British Finance Chief Quits With Blast at Thatcher Aide : Move Sets Off Shuffle of Cabinet

Nigel Lawson resigned as British chancellor of the Exchequer today in a bitter policy dispute over the role of Prime Minister Margaret Thatcher’s economic adviser, Sir Alan Walters.

The move set off Cabinet reshuffling in which Foreign Secretary John Major was immediately named to succeed Lawson as the country’s finance minister, and Home Secretary Douglas Hurd took over Major’s post.

Thatcher announced the upheaval in her ministerial ranks a day after returning from a controversial Commonwealth summit in Malaysia.

Walters, a professor who acts as a personal aide to Thatcher, has been locked in a longstanding policy dispute with the finance minister. Lawson told Thatcher he could not remain in office as long as she kept Walters as her personal economic adviser, the Treasury said.

“I have therefore regretfully concluded that it is in the best interests of the government for me to resign my office without further ado,” he said.

Lawson, his authority apparently challenged by open disagreement with Walters, demanded earlier this week that government advisers should not make public statements on policy.

Walters, a former World Bank economist who has a home in Washington, is one of an elite team of Thatcher advisers recruited from the business and academic worlds.

In a “Dear Margaret” letter to Thatcher, Lawson said: “The successful conduct of economic policy is possible only if there is--and is seen to be--full agreement between the prime minister and the chancellor of the Exchequer.”

Thatcher replied: “It is a matter of particular regret that you should decide to leave before your task is complete.”

A government spokesman said Britain’s economic and monetary policies would remain unchanged.

The dispute over Walters broke into the open when a copy of an article he had written appeared in a British newspaper this month. In it, Walters described the European Monetary System, which is intended to smooth out exchange rate fluctuations, as “half-baked.” Lawson wants Britain to join the system but Thatcher has blocked it.

Walters protested that he wrote the piece two years ago, while he was not working for Thatcher.

Lawson angrily responded by saying that Walters, as a confidential adviser, should refrain from speaking in public on economic policy.

Neil Kinnock, leader of the opposition Labor Party said: “His (Lawson’s) departure is purely the prime minister’s fault. She’s proved that she can’t run a government.”

In a debate on the economy Wednesday, Labor said Walters had become an “alternative chancellor” to Lawson, while even Conservatives, worried by signs of a government split, called Walters a “licensed jester” in Thatcher’s office.

Lawson’s departure comes at a time when Labor has pulled ahead in opinion polls as Conservative supporters have balked at rising interest rates.

Lawson, once hailed by the ruling Conservative Party for his handling of the economy, has been under fire for the last year since hiking interest rates to fight inflation.