Louise Haigh is set to take a key role in Andy Burnham’s ministerial team running the “engine of government” and being at the heart of policy formation.
Allies of Ms Haigh have told The Independent that she has already been inked in as the new chancellor of the Duchy of Lancaster – running the Cabinet Office and working closely with the prime minister and Downing Street.
The role is currently held by Darren Jones who is also chief secretary to the prime minister, with Ms Haigh set to take a similar position.
It comes amid speculation that Ed Miliband is set to be the new chancellor but that Mr Burnham intends to run much of his economic policy through Downing Street and the Cabinet Office.
It would potentially give the outspoken Ms Haigh a significant role in economic decisions with her support for wealth taxes as well as wider policy formation.
Ms Haigh was transport secretary under Sir Keir Starmer but was forced to resign after new details of a conviction over misreporting of a lost phone emerged.
She has since been a key lieutenant of Mr Burnham and was a central figure in his team as he fought the Makerfield by-election and prepared to take over from Sir Keir.
An ally said: “Lou is going into the Cabinet Office, it is pretty well known now.”
Another noted: “Keir [Starmer] always underestimated her and treated very badly over the resignation.”
One MP said: “If you want to talk about policies in Andy’s government you need to talk to Lou Haigh.”
However, Ms Haigh has caused some controversy since Mr Burnham returned to parliament.
In an interview with the BBC’s Nick Robinson on his Political Thinking podcast she appeared to suggest that Mr Burnham had been plotting for more than a year to replace Sir Keir.
She said: “He has been thinking about this and certainly planning for this, for this moment, for at least the last year.”
However, she later denied that is what she meant after a backlash from fellow MPs over the comment.
Ms Haigh has also called for a wealth tax and equalising capital gains tax with income tax in policy moves which businesses have warned would put investment in the UK at risk.
Explaining her views on capital gains tax in an article for leftwing Renewal magazine last month, she wrote: “This reform is central to restoring confidence that the system does not favour those able to structure their income over those earning through work.
“It would shift the taxation burden away from punishing work, and towards unproductive capital accumulation, which does little to grow the everyday economy.”
The reports about Ms Haigh come as Labour MPs are sending the new leader their CVs in the hope of getting ministerial positions.
New special advisers are also being recruited for the new government amid a clearout of many of Sir Keir’s old team.
Mr Burnham will be named Labour leader on Friday and take over as prime minister on Monday.
The Independent has contacted Mr Burnham’s office for comment.
