The Treasury will come under the spotlight as a former head of the civil service launched a review of its "mysterious and fearsome" power.

Lord Kerslake's review, commissioned by Labour, will examine whether the way the Treasury works is appropriate for delivering sustainable growth in a "fairer and more equal society".

Former chancellors and Treasury mandarins will be invited to give evidence to the review, which will be overseen by a panel including TUC general secretary Frances O'Grady.

Other panellists include Alan Buckle, the former deputy chairman of KPMG, ex-Birmingham Council chief executive Stephen Hughes and academics professor Karel Williams and professor Simon Wren Lewis.

Shadow chancellor John McDonnell, who ordered the review, said: "The next Labour government needs to be confident that the major institutions that are charged with managing our economy and public finances are fit for purpose, and to consider how they can be made more effective in delivering fair and sustained economic growth and prosperity."

Writing in The Times, Lord Kerslake said the Treasury had "enormous power and influence" but it was an "almost uniquely British political phenomenon to have so many of the central functions of government concentrated in one department".

He said: "For all its power, the Treasury still remains, for many people, both mysterious and fearsome in the power and influence it has over budgets.

"Everyone living in the UK is directly affected by Treasury decisions. But they have little or no direct contact with the department, and so there is a strong case for taking an open look at what it does, how it works and testing whether it is best organised to deliver the sustainable, long-term and balanced growth that this country needs."

The review, which will report in July 2016, will examine what changes are needed to develop a strategy for deficit reduction that "avoids damaging the country's growth potential".

It will also make recommendations to create "a sustainable economy, with appropriate balances between levels of investment and consumption and our trade with the rest of the world" and "a more equal economy, with reduced differences between regional economic performance and prosperity and inequality between those at the top and bottom of the income scale".