The chancellor of the exchequer has announced that an economic advisory council will be set up to support the government as it works to repair the damage caused by last month’s “mini” Budget.
The council will initially be composed of four individuals currently employed in asset managment, two of which were previously members of the Bank of England’s monetary policy committee (MPC).
This includes BlackRock managing director and former chair of the Treasury’s council of economic advisers, Rupert Harrison and Element Capital chief economist and former member of the BoE’s MPC, Gertjan Vlieghe.
They will be joined by PGIM Wadhwani chief investment officer and former member of the BoE’s MPC, Sushil Wadhwani, and JP Morgan chief market strategist and former adviser to chancellor Philip Hammond, Karen Ward.
The announcement came after chancellor Jeremy Hunt reversed “almost all” of the economic measures in the "mini" Budget less than a month after they were introduced by his predecessor.
Hunt announced the measure in the House of Commons yesterday afternoon (October 17) and said the council will provide “more independent expert advice to ministers”.
The Treasury said further council members will be announced in due course.
The council is to act as a consultative forum for the government to be advised on UK and international economies and financial markets and will be attended by the chancellor and the Treasury’s chief economic adviser.
Hunt stressed that all members will be attending in an independent capacity, and have been chosen for their personal knowledge and expertise.
He also said care will be taken to ensure council members are not privy to any material non-public information, or market sensitive information.
The Liberal Democrats said the council should be made up of housing and debt charities instead of only asset managers.
Sarah Olney, Liberal Democrats Treasury spokeswoman, said: "An advisory panel of purely wealthy asset managers in the middle of a cost-of-living crisis proves just how out of touch this Conservative government is."
U-turns
Hunt also hinted at a potential further U-turn on the government’s response to the energy crisis as he took questions from MPs, and said he is "not against the principle" of windfall taxes - something the prime minister was opposed to.
Responding to a question from Liberal Democrats leader Ed Davey, he said: "I am not against the principle of taxing profits that are genuine windfalls.
"We have said that nothing is off the table."
This followed his earlier announcement yesterday that the energy price guarantee, which had previously been announced as a cap on the price per unit of energy for two years, will only remain until April next year.
The only measures that will remain untouched from last month’s “mini” Budget are the abolition of the health and social care levy, and the changes to stamp duty.
The government will therefore no longer proceed with cuts to dividend tax rates, the reversal of IR35 reforms, the VAT-free shopping scheme for non-UK visitors and the freeze on alcohol duty rates.
The chancellor said these changes will raise £32bn a year.
jane.matthews@ft.com
