch and Danish firms reportedly triggered frustration inside government.
Rachel Reeves is pushing ministers to award more government contracts to British companies, as the Treasury moves to tighten control over procurement decisions in sectors considered critical to national security and economic resilience.
In a letter sent to cabinet ministers and reportedly seen by media outlets, Reeves urged departments to “buy British” wherever possible and made clear her dissatisfaction with the number of public contracts still being awarded to overseas firms.
The move is expected to affect billions of pounds worth of government spending across shipbuilding, steel manufacturing, energy infrastructure and artificial intelligence, with Treasury and Cabinet Office officials now set to monitor procurement decisions more closely.
According to government insiders, ministers could even see certain contract awards reviewed or overridden if officials believe national interests are not being properly considered.
The intervention comes at a politically sensitive moment for Reeves as tensions continue inside the Labour government over leadership speculation and economic strategy.
Frustration grows over foreign contract wins
The Chancellor’s concerns reportedly intensified after several major UK contracts either went to overseas firms or were opened to international competitive bidding.
Among them was a £200 million contract for Royal Navy support vessels awarded to Dutch shipbuilder Damen Group. Another £9 million deal to refit the polar research ship David Attenborough went to Danish shipyard Orskov Yard.
Reeves is also reportedly uneasy about a proposed £1.9 billion upgrade contract linked to the Faslane naval base, which supports Britain’s nuclear submarine fleet. Concerns have additionally emerged over the possibility of Chinese company Mingyang Smart Energy supplying turbines for a major offshore wind project in the North Sea.
Trade unions have increasingly criticised the outsourcing of major infrastructure and defence work abroad.
Louise Gilmour reportedly said it was difficult to imagine another country being so willing to send strategic industrial work overseas, while calling on the Ministry of Defence to do more to support British workers and local communities.
Supporters of Reeves argue the issue is not simply economic, but also strategic. Some ministers and officials are increasingly concerned that foreign involvement in critical infrastructure, especially energy systems, could create longer-term national security risks.
Whitehall’s spending rules now under pressure
Not everyone inside government agrees with Reeves’s tougher approach.
Some officials argue competitive international bidding helps the UK secure better value for taxpayers and prevents public procurement costs from rising unnecessarily.
Allies of John Healey reportedly insist the Defence Secretary also supports strengthening British industry, pointing to recent funding measures aimed at expanding domestic defence manufacturing capacity.
Meanwhile, officials connected to UK Research and Innovation defended the Orskov contract, reportedly saying the deal followed a full competitive procurement process.
Still, the Government now appears determined to shift procurement priorities more firmly towards domestic suppliers.
Earlier in 2026, Chris Ward reportedly said new procurement guidance would classify shipbuilding, steel, AI and energy infrastructure as strategically important sectors tied directly to national security.
Under the UK’s 2023 Procurement Act, ministers already have powers to block firms from certain contracts if they are considered security risks. But officials privately acknowledge that existing rules have not significantly changed Whitehall’s purchasing culture.
Reeves reportedly warned ministers that departments would be held accountable once updated procurement guidance is formally introduced later in the summer.
The wider backdrop may also be shaping the urgency behind the policy shift. Britain remains heavily reliant on imported energy, while global geopolitical tensions, including the conflict involving Iran, continue to raise concerns about supply chain resilience and economic vulnerability.
