Brown names economic advisers to the Treasury

Gordon Brown yesterday announced the appointment of two experts to his long-promised "Council of Economic Advisers" at the Treasury.

Paul Gregg, an economist from the London School of Economics specialising in the jobs market and inequality, and Chris Wales, a tax partner from Arthur Andersen, will work with teams of Treasury officials.

Although the new Council is billed as a replacement to the disbanded Panel of Independent Experts, the experts will focus on separate areas of policy rather than offering advice as a group. Yesterday's announcement made it clear that the individual policy experts would work alongside separate Treasury teams on the Government's priority areas.

Ed Balls, the special adviser to the Chancellor of the Exchequer, will continue to play a dominant role in economic policy. He has not formally been named chairman of the new Council but will co-ordinate policy as the Chancellor's main adviser.

Further outside appointments to the Council will be announced. Eventually there could be up to six experts brought in. In addition, the Treasury has not yet indicated whether or when Sir Alan Budd, its outgoing chief economic adviser, will be replaced. He is due to retire from the Treasury and move full-time to the Bank of England's Monetary Policy Committee in November.

Names in the frame for the top economics job in the Treasury have included Gavyn Davies, chief economist at Goldman Sachs, and Professor Charles Bean of the London School of Economics, as well as Mr Balls. However, the ultimate structure of advice remains unclear. The Treasury dismissed recent reports that Permanent Secretary Sir Terry Burns will be replaced as "extremely speculative".

Paul Gregg will work part-time at the Treasury and part-time in his current position as Senior Research Associate at the LSE's Centre for Economic Performance. He will focus on the Government's welfare-to-work programme and the review of the tax and benefit system being co-ordinated by Barclays Bank chief executive Martin Taylor.

Mr Gregg is a specialist on job insecurity, poverty and movements into and out of unemployment. He co-authored research which established the fact, often quoted by the Chancellor, that one in five non-pensioner households in the UK does not have anybody in work.

Chris Wales is a tax expert who worked in Sweden from 1991 to 1995 as head of Arthur Andersen's international tax practice there. He has specialised in corporate tax issues, including the financing of takeovers, and is expected to concentrate on the Government's planned reform of company taxation. His clients have included big US and European multinationals.

The new Council of Economic Advisers has been billed as a parallel to the US body of the same name, but so far the similarity is confined to the name. The Treasury has for some years drawn on advice from outside economists, often part-time, on their particular areas of expertise.

Kenneth Clarke, the former chancellor, appointed Edward Troup, who has since moved to City law firm Simmons & Simmons as an adviser on taxation.

The Treasury's announcement yesterday said the terms of reference for the new Council were: "To advise the Chancellor of the Exchequer on the design and implementation of policies for the achievement of the Government's economic objectives."