AFTER years of spending restraint, the Chancellor decided it was time to give taxpayers a well-deserved break.

Delivering his fourth budget, Ed Balls announced from the dispatch box he would raise the higher rate income tax threshold in England to £50,000.

As he sat down to be slapped on the back by a beaming Prime Minister Ed Miliband, the media pundits and the Tory opposition were stunned.

Conservative leader Andrea Leadsom was wrong-footed and fluffed her response, while The Sun loved it. "Bonus Balls" screamed the next day’s front-page.

As Miliband headed off to Brussels for a cordial EU summit with fellow member states, in the Commons the Budget debate dragged on. With the chamber barely populated, the little-known Labour MP for Hayes and Harlington stood up to make a speech from the backbenches.

He tore into his own frontbench, accusing the Chancellor of betraying Labour’s values by handing tax cuts to the richest in society. As he sat down, his friend Jeremy Corbyn, the backbench MP for Islington North, waved his order papers in support.

A few other Labour MPs shifted uncomfortably in their seats, silently wondering how to explain the tax cuts to their constituents relying on food banks.

John McDonnell’s outburst was reported by the Morning Star and the Hayes & Harlington Gazette, and he later seized the chance to repeat his comments on Russia Today and Iranian-backed Press TV.

Welcome to the Miliverse.

In the real 2018, it’s McDonnell who has betrayed Labour’s progressive values.

When the shadow chancellor told Radio 4 "we’ll support the tax cuts at the moment on the basis that it will inject some demand into the economy", it was met with incredulity in Labour circles. The assumption was that he had botched the lines, and a humiliating clarification would be forthcoming. But, no, regressive tax cuts for the few are now Labour’s policy in England.

The Resolution Foundation has laid out precisely why a party that boasts of representing the many should have no truck with Philip Hammond’s tax reforms.

The top 10 per cent of households will receive gains 14 times higher than the poorest in society.

Criticism of McDonnell’s regressive position was swift. For a list of the true progressives in the Labour Party, look no further than the 20 MPs who broke the whip in the Budget vote last week.

It is a fantasy shadow cabinet line-up that would find itself with a double-digit lead in the polls over this struggling and divided Tory government. Many other Labour MPs were no doubt cowed into silence by the hard Left machine.

One of the more unnerving aspects of this row has been how those on the extreme Left of the party have rushed to McDonnell’s defence on social media.

They have backed his claim that Tory tax cuts inject demand into the economy. Had this been a proposal from Yvette Cooper, or Liz Kendall, or Stella Creasy, they would be firing off Twitter posts about Blairite traitors abandoning the working class.

For too many on the Left, the Corbyn/McDonnell project is a religion.

But the leader of the opposition himself has been noticeably less enthusiastic about the tax cuts. He was clearly uncomfortable at Prime Minister’s Questions, and there is growing talk in Westminster circles of a split between Corbyn and McDonnell.

Corbyn is not a politician who is comfortable saying something he doesn’t believe in, even if he knows it’s what voters want to hear. That’s why, every time he comes to Scotland, he botches the party’s lines on a second independence referendum.

Although he floundered on the BBC Sunday Politics Scotland show yesterday, McDonnell is usually the more competent media performer. He can stick to the script in front of him and abandon the long-held views he once espoused from the backbenches.

That’s why he vocally opposes independence just three years after walking through the division Lobby with SNP MPs to back full fiscal autonomy for Scotland.

He has apologised "from the bottom of my heart" for his repulsive comments on the IRA. Yet, in his private study, he continues to display a plaque dedicated to those who died during the 1981 hunger strikes.

It is often said that those on the Left are more interested in principles than power. But McDonnell does long for power, and it now appears he is willing to abandon some of his principles to achieve this.

How else could he back tax cuts for the very richest?

Westminster insiders insist he still dreams of leading the Labour Party – something he has tried to do twice before.

It’s a stark warning for those who long for the end of the Corbyn era. With the party machine and membership now totally controlled by the hard Left, McDonnell may well get his chance. There is more Machiavellianism in him than Marxism.

His comments have triggered the first real difference of opinion between the UK leadership and the Scottish Labour leadership since Richard Leonard took control.

Leonard is not a man willing to abandon his principles, and wasted no time in publicly distancing himself from McDonnell. He will continue to promote a more progressive income tax policy, which has been the party’s position for several years now, and deserves credit for sticking to his guns.

But confused Campaign for Socialism members don’t know which way to turn.

Moderate Scottish Labour members – those who haven’t left the party in recent weeks anyway – find themselves standing firmly alongside Leonard, while those supposedly to their Left are now aligned with Jackson Carlaw and Murdo Fraser.

I doubt Philip Hammond has any idea how much his tax reforms for England have upset the apple cart in Scotland.

Heading into December, when Finance Secretary Derek Mackay will unveil his draft Scottish Budget, the attack lines are clear: Scottish Labour will come from the Left and the Scottish Tories will come from the Right.

But that won’t give Mackay sleepless nights. The SNP will sit quite happily in the middle, presenting the populist option to voters.

It’s something the party learned from Tony Blair.

As Prime Minister, Blair was cautious about tax rises for the well-off. It’s a sign of how confused our politics has become that one of his fiercest critics, John McDonnell, today shares that view.