UK government tells markets 'all well' despite Laws departure
Lib Dem's absence expected to be brief
THE UK Treasury was last night attempting to reassure markets that stable and detailed plans to bring down Britain's deficit are on track despite the resignation of David Laws amid concerns that his departure will undermine financial confidence in the new coalition government.
The departure of Mr Laws, who had been lauded by Tories and his fellow Liberal Democrats for his handling of a plan to cut£6.2bn (€7.3bn) from public spending last week, has damaged David Cameron's administration less than a month into its life. It has also seen him lose the minister many viewed as the linchpin holding the coalition together.
Mr Laws announced his resignation over the weekend following revelations that he had used £40,000 (€47,000) of taxpayers' money to rent a property owned by his partner.
He has been replaced by Danny Alexander, the Scottish Secretary. Mr Alexander's lack of economics experience and staunchly pro-Brussels background is likely to put the coalition under further pressure.
In a bid to head off concerns about the status of the government's cost-cutting plans before the markets reopen tomorrow, treasury sources were last night stressing that Chancellor George Osborne and Mr Laws had completed much of the difficult work on how to reduce the £156bn (€183bn) deficit before his departure.
Treasury officials, they said, were already fleshing out the plans to bring public spending under control as part of measures to be announced at the emergency budget just weeks away and comprehensive departmental spending plans to be published in the autumn.
"The two (Mr Osborne and Mr Laws) worked very closely together on the plans to reduce the deficit and work on that within the treasury is already well underway," said a senior source. "A lot of the strategy has already been worked out."
As senior figures from the Tories and Liberal Democrats signalled an early return for Mr Laws to the government yesterday, further details emerged over the extent to which his secretive private life affected his political career. Mr Laws instantly impressed MPs when he entered the Commons in 2001, with many encouraging him to launch a campaign to become his party's leader in 2007.
However, in a sign of the strength of his desire to keep his homosexuality secret, he told supporters going for the top job would not be possible. "I said to David at the time that he should go for the leadership," said a Commons colleague. "But he said, 'I don't think it's for me because of my lifestyle'."
The importance of Mr Laws to the coalition went beyond his strong early performance at the treasury. A key member of the Liberal Democrat team which negotiated the terms of the coalition agreement, and philosophically close to the Tories, he had become a key link between the partners.
A treasury spokesman said Mr Laws would not be claiming the severance pay usually given to departing ministers.
Mr Alexander's arrival will alarm many Tory backbenchers as he is strongly pro-European. Yesterday, Ken Clarke, the europhile justice minister, said he was "personally rather pleased" Mr Alexander had been handed the role.
"Danny has the intelligence, ability, potential, required for the task," he told the BBC. "I think in the first three weeks, the government has demonstrated its commitment to getting on with tackling the deficit," he said.
"Even round the cabinet table it is obvious there is no (division) between Lib Dem opinions and Conservative opinions. Someone like Vince Cable has the same views as me, and Danny has the same views as George Osborne."
Labour attempted to cause trouble for the coalition by highlighting Mr Alexander's past record. "Having worked with David Laws over the last three years, I am personally very sorry about what has happened," said Ed Balls, the shadow education secretary. "Danny Alexander is a curious choice as chief secretary to the treasury given he was a leading proponent of Britain joining the euro in the last decade."
A number of politicians yesterday suggested Mr Laws would be welcomed back into the government. Pensions Secretary Iain Duncan Smith said Mr Laws had been right to step down, but should be allowed to return. (© Independent News Service)