Chancellor Rachel Reeves is set to recruit a new heavyweight economic adviser ahead of her autumn budget after two key members of her economic team reduce their roles. John Van Reenen, a professor from the London School of Economics who has served as chief economic adviser since Labour took power, will cut his commitment from three days a week to one. Anna Valero, another member of Reeves’s council of economic advisers, is also departing to return to academia.
Van Reenen, an expert in productivity, has worked intensively alongside the chancellor through a turbulent year, with Treasury sources noting that his part-time role had effectively involved “seven days a week” work. His reduced role comes as Reeves faces pressure to address a deteriorating economic outlook with tax rises in the autumn budget. The chancellor has encountered difficulties in recent months, including reversing a decision to remove the winter fuel allowance from most pensioners and facing criticism over cuts to disability benefits.
During a House of Lords committee hearing, Reeves emphasised Van Reenen’s core insight on the need for higher investment to boost productivity. She told peers: “The key problem is productivity and investment is the answer. Investment in human capital, investment in physical capital and also investment in new technologies. That’s why the fiscal rules I set out do treat investment differently.” She also declined to rule out heavier taxes on wealth, stating that tax decisions would be announced in the budget.
Treasury sources confirmed that Valero had always been expected to return to the LSE but would remain in contact with the government. Both Valero and Van Reenen contributed to key policy announcements, including the industrial strategy and the spending review. A Treasury spokesperson said: “John and Anna have provided invaluable leadership to the chancellor and will continue to do so in their new capacities.” However, Whitehall insiders warned that Valero’s departure could leave the industrial strategy without a strong advocate within the Treasury, potentially complicating implementation.
Some Labour veterans have noted that Reeves lacks a powerful enforcer to impose Treasury will across Whitehall, akin to roles previously held by Ed Balls under Gordon Brown or Rupert Harrison under George Osborne. Meanwhile, Prime Minister Keir Starmer is strengthening his own economic team, with Downing Street seeking an economic adviser to counterbalance Treasury dominance in policy-making.
