Remember Peter Mandelson proclaiming that he didn’t mind if people got filthy rich under Labour? Well, those days have well and truly gone. The 50% tax rate announcement was purely designed to give a signal to the Labour left that he’s happy to make the pips squeak (copyright Denis Healey 1977). What other explanation can there be? It will raise very little extra money and help reduce incentives. A 50% tax rate will encourage entrepreneurs to invest money anywhere other than this country. There is, of course, another benefit. It puts the Tories on the spot. Will they now vote against the 50% rate? In my view they must, but they would do it in the full knowledge that Brown would accuse of them of sticking up for their "rich friends".
But the real scandal is the amount of borrowing - £606 billion over the next four years – which the Chancellor announced. Truly scandalous. He said we would borrow £175 billion in this calendar year. Judging by the record of previous government forecasts, the figure is likely to be far higher than that. It will take decades to pay this back.
And to believe that we will have a 3.5% growth rate in 2011 is fantasy. You can’t go from negative growth to that level of growth in a few months. And if he’s wrong, tax receipts will be lower and borrowing will rise even further.
There was no attempt to haul in public spending, and frankly that’s the only way to reduce borrowing if tax receipts are also in the doldrums. To say you will save £50 billion without anyone noticing and no programmes being axed is something which most people can see through.
The car scrappage scheme is a joke. All it will do is help the likes of Audi, BMW and Mercedes. I could see the point of it in Germany, but not here. It may help a few car dealers, but that's about it. Why not introduce a scheme to help local newspapers, or newsagents, or shops, or indeed everyone? Why just cardealers?
This was a cheap budget from an expensive Chancellor. It was a missed opportunity to set a new direction for the country. All it did was announce a series of wholly unrelated initiatives, some of which may be of limited benefit but most of which no one will notice.
It is a budget which has helped Labour lose the next election.
UPDATE: 77% of Sky News viewers feel worse off after the budget.
64% are against the 50% rate.
UPDATE 2.10pm: From Robert Peston...
Actions have consequences...
Gilt sales this year are forecast to be £220bn - way above all market forecasts. There will be a big gulp from investors. Why is the Treasury's borrowing need so much greater than was expected? Well, the cost of bailing out the banking system appears to have been greater than expected.
I'm not surprised that sterling is now falling. Questions will also be asked again about whether the UK will retain its AAA credit rating. If that were lost, the cost of selling all this debt would rise.
And then there will be the emotional reaction of bankers to the news that their take-home pay is being cut significantly by the new 50% top rate of tax and a reduction in relief on pension contributions for high earners.
There'll be gloom in the City tonight.