That means an immediate saving for the taxpayer with debt interest the fifth biggest component of

That means an immediate saving for the taxpayer, with debt interest the fifth biggest component of government spending. The real benefit, and the one that makes yesterday's announcement a turning point in the history of British economic policy, is the fact that inflation is lower and growth more stable when central banks, and not politicians, set interest rate policy. If we truly want to end the pattern of boom and bust, this is one of the most effective means of achieving it.For all Ken Clarke's improvements to the policy machinery, Britain still has one of the most volatile economies, and one of the highest inflation rates, in the industrialised world. There is little doubt that this is in large part due to a greater proneness to using both levers of economic policy, monetary and fiscal, for political ends.Giving the Bank its independence has made it all but impossible for politicians to manipulate interest rates in a narrow, short-termist way in future. It is unthinkable in practice that a future Chancellor would be able to reverse Mr Brown's decision.

This will mean, over the course of many years, lower and more stable interest rates, and lower mortgage costs.Eddie George, Governor of the Bank of England, said the Chancellor's prudence would extend to setting taxes and spending for the long-term. "I would hope the commitment to the responsible policy he has shown today on the money policy side, I would hope that will carry over into the fiscal side too," he said in central banker-speak. Mr Brown has sent the strongest possible signal of his long-termism. It is worth pounds 10 a month on the mortgage for now for the likely savings later..

The champagne flowed, and Michael Howard toasted the deal he thought he had struck with William Hague to form a dream ticket for the leadership of the Conservative Party. Mr Hague had agreed at 11 o'clock on Monday night, over drinks in Mr Howard's grace and favour flat in Belgravia, that he would be the deputy leader and chairman of the party, giving Mr Howard an unstoppable run at the leadership. The celebratory drinks were shared with Mr Howard's wife, Sandra, Mr Hague's girlfriend, Ffion Jenkins, 28, and Sir Michael Spicer, Mr Howard's campaign manager.But the champagne feeling turned flat at 8am yesterday when Mr Hague, 36, rang the former Home Secretary to tell him that, having slept on the idea, he had second thoughts - he was running for the leadership, and the deal was off.Mr Howard was furious, but put a brave face on it yesterday, as he announced his intention to run for the leadership without Mr Hague's support.After confirming Mr Hague had had second thoughts, Mr Howard said he did not rule out Mr Hague joining his shadow Cabinet if he was elected leader."I have the highest opinion of Mr Hague," he said. "I certainly intend that he should play a part in the team."He added that there could also be places for two of his declared rivals for the job - Kenneth Clarke and John Redwood, who also launched his campaign yesterdayMr Howard said that it would be "silly" to pretend that he and Mr Clarke agreed on everything but he said they had been friends for 37 years and there were a large number of issues on which they were agreed.The champagne supper, like a party that got out of hand, left both camps with a bad hangover, and embarrassment on all sides. The opposing Lilley and Redwood camps could not hide their glee at the set-back for both Mr Howard and Mr Hague. "It just shows that they still couldn't organise a p***-up if they tried," said one Redwood campaign supporter.There had been intensive talks over the telephone for the past three days, about Mr Hague throwing his support behind Mr Howard."It was agreed over the telephone that William would be the deputy leader and chairman of the party They were really only agreeing the details of the campaign. The meeting lasted about an hour and they broke out the champagne to celebrate.

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