Starmer strengthens control over economic policy through new budget committee
Prime Minister Keir Starmer strengthens control over the government’s economic strategy by strengthening the Intergovernment Budget Committee, which will shape the fall statement on November 26.
The board will meet weekly to ensure closer coordination between No. 10 and the Treasury, which has sparked opposition from the business group amid a huge tax rise.
The new structure will be co-chaired by Torsten Bell, the Minister of Pension and former directors of the Resolution Foundation and Starmer, recently appointed as chief economic adviser Minouche Shafik.
The committee will also include Reeves’ chief of staff, Katie Martin, who manages the relationship with business; Varun Chandra, No. 10 Business Envoy; Darren Jones, the new chief secretary of the Treasury; and Morgan McSweeney, Starmer’s chief of staff.
Communications heads 10 and 11 will sit on the board along with Starmer’s newly appointed COMM director and Tony Blair administration veteran Tim Allan.
Government insiders said the expanded lineup is designed to align economic and political messaging while injecting a stronger business perspective into budget discussions.
Reeves’ pressure as fiscal rules tighten
Prime Minister Rachel Reeves faces increasing pressure ahead of the November budget and the Office of Budget Responsibility (OBR) is expected to downgrade the forecast. According to independent estimates, she may need to find an additional tax increase of £25 billion in order to comply with her own financial rules.
Reeves was criticized after his last budget increased employer’s national insurance contributions by £2.5 billion, with a relocation business head saying the cost of hiring has increased and increased inflationary pressures.
CBI Director-General Rain Newton-Smith has urged the government to carry out “thorough tax reforms” rather than more tax rate hikes, pointing out that stamp duty and VAT thresholds are areas that require overhaul.
The Institute of Directors (IOD) welcomes the creation of a budget committee but calls for a larger business representative.
“It’s certain that the government will reinvest energy into the growth agenda with a particular focus on business. But to be successful, the Budget Committee must issue a statement effective for businesses and act quickly to remove barriers to growth from tax and regulatory regimes,” said Anna Leach, chief economist at IOD.
She added that incorporating independent business voices into the board would help “constructively challenge” government thinking and bring expertise into budget plans.
The enhanced budget committee underscores Starmer’s determination to concentrate economic decisions and avoid political mistakes in recent months. But with slow growth, business confidence declines and future fiscal choices, the test will be whether this new forum can balance Labour’s fiscal discipline with the growth agenda to reassure businesses.
