Rachel Reeves is hauling her Cabinet colleagues over the coals for not doing enough to “Buy British”. In a letter to Government departments, the Chancellor has called on ministers to prioritise domestic suppliers in four key sectors: shipbuilding, steel-making, energy and artificial intelligence. The Treasury is apparently concerned that too much business is being won by overseas contractors at a time when Britain is suffering from sluggish growth and rising unemployment.

The Government is right to prioritise buying British. No major industrial nation has ever been able to succeed without having a strong presence in its own domestic market. The United States has had a Buy American Act in force since 1933, which forces the government to try to source essential goods domestically. Researchers estimate that it has created an additional 100,000 manufacturing jobs. China also has very restrictive practices on its $500 billion procurement market, despite repeated promises to open it up. The British Government currently spends over £340 billion with the private sector, but a third of its largest contracts go either directly or indirectly to foreign suppliers.

Sadly, Reeves is not the first chancellor in recent times to advocate buying British. The problem is that it never seems to happen. Former Chancellor Rishi Sunak infamously tweeted in 2024 that “we shouldn’t be reliant on foreign food”, yet imports have remained high. The Coalition government passed the Social Value Act in 2012 and created a small and medium-sized business (SMEs) procurement target to help local businesses win Government contracts, yet spending with SMEs has fallen in recent years. Meanwhile, repeated strategies encouraging departments to spend more with British businesses, including a new procurement note published only last year calling for greater use of domestic steel, never seem to make any difference.

It is clear that writing letters calling for departments to buy British won’t get the country anywhere. The real problem is the lack of viable options to buy British. Take wind turbines. Britain is spending record amounts on wind turbines but, according to findings from the Institute for Public Policy Research, it remains a minnow in the production of key components of offshore wind turbines. The UK’s annual production of components averages just over €100 million, compared to nearly €4 billion in Denmark and €2.5 billion in Germany. This is despite Britain issuing the largest ever offshore wind auction in Europe earlier this year.

Another topical example is steel. Demand for British steel is growing, particularly for major infrastructure and defence contracts. Yet despite the proposed nationalisation of British Steel, Labour is still not planning to invest in production to meet domestic demand.

The Government has a “Modern Industrial Strategy”, but it reads more like a prospectus for international investors to buy British businesses rather than a serious programme to increase domestic production. Until the UK starts putting significant resources through grants, tax reliefs and supportive infrastructure investments (like energy production) into expanding existing producers and growing new businesses, the Chancellor’s letter is likely to go unacted upon.

The tragedy is that the gains from getting Government procurement right could be enormous, given the hundreds of billions Britain spends every year. However, Labour needs to throw the kitchen sink at supporting the development of a new generation of national champions that can become reliable partners for British procurement. This is where Reeves should provide some leadership and rewrite the Modern Industrial Strategy. That way, she can turn “Buy British” from a slogan into the heart of Labour’s economic agenda.

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Andrew O’Brien is the former Director of Policy at the think tank Demos and currently Head of Secretariat of the Independent Commission on Neighbourhoods. He writes in a personal capacity.

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