Rachel Reeves challenges Cabinet to buy British
The Chancellor and Pat McFadden, the Chancellor of the Duchy of Lancaster, sent out the message in a letter to the Cabinet.
It urged ministers to use procurement contracts, which are in the Government's gift, to help generate jobs in the UK by supporting British companies.
The intervention comes amid a consultation about whether rules can be changed to give the Government more freedom to give contracts to UK firms.
Each year £400bn is spent in public sector procurement, meaning small changes in approach could have a significant impact.
Ms Reeves is facing difficult economic circumstances in her Budget this autumn, with official growth forecasts halved for 2025.
New tax rises appear increasingly inevitable given that pressure on the public finances has intensified and the Chancellor will not break her borrowing rules.
Excerpts of the letter from Ms Reeves and Mr McFadden were shared with The Telegraph.
The pair wrote: 'We want people around the UK to feel the full impact of government spending through investment in skills and high quality jobs. That's why we're going further to ensure public procurement expenditure boosts British industry, jobs, skills, productivity, and expands the supply side.
'Every department needs to be pulling this procurement lever to support economic growth and strengthen our economic security. It is possible to do this within our trade agreements, as other countries do.'
They added: 'We are asking all Secretaries of State to satisfy themselves that your department, and arms length bodies, have the commercial capacity and capability to ensure the creation of British jobs, productivity enhancing opportunities, and skills are prioritised in every major contract.'
They also told colleagues to 'set ambitious and stretching targets for increasing your procurement spend with SMEs (Small and Medium-sized Enterprises) and social enterprises while stripping away requirements and processes that are barriers to these firms competing with established players'.
At one point they wrote: 'Your commercial team is not a back office function – it is a strategic policy lever and must be a priority.'
Ms McFadden was once Sir Tony Blair's political secretary and has emerged as a key confidant of Keir Starmer in recent years.
As the most senior minister in the Cabinet Office he is overseeing cross-government attempts to tackle Whitehall bureaucracy and make savings in the civil service.
Whether the rhetoric of Ms Reeves and Mr McFadden will lead to a step change in procurement approach remains to be seen.
During the Conservatives' 14 years in office government ministers often talked publicly about the importance of using the Government machine to support British businesses.
A consultation issued by the Cabinet Office is looking at changes to procurement rules that make it easier for the government to boost British industry. It will report back in September.
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