Watson stepped down from his shadow cabinet role yesterday following allegations that the Unite union had attempted to influence the vote for the next Labour candidate in Falkirk.
Watson, whose office manager Karie Murphy was the union's choice for the seat, departs amid a growing spat between the party and union over the allegations.
Kirsty Walker, associate director at iNHouse Communications, said the departure of a ‘very powerful figure’ in the party would inflict ‘major damage’ to Miliband.
‘You want Watson in your team, not out of it,’ she said. ‘Considering Watson’s role as a maverick figure, he will be even less restrained in what he says. This makes Miliband look weak and slightly diminished.’
A Labour internal inquiry into the affair resulted in the suspension of Murphy and Falkirk chairman Stephen Deans from the party.
Unite general secretary Len McCluskey labelled the inquiry ‘a stitch-up'.
McCluskey said he had ‘no trust’ in the party’s handling of the issue and denied the union had been involved in signing up members to the constituency party and paying their subscriptions.
In his resignation letter, Watson said he believed the report should be published and praised Miliband’s ‘compassion and resolve'.
Gurpreet Brar, a partner at Bell Pottinger Public Affairs, played down divisions between Unite and Labour, but said that Watson’s departure reflected deeper issues and needed 'a show of unity' in response.
Brar said: ‘Whether it is around the unions, or right and left divisions within the party, people feel the leadership has not done as much as it could to bring elements of the party together.
‘Watson’s resignation could have been handled better and Miliband looked like he was behind on the issue, but the opportunity to bring people together is still there.
‘Miliband should not rush to replace Watson. He should wait for the upcoming reshuffle and focus on bringing everyone back together with a unifying candidate.’