Coalition crisis as David Laws quits over £40k rent to lover

THE Conservative-Lib Dem coalition suffered a damaging blow last night when David Laws resigned from the Cabinet after it emerged that he broke Commons expenses rules to pay his secret male lover £40,000 of taxpayers' money.

• Under fire: David Laws' future was in the balance yesterday over his expenses. Photograph: Clive Gee/PA

The Lib Dem MP stood down at the end of a week that saw him identified as the rising star of the coalition after an impressive debut as Chief Secretary to the Treasury.

But just three weeks after the government's formation, Laws became the first casualty of the fledgling administration when he decided that revelations over his expenses and his private life made it impossible to carry out his public duties.

Last night, Scottish Secretary Danny Alexander was installed in his place at the Treasury, while Lib Dem MP Michael Moore was the surprise choice for promotion to the Scotland Office.

Laws said it was his own decision to quit, but his departure came just hours after he faced calls from Labour for his resignation amid claims that he abused his expenses by channelling 40,000 to his partner, lobbiest James Lundie, who was also his landlord.

In his resignation statement at the Treasury, 44-year-old Laws said: "I do not see how I can carry out my crucial work on the Budget and spending review while I have to deal with the private and public implications of recent revelations."

Laws quit as he faced up to the expenses scandal that saw him "outed" as gay. He took the step after issuing an apology, which included the explanation that he had hidden the fact that his landlord was also his lover because he wanted to keep his sexuality private. A parliamentary rule introduced in 2006 forbids MPs from paying rent to a "partner." Laws claimed back the costs of sharing two houses in London with his boyfriend between 2001 and 2009.

Laws claimed between 700 and 780 a month to sub-let a room in a flat in Kennington, south London, from Lundie. His boyfriend sold the flat for a profit of 193,000 in 2007, buying another house in Kennington for 510,000.

The MP then began claiming to rent the "second bedroom" in this property. His claims increased to 920 a month. Laws' main home is in his Yeovil constituency.

The arrangement continued until September 2009, when parliamentary records indicate that he switched his designated second home and began renting another flat at taxpayers' expense. Lundie remained at his former home.

Laws, who reported himself to the Parliamentary Standards Commissioner, last night expressed heartfelt regret for putting his political career ahead of "those I love most".

"I have pursued a political career because of my sense of public duty, but I have too often put this before the interests of those I love most. It is time to redress the balance."

He added that he was "extremely grateful" for strong support from the Prime Minister, David Cameron, his Liberal Deputy, Nick Clegg, and Chancellor George Osborne. Cameron and Clegg, anxious to minimise the fall-out from the revelations, had put in place a strategy to replace Laws by early evening.

After Laws' statement, Clegg insisted he had "great respect" for the way Laws had handled himself since the revelations emerged, and said his privacy had been "shattered".

Cameron said Laws was an "honourable man", adding: "I hope that, in time, you will be able to serve again."

His decision less than 24 hours after details of his expenses claims came to light was almost inevitable given Cameron and Clegg's pre-election pledges to create a new politics free from the expenses sleaze that blighted the last parliament.

Having a minister in charge of making 6 billion in cuts to public services with question marks over his own financial probity would have proved extremely difficult for the new government's credibility.

But his resignation was a matter of deep regret for his colleagues on both the Lib Dem and Tory benches.

Conservative MPs approved of Laws as a right-wing Liberal Democrat who they almost regarded as his own.

His presence in the Cabinet had been viewed as a unifying factor in the coalition, particularly after he made a very well received speech alongside the Chancellor George Osborne on the financial challenges facing the country last week.

Osborne said: "I am very sorry to lose David from the Treasury. It was as if he had been put on earth to do the job that was asked of him."

Last night, Alexander, 38, the Lib Dem who had been Scottish Secretary for only three weeks, was preparing for a huge challenge. Unlike Laws, who was a millionaire by the age of 28 and came into politics after a successful career in the City, Alexander's job before he entered parliament was as a press officer for the Cairngorms National Park.

Alexander has been succeeded by Moore, his party colleague and MP for Berwickshire, Roxburgh and Selkirk.