UK Moves to Prioritise British Steel and Shipbuilding

The UK Government is set to prioritise British steel and shipbuilding when awarding large procurement contracts, with Chancellor of the Exchequer Rachel Reeves announcing new legislation.

The laws apply to what the government classifies as critical national infrastructure and mark a shift in procurement strategy, moving focus toward economic security, domestic production and reduced reliance on overseas manufacturers.

Speaking at the Labour Party’s annual conference in Liverpool, Reeves said the aim was to "put Britain first," with a strategy that brings long-term support to UK industry, including shipyards and steelworks.

Reeves said: “We are putting Britain first, empowering us to prioritise British-built ships and British-forged steel; strengthening our national economic security and creating manufacturing jobs here in Britain. Because where things are made, and who makes them, does matter.”

Steel and shipbuilding prioritised in public contracts

Reeves stated that steel and shipbuilding will now be treated as critical national infrastructure, ensuring both sectors are front and centre in public procurement.

The updated rules give the government more flexibility to favour domestic suppliers when awarding defence and transport contracts.

It follows growing global concern over fragile supply chains and international trade disruptions. In the last year, geopolitical tensions and trade route uncertainty have led many countries to consider domestic production as a more reliable alternative.

The UK is now joining that trend by bringing production back home. In April, the government stepped in to safeguard British Steel’s Scunthorpe facility, which supplies 95% of the steel for the UK rail network. This site remains the country’s only manufacturer of virgin steel, steel made from raw iron rather than recycled materials, and is considered vital to national infrastructure.

By taking control of operations at Scunthorpe, ministers save thousands of jobs and preserve two essential blast furnaces.

Reeves added: "There must be a future, there will be a future, for steel forged here on British soil.”

The plan has receiveed support from unions including GMB, which has more than 500,000 members, and Prospect, which represents 160,000 professionals across science, engineering and technology.

Both unions describe the policy as a long-awaited change to a system that often favours the lowest bidder regardless of where production happens or how it affects UK industry.

Prospect General Secretary Mike Clancy added: “For too long our procurement system has been pointing in the wrong direction, fixated on headline cost and ignoring other factors such as supporting good quality jobs.

"Under the last government we saw important shipbuilding contracts go to foreign firms, while our own yards were desperate for work. A more strategic procurement process can promote long-term skills planning and lead to ambitious industrial partnerships.”

UK shipyards set for revival

Britain’s shipbuilding sector, once a key part of national identity and defence, is central to the new procurement focus.

Currently, 95% of UK trade moves by sea, with the Royal Navy playing a key role in maintaining safe shipping lanes.

The government has already committed to major shipbuilding programmes such as the City Class or Type 26 frigates. These are designed to protect the UK’s nuclear deterrent and aircraft carriers, and are being built by British defence company BAE Systems. A total of eight vessels will form the new class.

Public procurement decisions are also designed to spark more competition and innovation within the industry.

Reeves confirmed that the government will build on current programmes to support long-term supply chain development and domestic capability.

GMB General Secretary Gary Smith comments: “For generations, our fantastic yards have kept the country safe; from the ships that beat the Armada to those that sunk the Bismarck.

"This policy will reinvigorate the UK’s shipyards – and the communities built around them.”

The GMB Union has labelled the plan “incredible news for the UK’s proud shipbuilding sector".

Local supply chains key to national security

The emphasis on British steel and shipbuilding forms part of a wider localisation strategy, with the government aiming to build more resilient supply chains, reduce exposure to international risk and ensure long-term support for high-value engineering jobs.

Unions argue that strategic procurement leads to better outcomes not just for the economy but also for communities that rely on manufacturing.

The shift also reflects a broader rethinking of value in public contracts, where cost alone no longer dominates decision-making.

By investing in local capability and strengthening domestic supply, the government says it is also enhancing national defence capacity, with more ships for the Royal Navy and a transparent, UK-based steel supply for infrastructure projects.

As Reeves and supporting unions highlight, manufacturing location matters, both for economic independence and job creation.

The shift in procurement signals a clear direction: national contracts will now build up British industries from within.