UPDATE 3-UK coalition loses treasury minister over expenses

* Liberal Democrat quits over expenses issue

* Laws was finance expert involved in key budget cuts

* Departure seen as move to protect new coalition govt

(Adds context, background)

By Stefano Ambrogi

LONDON, May 29 (BestGrowthStock) – British treasury minister David
Laws, a key architect of plans to rein in a gaping budget
deficit, resigned on Saturday after revelations about his
expenses, dealing a blow to the new coalition government.

Conservative Prime Minister David Cameron replaced Laws, the
Chief Secretary to the Treasury, within 24 hours of his apology
after a newspaper reported he had claimed tens of thousands of
pounds in parliamentary expenses for rent he passed on to his
long-term male partner.

Danny Alexander, a former close aide to Liberal Democrat
leader Nick Clegg, moves from the role of Scottish Secretary to
replace Laws in the number two role in the finance ministry —
the most heavyweight cabinet post the Lib Dems have.

The loss of Laws less than three weeks after the formation
of the government is a blow to Britain’s first coalition
government for 65 years. The coalition took power after Labour
lost the May 6 election, ending its 13-year rule.

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.

UNWELCOME DISTRACTION

Alexander, who has no experience of high office, will now
take over the role of seeing through a series of tough austerity
measures needed to save Britain billions of pounds.

The loss of Laws is a setback to Cameron, who has made
tackling the deficit his top priority.

It is also an unwelcome distraction for a new government
eager to focus on the economic challenges and to start a new
chapter after a scandal over parliamentary expenses that dogged
the final months of the previous Labour government.

Cameron had promised a new, open administration that abides
by strict rules of conduct.

Clegg, the deputy prime minister, told BBC television:
“David Laws has taken a very painful decision today. It was his
decision alone.”

Cameron called Laws’ decision “honourable” and Conservative
Chancellor of the Exchequer (finance minister) George Osborne
expressed sadness at his sudden departure.

Osborne said in a statement it was “as if he had been put on
earth” to do the job of Treasury Chief Secretary.

Laws went before parliament this week to defend details of
the initial 6.2 billion pounds ($9.05 billion) of departmental
savings, including cutting down on ministerial perks.

He had won the respect of his Conservative colleagues and
the willingness to make cuts had reassured markets worried about
a deficit forecast to top 160 billion pounds this year.

Alexander, who is 38, was little known outside parliament
before the election.

He rose to prominence during the election campaign as
Clegg’s chief of staff and as a negotiator in the days of talks
that led to the formation of Britain’s first coalition
government since World War Two.

The coalition agreement is a delicate balance of the two
parties’ policy priorities. By appointing another Lib Dem to
replace Laws, Cameron has been careful not to upset the party
balance in the coalition cabinet.

Investing Basics
(Additional reporting by Adrian Croft; Editing by Kevin Liffey)

UPDATE 3-UK coalition loses treasury minister over expenses