Rachel Reeves has told cabinet ministers to ensure government contracts go to companies that will boost British workers as employment figures continue to struggle.
The Chancellor, along with Chancellor to the Duchy of Lancaster Pat McFadden, told their colleagues that the billions in public spending on transport and infrastructure projects must be utilised as an opportunity to ramp up British jobs.
Reeves and McFadden said they must “ensure the creation of British jobs, productivity-enhancing opportunities, and skills are prioritised in every major contract”.
The senior Labour figures wrote in a letter to cabinet ministers that “people around the UK” needed to “feel the full impact of government spending through investment in skills and high-quality jobs”.
The pair had also urged departments to funnel more spending to smaller firms in a bid to remove barriers restricting their competition with established players.
“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 wrote.
Official figures look bleak for Reeves
This follows official figures from the Office for National Statistics showing thousands of jobs were lost in June as the consequences of Rachel Reeves’ £20bn tax raid weighed.
The estimate of employees on the payroll dropped by around 41,000 in June while the unemployment rate grew to 4.7 per cent, a four-year high.
In the year to June, some 178,000 people were pushed out of work.
Economists pointed to Reeves Autumn Budget tax hikes for the reduction in headcount as well as citing it behind higher inflation figures, which showed a 3.6 per cent year-on-year rise in prices, with companies forced to up the costs of their products.
McFadden had proposed an overhaul of public procurement rules last month in a move to give public bodies have more weight to choose firms which can prove they will help British jobs when they are lodging a contract bid.
The change is set to apply to major projects such as transport, as well as other schemes including hospital and school building.
The efforts come as Rachel Reeves growth agenda has taken a sharp turn downwards.
The economy contracted 0.1 per cent in June, going against economists expectations of minor growth. This followed a 0.3 per cent shrink in April as Reeves’ tax hikes came into effect.
