Chancellor Alistair Darling today announced a “soak the rich” Budget by forcing the wealthy to help Britain escape the worst economic depression since World War Two.

He also clobbered drinkers, smokers and motorists with increased duties on alcohol, cigarettes, petrol and diesel in a bid to boost Treasury coffers.

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But there was also good news for motorists when the Chancellor finally succumbed to pressure from the motor industry for a car scrappage scheme which will offer motorists a discount of £2,000 on the purchase of a new car until March 2010 provided they jettison vehicles which must be at least 10 years old.

Mr Darling’s tax bombshell was specifically targeted at high earners. He proposed raising income tax for anyone earning more than £150,000 a year to 50p in the pound from next April – a year earlier than the 45 per cent new rate he announced last December.

High earners will also be hit by having their tax relief slashed on pension contributions, as the Chancellor tries to rebalance the nation’s books in the face of fresh forecasts of record Government borrowing.

Alcohol duties will rise by two per cent from midnight tonight, and taxes on cigarettes and other tobacco products will go up by the same amount from 6pm. The Chancellor also announced a 2p increase in fuel duty in the autumn, followed by 1p plus inflation from next April for the next four years.

He told MPs that his tax increases taken together would raise £6 billion by 2012 “to help secure our economic future”.

There was also help for pensioners who will see their state pensions rise by at least 2.5 per cent this year. The winter fuel allowance will stay at £250 this year for people over 60, and £400 for anyone over 80 years.

The child element of the child tax credit will go up by £20 from next April, and statutory redundancy pay will rise by £30 to £380 a week.

One announcement which raised a rare cheer was a proposal to bring forward £50 million in investment to spruce up armed forces’ homes.

Mr Darling announced new support for offshore windfarms and for insulation schemes in houses.

He promised continuing help for people facing repossession of their homes, and a new “guarantee to young people” to give them work or training if they have been out of work for a year or longer.

He raised shocked cries from the benches opposite when he revised the total of Government borrowing to a record £175 billion this year – nearly 12 per cent of the UK’s national productive wealth.

Telford MP David Wright said the Budget would offer “real help” to get people, especially the young, into work, to support businesses and homeowners facing problems.

“The measures in the Budget will help us deal with the economic difficulties,” said the Labour MP.

By John Hipwood and Sunita Patel