Budget 2009: the election campaign starts here

Chancellor Alistair Darling did his best to inject some notes of optimism into his second Budget, which was delivered amidst the worst economic conditions for 60 years, as he admitted himself.

He spoke about growth returning towards the end of this year and promised the massive public debt would be halved within four years.

But he did little to hide the fact things are grim, very grim, with gigantic figures on borrowing, which he even increased, and reductions in public spending.

Not the sort of picture any government would want to have as the backdrop to the next general election campaign. And, while the poll itself may still be a year away, this Budget marked the clearest sign yet that Labour has already started that campaign.

Don't believe anyone who says this was not a deeply political budget. It had more than a smack of 1970s, Old Labour "squeeze the rich" about it.

The big surprise, and the big challenge thrown down to the Tories, was the increase next year in the top rate of income tax from the planned 45p in the pound to 50p. This will apply to anyone earning more than £150,000 a year.

Many Tory backbenchers are deeply opposed to the 45p and have already been pressuring David Cameron not to go along with it. So far the Tory leader has resisted that pressure and Shadow Chancellor George Osborne does his best not to talk about it at all.

But now, with the new, higher rate set to come in just a few weeks before the next election, he will be forced to take a stand. If Osborne and Cameron oppose the increase, as they will be urged to do by many on their own benches and natural supporters, they will be charged with looking after their rich mates - the sort of people Labour will claim sparked the banking crisis.

If they accept it, it risks infuriating natural Tory supporters and might cause severe strains on the backbenches.

The truth is that this measure, along with other changes to personal allowances and pensions also designed to hit high earners, has far more to do with politics, distracting eyes away from some of the bad news and re-drawing some sort of class divide, than with raising money.

The Treasury Red Book, which gives all the mind-boggling detail of the Budget, shows that the 50 per cent tax level is expected to raise only £1bn - a drop in the ocean compared with the debt this Government is running up.

But every little bit helps and Labour has decided that the people who can help foot the bill will be those high earners who are unlikely to win much sympathy, particularly amongst Labour supporters who need cheering up at the moment.

Whether Cameron is ready to engage in a new class war will be one of the fascinating and possibly defining elements of the next election campaign. ·