THE political future of Alistair Darling was being questioned last night amid growing claims the chancellor had lost the trust of business leaders.

Some MPs and civil servants suggested Darling might be replaced by Ed Balls, the schools secretary and Gordon Brown’s former chief economic adviser.

Darling was jeered at two City events last week as concerns mounted over his handling of the Northern Rock crisis, reforms of capital gains tax, and plans for a £30,000 “nondom” levy on rich foreigners living in the UK - an idea publicly criticised by the business minister Lord (Digby) Jones.

It also emerged that several of the government’s key business advisers, including Sir James Sassoon, the former Warburg banker who is Darling’s representative in the City, were spotted at a Conservative party fundraising event, the Black and White Ball.

One Labour MP close to No 10 said: “People near to Brown are now talking openly about the need to move Alistair from the Treasury in a summer reshuffle.

“We spent 15 years slowly building trust with business and the City and Darling has managed to destroy that in a matter of months.”

A senior Treasury civil servant said: “If Ed had been in charge over the past few months we would not have had nearly the problems we now have.”

However, a Downing Street spokesman said there were no plans for a reshuffle.

The row over nondoms has potential to inflict significant damage on Labour’s reputation in the City, as growing numbers of foreign bankers consider relocating to avoid having to disclose their assets to the taxman.

Research by Philip Beresford, who compiles The Sunday Times Rich List, shows that the number of directors of British firms moving to Monaco has risen 60% to 878 in the past four years, while Switzerland is now home to 8,840 directors of British companies.

Recent departures include John Christodoulou, 42, who fled his Cyprus homeland after the 1974 Turkish invasion and is now the second largest freeholder at Canary Wharf in London; John De Stefano, 62, a stakeholder in some of London’s top restaurants; and Elena Ambrosiadou, 49, once Britain’s best-paid female executive, who has also moved her hedge fund operation Ikos to Cyprus.

Beresford said: “It’s not just the nondoms who are worried about the Brown regime adopting a redder hue. British entrepreneurs are now looking seriously at relocation in more tax-friendly climates.”

When Luke Comer’s firm was earning £10,000 a week plastering houses in his native Ireland but losing £7,000 of it in tax, he decided it was time to move to Thatcher’s Britain.

Twenty years later Comer has moved again. This time he has gone to Monaco and started doing business in Germany. He and his brother Brian built their property company into a £1 billion concern and two years ago they tried to buy Aston Villa football club for £64m.

Now Comer, 50, believes many of Britain’s 116,000 nondoms could join him in an exodus from the country. “It does seem as if Labour wants to go back to the days of soak the rich,” he said.

Darling is introducing a £30,000 a year charge on nondoms who have lived here for more than seven years.

They are also alarmed by the closure of a loophole that allowed them to escape capital gains tax on British assets held in offshore trusts.

The Treasury says it is introducing the changes in the interests of fairness. It estimates the measures will raise almost £1 billion by 2011, but financial advisers to the nondoms say the tax grab could backfire, with the loss of at least £2 billion to the British economy per year.

The Society of Trust and Estate Practitioners (Step) estimates the changes could drive a third of the nondoms abroad.

Comer said from Monaco last week: “People don’t realise that Britain was almost bankrupt before Margaret Thatcher came to power. Someone like Lester Piggott, the jockey, was risking his life every day and paying 98p in the pound in tax.

“With the government’s attitude they will drive people out of the system. I have made my living by the sweat of my brow. Labour have to realise that you can’t make the poor richer by making the rich poorer. Angela Merkel [the German chancellor] has a much healthier attitude. ”

David Harvey, chief executive of Step, said: “The Treasury sees it as fairness; that everybody should pay the same. It’s a perfectly respectable argument. But if the economy as a whole loses out it is fair to no one.”

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