Ex-Fabian chief to become economic adviser to Brown

Michael Jacobs, the former general secretary of the leftist think tank, the Fabian Society, has won a job in Gordon Brown's inner circle, advising the Chancellor on public service reform.

As head of the Fabian Society, Mr Jacobs was an avowed "tax and spend" advocate, arguing that the British public would stand for open tax rises if they were explicitly tied to improved results from the public sector. He has also been a critic of the "ideological timidity" of the Government in its second term.

The exact brief for Mr Jacobs' post is yet to be agreed, but he will join the influential council of economic advisers in his full-time job at the Treasury, and is expected to begin in the next few weeks. He quit the Fabian Society in the autumn and is currently pursuing a research fellowship in Australia. At the Treasury, he will have a role advising on public sector productivity, a vital area for the Government as it struggles to persuade the electorate that the extra billions for the National Health Services and other public sector bodies are resulting in improved services. Mr Brown is understood to be beefing up his advisory team ahead of the departure of Ed Balls, his long-standing chief economic adviser, who hopes to win a parliamentary seat.

Mr Jacobs is widely believed to have been influential in the formation of Mr Brown's policy of raising National Insurance contributions to pay for extra NHS spending.

At the Fabian Society, Mr Jacobs' last economic pamphlets were concerned with inheritance tax, where he advocated reforms that would reduce the perceived iniquities of the tax and the widespread avoidance by the well off. Proposals included moving the tax burden from the deceased's estate to the beneficiaries'.

In September, Mr Jacobs put his name to a critique of Tony Blair's government, arguing: "A just society - built on a huge investment in children, making real Labour's historic commitment to end child poverty - must be the centrepiece of the government's appeal." The piece argued that private sector involvement risked undermining the public sector.