WHEN Chancellor Alistair Darling announced – last year – that he was slapping a 45p tax rate on the rich, many said that it spelt the death of New Labour.

If so, then yesterday’s dramatic Budget – with its 50p tax rate, cuts to pension tax relief and plans to raise £7bn a year more from high-earners – was a stake driven through its heart, prior to a spectacular funeral pyre.

Oh, to be a fly on the wall of Tony Blair’s Buckinghamshire mansion today, or wherever the departed prime minister is currently tearing out his hair.

That, surely, will be the reaction of the New Labour founder and torch carrier to a Budget that immediately sparked memories of Denis Healey’s famous pledge to “squeeze the rich until the pips squeak”?

Depending on your viewpoint, it is either a return to true Labour values of creating a fairer society – or a reversion to nasty class war.

IT was also immediately clear the battleground for the next General Election was being laid out as the Chancellor spoke, because this was a Budget more nakedly political than almost any before it.

Bringing forward the higher tax rate to next April means it will – unless Prime Minister Gordon Brown surprises us in the autumn – be in place just weeks before the election.

The trap for the Tories is obvious. If they pledge to reverse it, they will be making the rich their No 1 priority when the luckless majority are still suffering recession blues.

If they accept it – as they surely must – then Conservative leader David Cameron will be hit by howls of protest from the Tory right and accused of betraying the legacy of Margaret Thatcher.

As proof that the motivation is primarily political, the projected amount to be raised from the 50p tax rate next year (£1.13bn) is less than the sum pencilled in from higher fuel duty (£1.25bn).

Nevertheless, by 2012, the tax hikes on the rich announced yesterday will bring in £7bn, according to the Treasury – a significant sum.

And when the facts are laid out, who could argue that – with tax rises unavoidable – they should fall on the winners in Britain’s disgraceful wealth divide?

According to the Treasury, of the £30bn paid in tax relief on pension contributions, a shocking 23 per cent (£7bn) goes to the 300,000 people who earn more than £150,000 a year.

IT means a £150,000-plus earner scoops £27,000 a year in tax relief – more than the take-home salary of the average worker. It is a scandal that has gone on for too long.

But will this Budget make any difference to a Government still at least ten points behind and apparently sailing towards an election shipwreck? Few Labour people will be optimistic.

It screams volumes about Labour’s plight that they have judged “Brown Soaks The Rich” to be the only alternative headline – and a preferable one – to “Brown Has Bankrupt Britain”.

But it is unlikely to distract attention for long from the harsh reality of the deepest recession for 60 years, a £1 trillion debt mountain and – buried in the red book – an admission that unemployment will soar way beyond three million next year. Tax the rich was the strongest card that could be played, but it is nowhere near a winning hand.