Britain and the world needs to find a way out of economic woe – but don’t expect Davos to help

It is grey and miserable outside, the deadline to file your tax return is fast approaching, and so are inflation-fattened bills for the festive season. Meanwhile, the rich and business-savvy have jumped in their private jets to attend a talking shop at a picturesque Swiss ski resort.

Yes, the World Economic Forum (WEF) is underway. Do you like to ski? Best avoid the place. There will be enough crocodile tears shed over the state of the world created by those in attendance to melt all the snow in Switzerland.

As it usually does, Oxfam fired a broadside at the event’s attendees with a missive railing against the grotesque levels of inequality blighting the world. It wants to see taxes imposed on wealth and the wealthy; the billionaires who seem to end up smiling however poisonous the economic backdrop.

Oxfam makes the point that poverty has increased for the first time in 25 years. The cost of living crisis fuelling this, it says, is also an inequality crisis. Time to redress the balance.

But wait: at the end of last week, the Centre for Policy Studies, which was Margaret Thatcher’s favourite think tank, presented a counter-argument. In it, Robert Colvile says: “The faster you grow, the better the lives your citizens are able to enjoy.” He seeks to make what he calls the “moral case” for much more of it.

True, Colvile doesn’t reference Davos – and his focus is very much on a UK stuck on the world’s slow-growing hard shoulder. But it’s worth considering what he has to say in the context of the forum and Oxfam’s contribution to it.

What you have here is essentially something similar to the old “trade or aid” debate. To address the grinding poverty that exists in the developing and the developed world, we have a call for tax and redistribution vs a call for more growth and lower tax to deliver it. It just doesn’t lend itself to a snappy slogan with a nice rhyme.

I see problems with Colvile’s thesis. For a start, his arguments are weakened by an attempt to let the Conservative Party off the hook for its recent failings in Britain. He says: “The idea that our troubles began with the financial crisis, or the fact of Tory government, is wrong-headed.”

He points to the long-standing downward trajectory of growth in the UK, noting that it was falling under Gordon Brown too. Quite why that should give the Tories a pass isn’t clear to me. How can the record of a party in power for more than a decade be judged to be anything other than an economic failure if it has done nothing to arrest that decline?

There is also more than a hint of Trussonomics at play (she gets a couple of references in his prescription): cut taxes and regulation, and embrace “supply-side reforms”.

While he is right to point out that the “de-growth” movement would inevitably deny people in the developing world access to the things people in richer countries take for granted – “the ultimate display of white privilege” – I’m not sure that movement is as big as he fears, or that the public really needs “educating” of the need to counter it.

But I digress. Because here’s the point I draw from Oxfam’s case on the one hand, and that of Colvile and the Centre for Policy Studies on the other: we need both more growth and more redistribution of the proceeds. The former isn’t compromised by the latter.

Colvile makes the case for small business, something he rightly recognises that the public is fond of.

Oxfam demonstrates the problems faced by this sector by quoting Najwa, who has a harissa business in Tunisia: “We are facing incredibly huge challenges. As for the raw materials, the price of chillies has now more than doubled, even tripled. Hard work is not enough in this tough world.”

There are plenty of people in Britain who are similarly struggling. The independent shop where my children’s shoes have been bought since they were born would be an example: it is closing.

It doesn’t matter how much “red tape” you tear through – if the cost of raw materials is shooting through the roof to the extent that it makes your business unviable, or if your rent eats up all your revenues, you have no business. Colvile is, by the way, on the right track when he attacks nimbyism. It greatly contributes to higher rents for both businesses and individuals.

But supply-side reforms only get you so far when it comes to addressing these concerns. Growth would, for example, be encouraged if more women were able to set up businesses. A prerequisite of that would be the wider availability of childcare that is both high-quality and affordable. That requires subsidy, which in turn requires tax.

Small businesses cannot compete with global monsters like Amazon, the advantage of which has been fuelled by what I see as a profoundly unfair tax system. The balance should be redressed.

Britain’s growth is also undoubtedly being undermined by its unhealthy workforce. A record number of people have been made “economically inactive” through sickness or other circumstances, leading to crippling labour shortages. Those shortages may be eased by the current downturn. But only temporarily.

To address this problem, we need to fix the NHS. Keir Starmer has promised a battle against its bureaucracy. But it also requires more of the funding it has been starved of, which means more tax.

Old-style tax and spend? Pfah. Disastrous. I imagine the Centre for Policy Studies would say something like that in response to this. I would prefer to describe it as tax and investment. An investment that would yield returns. Just imagine the returns that could be unlocked if a fair proportion of the vast sea of billions stashed in offshore centres by the global mega rich were subject to a fair levy.

Those returns could be used to encourage growth (pleasing Colvile) and to deliver redistribution (cheering Oxfam). Everyone’s a winner. Apart from the billionaires. Except that they’d still have their billions and their yachts and their other toys. They never really lose. Oxfam calls for a 5 per cent tax on their billions. A rounding error, in other words. But one that could accomplish an awful lot.

Tax – collecting more of it and making it fairer – is sometimes a talking point at Davos. Growth is always on the agenda. Trouble is, the WEF is a closed shop for the elite. It is composed of the rich and privileged talking to the rich and privileged. The sort of people who are divorced from the problems of real people trying to make a living in the system they built – a system that looks more and more unstable.

We need solutions to that, but they won’t come out of Davos, which majors in hot air.

Whether to choose Colvile’s ideas, or Oxfam’s, or someone else’s, or a hybrid of two or three of them, deserves a much wider discussion. A democratic one. Colvile is right about that.