Alistair Darling has criticised the huge bonuses being awarded to City executives during a period of economic uncertainty.

The Chancellor said that boards should apply the “next-door neighbour test” to judge whether payouts would be regarded as excessive by the average man in the street.

“People get fed up if they see others getting great big bonuses and they can’t actually see what they did. It can be extremely frustrating.

“Boards need to ask themselves ‘Are we behaving reasonably?’ If you’re leaning over the fence talking to your next-door neighbour, can you justify what you’ve done?” Mr Darling said in an interview with The Daily Telegraph.

More than a third of City staff received higher bonus payments this year than last year, according to a survey of financial services employees published this month. About £7 billion will be paid out in bonuses in the first quarter of the year.

The study, by Morgan McKinley, the firm of headhunters, said that prospects for recruitment in the City had deteriorated as a result of the credit crunch, but this had not affected bonuses.

The survey, of people paid between £18,000 and £150,000, found that 70 per cent admitted that their payouts this year had either matched or exceeded their expectations.

The average City salary rose by 5 per cent to £53,246 in the 12 months to January.

Meanwhile, fears that plans proposed by Mr Darling to levy a £30,000 annual tax on foreigners not domiciled in Britain would lead to an exodus of talent appeared to be supported yesterday by research that said 42 per cent of South Asian high-earners were preparing to leave Britain.

Grant Thornton, the financial advisory firm, found that “nondoms” from the Asian subcontinent, the largest group in the UK, had reacted furiously to the prospect of the new laws.

Under the Government’s plans, nondoms who have been resident for seven years would have to pay the new charge, pay British income tax or leave.

The report, based on interviews with 50 high-net-value South Asian nondoms, found that 84 per cent thought that the fee was not being set at a fair level. A third of those surveyed said that they planned to pay the tax. Seventy-eight per cent said that they would not have enough time to get their affairs in order to comply with the new laws, which will come into force on April 6.

The Treasury’s climbdown on Tuesday, when it retracted some proposals, including a requirement to disclose offshore assets, will make little difference, according to Anuj Chande, partner and head of Grant Thornton’s South Asia Group.

“While the majority of the survey was carried out before the Treasury’s changes, about 10 per cent were asked after and there was not much difference between reactions,” Mr Chande said. “The scrapping of the retrospective element is seen as fair but not seen as a big enough change.”

The Treasury insisted that the figures did not marry with its research. Its figures showed that of the 20,000 nondoms affected, only 3,000 would leave the UK. About 4,000 would pay the charge and the remainder would opt to start paying tax. Susan Thompson, Patrick Foster