If the Midas touch had an allegorical opposite, the hero of the tale would be Alistair Darling. The story begins as he takes on a long-coveted role just as the fates – or in this case markets – are spinning his doom. As the web entangles him, he is given a secret power: everything he touches turns to dust.

A gambler would call it a losing streak; a hippie would point to some very bad karma in a previous life. In barely eight months, Mr Darling has presided over a bank run, a global financial crisis, tumbling stock markets and a soaring deficit in public finances. Some of the horror has been beyond Mr Darling’s control: he cannot be blamed for the sub-prime scandal, nor the credit crunch that it triggered. And he was still enviously eyeing No 11 when Adam Applegarth bet the future of Northern Rock on complex financial instruments that would fail.

At the G7 meeting of finance ministers over the weekend, Mr Darling was not the only shell-shocked politician trotting out soundbites to hide his helplessness.

But Mr Darling can be excused only so much. Nondoms seemed such easy targets. Playing to the electorate’s entirely natural disdain for those rich who pay a pittance in tax seemed like a good idea. How can it be fair that a foreign investment banker can pay virtually no tax while earning a bonus that could buy Margate?

Let us be clear. It is not fair. But only ten-year-olds expect the Government to be able to make life fair. Some politicians, astonishingly, are still trying to legislate for fairness. One, Venezuela’s Hugo Chávez, memorably described oil executives as living in “luxury chalets where they perform orgies, drinking whisky”. Even if that description is accurate, if it comes to a choice between a state that legislates against orgiastic wealth creators or one that leaves them alone as long as they keep on creating wealth, then bring on the dancing girls.

The move against nondoms, which could damage irreparably London’s position as a global financial centre, looks, at best, misguided and, at worst, hopelessly naive.

The nondoms are here primarily for the tax breaks, but also for the reputation of the City of London and for business-friendly governance. With the United States sinking closer to a recession, inflation creeping back into the UK and global markets jittery, a Chancellor who looks naive and helpless is increasingly a liability.

The furore over nondoms comes after the Government’s farcical attempts to save Northern Rock. Together, they threaten to undermine the Government’s relationship with business and the UK’s credibility as a financial centre.

It must be obvious by now, even in No 11, that this knee-jerk proposal must be retracted before it is too late.

Yet Mr Darling’s astonishing ability to turn everything he touches into dust remains problematic. He is in an almost impossible quandary. If he backs down now, he will add weak and indecisive to naive and helpless. If he attempts a compromise and backs down on the parts of the proposals causing the most outrage – plans to tax capital earned outside the UK – then he is left with a plan that is more or less identical to the Tory proposal that prompted the Chancellor’s knee to jerk in the first place.

Mr Darling must find a Midas touch, if only temporarily, and a quick solution to the current impasse – his political survival and the health and wealth of the City depend on it.

antonia.senior@thetimes.co.uk

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