Where now for the coalition?

Treasury Secretary's departure will pile pressure on inter-party relations, says John Rentoul, and add to tensions within the Lib Dems
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Indy Politics

It all started with a joint news conference in the Downing Street garden that sketch writers thought resembled a gay wedding. Now the lack of a gay wedding has brought the coalition to its first real crisis. While David Laws debated whether to resign as Chief Secretary to the Treasury, many MPs and commentators said that he would have to stay because he was so critical to the success of the coalition government. He had been an instant success as the acceptable face of public spending cuts, looking comfortable and authoritative at the side of George Osborne, the Chancellor.

So what will his departure mean for the alliance between David Cameron and Nick Clegg?

Laws was important because he is economically literate, and the one Liberal Democrat apart from Clegg who was most enthusiastic about working with the Conservatives – and who is not Chris Huhne. Huhne, the Secretary of State for Energy and Climate Change, is also an economist with experience of having made money in the City, but relations between Clegg and his rival for the leadership of the Liberal Democrats three years ago remain strained.

Vince Cable, the Secretary of State for Business, Innovation and Skills, could also have been a candidate for the chief secretary job, except that he is believed to be sceptical about the coalition – and he clashed fiercely with Osborne during the election campaign.

Nor did Cable endear himself to his leader by his surprise resignation as deputy leader of the party last week. His motives remain a puzzle, but it means an unnecessary internal election for the post, which will probably be won by Simon Hughes, on the left of the party.

Hence Clegg's decision to turn to Danny Alexander to replace Laws. Alexander, whose economics experience consists of reading Philosophy, Politics and Economics at Oxford University, has been Clegg's right-hand person as his "chief of staff" since they both entered the House of Commons in 2005.

That means Clegg retains close control of the critical Treasury portfolio, which Laws had already made the keystone of the coalition's arch.

Conservative MPs were openly admiring of Laws when he announced the details of £6.2bn spending cuts on Tuesday, and again in the Commons the next day. Tories queued up to praise him as "my right honourable friend" – a term usually reserved for members of their own party. Edward Leigh, the right-wing Tory MP for Gainsborough, said: "I welcome the return to the Treasury of stern, unbending Gladstonian Liberalism."

Laws will be a hard act to follow. But his departure will not only weaken the bridge between Tories and Liberal Democrats. His replacement by Alexander will also add to the tension within the Lib Dems.

Many in the coalition's junior-partner party were suspicious that Laws was being used by the Tories as a "human shield" against a popular backlash over spending cuts. In addition to that, many of them will now also resent the rise of Clegg's young right-hand person to such a central position in the coalition Cabinet.