Philip Webster (left), Political Editor of The Times, explains how the postponing of next year’s government spending review shows that Gordon Brown is preparing for his eventual succession as Prime Minister.

"In practical terms, all this announcement means is that in the financial year 2007/2008, spending will stay at what has already been fixed.

"In the past, the third year of the spending cycle was renegotiated, with budget increases. But that won't happen this time, so that's why people call it a 'freeze' even though spending will still increase as planned.

"But in political terms, something much more important is happening. Mr Brown is preparing the way so that when the moment comes that Tony Blair stands down there is an orderly transition of power.

"The significance of today's announcement seems to be that Comprehensive Spending Review will coincide with Mr Blair's ten years as Prime Minister in May 2007. It makes an obvious point for them to make the transition.

"The Government believes that in 2007 it will be starting out again on the second long march, and the hints around Whitehall this morning is that it will be a suitable time for Mr Brown to take over.

"The economics side of this is also significant. The truth is that Mr Brown can't go on increasing spending willy nilly. So for the 2007/2008 spending cycle he has ordered a root and branch reform of all Government spending.

"The Comprehensive Spending Review starts at zero. Government departments will not only have to justify their increases, they will have to justify all their spending. This will make for completely redrawn priorities. The Chancellor must hope that he can find waste and inefficiency to cut away at to make room for future spending.

"In redrawing the dates of the economic cycle, Mr Brown also has an eye to preserving his reputation for prudence.

"Under the previous statistics, the Office for National Statistics said that the current economic cycle started in 1999. So they look at figures from then on when they decide whether the Chancellor is breaking his 'Golden rule' on spending.

"Put in simple terms, what happened today is that Mr Brown has suddenly discovered that he has two more years and that the current economic cycle should have started in 1997. Now that's good news for the Government because these were two good years.

"The result is that nothing changes in the country, but the Government gets off the hook in a purely statistical terms. It's a short term measure which will spare the Chancellor embarrassment. It's all brilliantly done with mirrors but these are two big things to happen on the same day."

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