LABOUR'S new Holyrood leader, Iain Gray, yesterday announced his first shadow cabinet change, handing Margaret Curran the crucial new role of policy co-ordinator, drawing up the manifesto for the party's fight-back in 2011.

Her toughest task as she moves from health into this policy development role will be coming up with a plan for reforming the council tax.

Mr Gray said: "It will mean defining exactly how we should reform the council tax to make it fairer."

He added: "I have been asked how we respond to the loss of Glasgow East. We embrace the message of that defeat into the heart of our campaign in the forthcoming general election and we write it into every line of our programme for winning in 2011. It will be a programme which speaks to the concerns and aspirations of Scots."

Mr Gray said Margaret Curran had been on more doorsteps speaking to more voters than anybody during the by-election.

He said: "That is why I am going to ask Margaret Curran in my shadow cabinet to drive the policy development process towards 2011 for Labour in Scotland. Margaret Curran will take the lessons she learned on the doorsteps of Glasgow East to the heart of that process."

Mr Gray's reshuffle got under way over the weekend with a series of private meetings with colleagues and will continue today. It requires replacements for Ms Curran's health portfolio, his own finance post and for the communities post held by Johann Lamont who won the deputy leadership contest against Bill Butler at the weekend by a margin of 60% to 40%.

Although the main leadership ballot did go to a second round it was sufficiently clear-cut for Mr Gray to claim a solid mandate. He won the run-off against Cathy Jamieson 58% to 42%.

The new Holyrood leader won more nominations from fellow MSPs than his rivals, but it was his victory among grassroots party members that really enhances his authority.

Amid the congratulations, including a call from First Minister Alex Salmond, was one slightly sour note sounded by Scottish Secretary Des Browne who said he expected Mr Gray to "respect the structure of this party". This was seen as reminder that Mr Gray was simply Holyrood leader, not overall party leader in Scotland, a post held by Gordon Brown.