Shadow Business Secretary Chuka Umunna accused ministers of “selling business short and selling Britain short” by failing to ensure that UK companies benefit from the £240bn the state spends on goods and services each year.
He called for major changes to procurement policies following the decision to buy rolling stock for the Thameslink service from Germany, which was blamed for Derby-based train-builder Bombardier shedding 1,400 jobs.
And he accused the Government of abandoning Britain’s defence industry by allowing the Ministry of Defence to buy equipment “off the shelf” from abroad.
Mr Umunna rejected the argument that the Government is prevented by EU laws from giving preference to British firms when awarding contracts.
He pointed to a European Court of Justice ruling in 1998 which permitted the French government to take the impact on employment into account when assessing bids, as well as a 1988 ECJ finding that it was legal for the Netherlands to include requirements for contractors to draw a proportion of workers from the long-term unemployed.
Labour is calling on the Government to use the leeway allowed by the EU to allow the impact on jobs to be taken into account when awarding contracts.
Speaking in Warwick, Mr Umunna said contracts should be awarded to companies that offer apprenticeships and to high growth-potential innovative firms. He also called on the Government to outline a strategy for the future of the UK train-building industry in the wake of the Bombardier decision.
Mr Umunna, who was launching an interim report from Labour’s business and enterprise policy review, said: “David Cameron’s Government is letting down companies creating jobs in Britain. Through the Thameslink decision, it is jeopardising jobs and investment. And the MoD, under the Conservatives, now buys ‘off the shelf’ from the US with no regard for companies in Britain.”