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Alistair Darling stored up big tax rises for the better-paid and huge curbs in public spending yesterday with a £1 trillion debt gamble to defeat the recession.

In a Robin Hood-style budget statement of breathtaking scope, the Chancellor asked 800,000 people who earn more than £100,000 to bear the brunt of a package of deferred tax rises designed to bring down borrowing in 2010, when it will reach a record peak of £118 billion, or 8 per cent of national income.

Top earners will pay £3 billion of the £4 billion to be raised in extra taxes from that year. People earning more than £40,000 will contribute some £500 million, averaging at around £3 a week, from a half-point rise in national insurance. It is the second time that national insurance contributions have risen since Labour came to power.

Public spending will be reduced by £12 billion from projections outlined only in March as Mr Darling slashes the growth in spending from an already low 1.8 per cent to a painful 1.2 per cent. It will be the biggest squeeze on budgets for more than a decade.

As The Times reported yesterday, the main assault on higher earners will come from a new 45 per cent rate of tax on earnings above £150,000 — the first rise in headline income tax rates since 1973, when Edward Heath was Prime Minister.

But in another surprise move that will test the aspiration credentials of new Labour, people earning more than £100,000 will have their personal allowances cut in half, and those earning more than £140,000 will have them removed altogether.

In 2011, someone on £150,000 will pay an extra £3,000 in tax. Someone on £200,000 will pay an extra £5,000.

The rise in national insurance will affect employers as well as employees, but the Treasury insisted that basic-rate taxpayers would not be worse off because, in an unexpected move, Mr Darling made permanent the emergency £600 rise in personal allowances in May to tackle the row over the abolition of the 10p rate of tax. This will benefit all basic-rate taxpayers by £145 next April, balancing out the post-election rise in national insurance.

Nevertheless, the Conservatives claimed that by 2012 people earning £20,000 would be worse off.

It was a package that pointed to Gordon Brown delaying a general election until 2010. Mr Darling is banking on the recession being shorter than those in recent decades and counting on growth resuming in election year.

Labour MPs welcomed measures that they saw as protecting the party’s core supporters from recession, but there may be misgivings when the likely impact of the public spending curbs sink in.

The deferred tax increases were also seen as a way of putting the Conservatives on the spot, trying to force them into a choice between looking after the better-off or the lower-paid when framing their pre-election economic policy.

The Tory leadership immediately gave notice that it had no intention of falling into the trap. A senior Conservative said that reversing the tax increases would not be a priority of an incoming Conservative government. Any future Tory tax cuts would be aimed first at families on lower incomes, he said.

The Pre-Budget Report heralded a £20 billion “fiscal stimulus” for the economy — £4 billion in the current year and £16 billion in the next.

The main component is the well-trailed cut in VAT from 17.5 per cent to 15 per cent from Monday, which will expire in 2010. It is the first time that standard VAT has been cut across the board since it was introduced in 1973.

There were boosts for pensioners and families with children, with an increase in child benefit from January, three months early. Every pensioner will get a one-off payment of £60 in January on top of the £10 Christmas bonus.

The Chancellor also announced a £3 billion boost to capital spending by bringing forward projects on motorway building, council housing, schools and energy efficiency projects.

Mr Darling offset the VAT cut by raising duties on petrol, alcohol and tobacco by an amount that kept the overall cost about the same. He postponed the controversial shake-up of vehicle excise duty for a year.

With the Treasury’s figures showing Britain’s debt as a share of GDP reaching an eye-watering 57 per cent in 2013, Mr Darling had no choice but to scrap the fiscal rules — temporarily, he insisted — that have governed Labour’s stewardship of the economy since 1997. These set the limit on borrowing at 40 per cent of GDP.

He predicted that the economy would shrink next year by between 0.75 per cent and 1.25 per cent but bounce back to positive growth in 2010. He said that his measures should make the recession shallower and shorter than it would otherwise have been. However, it will last a full year, almost as long as the five quarters of negative growth in the early 1990s.

Total debt will reach £1,020 billion (just over £1 trillion) by 2012-13, with a further rise to £1,084 billion projected the following year. The figures show that debt will double since last year’s total of £526 billion.

In all, Mr Darling plans to borrow £434 billion over the next five years — on top of the £77.6 billion that he is borrowing this year. The Tories said that this year’s total alone was more than the £60 billion, at today’s prices, that Winston Churchill borrowed from the United States to pay for the Second World War.

Borrowing is due to peak next year at £118 billion — three times the £38 billion the Chancellor predicted at the time of the Budget only last March. After that, borrowing will only come down slowly over the next couple of years before dropping, if the Chancellor’s predictions are correct, to £54 billion in 2013-14. This is still high by the standard of recent years.

Mr Darling argued that it would be “perverse” to apply the fiscal rules in a rigid manner in the midst of a global economic crisis. He said that debt should start falling again as a proportion of GDP from 2015-16.

However, George Osborne, the Shadow Chancellor, said that in order to pay back the borrowing Mr Darling had placed “a huge unexploded tax bombshell” timed to go off just as the economy was supposed to be picking up.

He accused Mr Darling of “bringing this country to the verge of bankruptcy” by doubling the national debt, which is set to reach £118 billion next year. He said that Mr Darling had offered “temporary tax giveaways paid for by a lifetime of tax rises on the British people” and that the country’s future had been “mortgaged to bail out the mistakes of the past”.

Vince Cable, the Liberal Democrats’ Treasury spokesman, said that VAT cuts would not be enough to boost consumer spending. He said: “It would be much more sensible to put money directly in the pockets of low-paid workers by cutting their income tax.”

Richard Lambert, the Director-General of the CBI, said that Mr Darling’s growth forecasts looked “optimistic”.

Brendan Barber, the General Secretary of the TUC, said: “We welcome the significant extra cash that he has put into the pockets of low and medium-paid workers and the extra help for pensioners. It is absolutely right that the top 1 per cent, who have done so well in recent years, should pick up the bigger part of the bill.”

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