UK coalition plans seen surviving Laws’ departure

* Chief Secretary to the Treasury quit over expenses

* Spending cuts needed to curb budget deficit

* Resignation a blow to new coalition, analysts say

* Policies seen as more important than one man

By Stefano Ambrogi

LONDON, May 30 (BestGrowthStock) – The loss of a treasury minister
just 18 days into office is a serious setback for the new
British coalition, but is unlikely to drive it way off course in
its search for deep spending cuts to curb the budget deficit.

Chief Secretary to the Treasury David Laws, who had been
responsible for identifying budget cuts, resigned on Saturday
after questions arose about his expense claims which may have
broken official parliamentary rules.[ID:nLDE64S0HK]

Analysts described his resignation as a knock to the fresh
Conservative-Liberal Democrat alliance, but not insurmountable.

“It is a blow but not fatal by any means,” said Royal Bank
of Scotland economist Ross Walker.

Asked how the City would react he said: “There are other
bigger issues at the moment, but I think there will be a sense
of disappointment, because at the margin it probably makes some
of the fiscal tightening harder to sell.”

Economist Philip Shaw at Investec said in just two weeks
Laws had shown himself to be a very capable communicator and an
important bridge between Lib Dem and Conservatives policies.

“Having said that it’s not a mortal wound for the coalition.
Before the election his name wasn’t really being touted as the
chief secretary, so the process of fiscal consolidation will
carry on without him,” he said.

“It is a shock and shock that has come quickly in the life
of the new government, but it is one that perhaps will be
survived fairly easily.”

POLICIES MORE IMPORTANT THAN PEOPLE

A newspaper had reported that Liberal Democrat Laws, second
to Conservative finance minister George Osborne, had claimed
tens of thousands of pounds in taxpayers’ money for rent he
passed on to his long-term male partner.

Laws, an economist with a background in London’s financial
services industry, was a key player in the Conservative-Liberal
Democrat coalition. He appeared to have struck up an effective
relationship with Conservative finance minister George Osborne.

The two men were drawing up spending cuts to rein in
Britain’s record peacetime budget deficit, which exceeds 11
percent of gross domestic product. The coalition is due to
present an emergency budget on June 22.

“I do not see how I can carry on my crucial work on the
budget and spending review while I have to deal with the private
and public implications of recent revelations,” Laws, a
millionaire, said in his resignation statement.

Prime Minister David Cameron moved swiftly to replace Laws,
appointing another Liberal Democrat, Scottish Secretary Danny
Alexander, to the post.

Senior politics lecturer at Sussex University, Tim Bale,
said ultimately the coalition agreement between the parties and
the policies themselves were more important than one man.

“Coalitions are about teams of people rather than
individuals and the loss of one individual is serious, just like
it is for a soccer team, but there are more players than just
one and his absence won’t be the be all and end all.”

Alexander, 38, has no experience of high office nor the
financial expertise of Laws. He had been chief of staff to
Liberal Democrat leader Nick Clegg since 2007 and, with Laws,
was part of the negotiating team that helped to form Britain’s
first coalition since 1945. [ID:nLDE64S0IE]

Asked how financial markets would react to his appointment,
RBS’ Walker said he was an unknown quantity. “He was one of the
negotiating team and therefore is well regarded within the Lib
Dems, so we will just have to see.

“But I think Osborne was the key figure in all of this
(budget cuts) and that is going to continue.”

Investing
(Editing by Myra MacDonald)

UK coalition plans seen surviving Laws’ departure