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UK Chancellor Rachel Reeves has told cabinet colleagues to award government contracts in shipbuilding, steel-making, energy infrastructure and artificial intelligence to British companies. Procurement in those four areas will be recognised as ‘critical for national security’, and under new guidance contracts for British industry will be prioritised ‘to protect our national security’, a government spokesperson said. Reeves, in a letter to Cabinet ministers reported by The Guardian, said all of them 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,’ she wrote in the letter co-signed by the Cabinet Office minister Chris Ward. ‘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.’ Treasury and Cabinet Office officials are to observe contracts in the four sectors and could intervene in procurement decisions taken by departments if necessary. The move comes amid rising concern about the UK’s vulnerability to international supply chains, with Iran’s blockade of the Strait of Hormuz providing the latest demonstration of other countries’ ability to disrupt global trade. The chancellor is frustrated by a number of major contracts being awarded to overseas bidders or put to open tender, The Guardian first reported. Those include a £200 million contract made by outsourcing giant Serco Group PLC to build vessels to support the Royal Navy awarded to Dutch shipbuilder Damen Shipyards Group NV, a £9 million deal to refit the polar research vessel RRS Sir David Attenborough with the Danish shipyard Orskov Yard AS; and the potential for a contract to upgrade Faslane home to the Trident missiles system to go abroad as part of a competitive tender. Reeves was also reportedly unnerved by the possible supply of wind turbines by Chinese company Ming Yang Smart Energy Group Co Ltd for a major North Sea project, amid wider national security concerns over Beijing’s involvement in critical infrastructure. In March, Cabinet Office minister Ward said he would issue guidance under which contracts related to steel, shipbuilding, AI and energy infrastructure would be used to back British business, with departments also required to use British steel for their projects, or provide a justification if they choose to source steel from abroad. The measures included a new ‘public interest test’ requiring Whitehall departments to consider whether outsourced contracts worth more than £1 million could be better delivered in-house. Other changes included using AI to ‘streamline the commercial process’, simplifying contracts and creating a central platform so small businesses do not have to keep submitting the same information when bidding on different contracts. Reeves said in her letter that ‘each department will be held to account on the progress being made’ on complying with the new Cabinet Office guidance ‘when it is issued later this summer’. Her intervention comes amid speculation over UK Prime Minister Keir Starmer’s leadership and who could become chancellor if he is ousted. It follows a string of announcements last week aimed at easing the impact on the cost of living from the Iran war, including a cut in the rate of VAT on tickets for theme parks, zoos and museums from 20% to 5% over the summer holidays and free bus travel for children. 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.’ source: PA Copyright 2026 Alliance News Ltd. All Rights Reserved.
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