Bidenomics lessons: Labour looks to Democrats as it prepares for power | Labour

Rachel Reeves dismayed many in the green movement this year when she announced a Labour government would phase in its £28bn green growth plan rather than spending the full amount straight away.

The shadow chancellor had been mulling such an announcement for a while, but decided on it for sure after being warned two weeks earlier by senior members of Joe Biden’s administration not to rush the rollout of Labour’s flagship scheme.

People briefed on Reeves’s conversations during a pivotal trip to Washington in May have told the Guardian she was warned about problems the Biden administration has had in implementing green subsidies, thanks to complex US planning laws. They advised her she should consider planning reform before announcing how new green incentives would be spent.

The impact of US officials’ advice on Labour policy – Reeves met the Treasury secretary, Janet Yellen, and Biden’s economic adviser Lael Brainard while in Washington – is a reflection of the growing closeness between Labour and the Democrats as both face crucial elections in 2024.

In an echo of the relationship between Tony Blair and Bill Clinton that helped redefine politics in the 1990s, those close to the Democrats and the Labour party are once again cooperating closely on policy and strategy.

The conversations particularly focus on the economy and trade, with the shadow trade secretary, Nick Thomas-Symonds, telling the Guardian that Labour would be ideally placed to sign a raft of trade agreements with the Biden administration should both win their pushes for power next year.

If both parties do win, they are promising to pursue a more interventionist economic policy that could redefine progressive politics and policy for a generation.

Mathew Lawrence, the director of the leftwing UK thinktank Common Wealth, said: “The policy dialogue is stronger than it has been for a while. Bidenomics is setting itself up as a break from the third way economics of Clinton and Blair, with more direct intervention into markets, and a sharper focus on distribution. Labour is learning from that.”

Heather Boushey, an economic adviser to Biden, said: “The US and UK have long been swimming in the same currents, from the relationship between [the former president] Franklin D Roosevelt and [the British economist] John Maynard Keynes, through [Ronald] Reagan and [Margaret] Thatcher, to Blair and Clinton.

“It is exciting now as we put together the ideas behind Bidenomics … how much the two countries are once more learning from each other.”

Reeves, who used to work in Washington as an economist in the British embassy, gave a speech during her visit in which she set out more clearly than ever how much Labour’s economic policy is aligned with the Biden administration’s. “Globalisation as we once knew it is dead,” she declared as she called for the government to invest heavily in certain industries and help protect workers with greater employment rights.

One person close to the White House said those around the president had been impressed with the speech, describing it as a “wow” moment. Reeves’s visit was one of a series of transatlantic visits, seminars and policy conversations that have taken place over the past two years as Labour and the Democrats have honed their economic, energy and trade agendas.

A year earlier Ed Miliband also visited Washington as he was developing his ideas for Labour’s £28bn green prosperity plan. While there, the shadow energy secretary met policy thinkers including John Podesta, the head of the Center for American Progress, who has since gone on to advise Biden on the clean energy transition.

Those close to Miliband say the visit helped convince him he needed to sell his green vision in terms of what it means for the economy and jobs, rather than solely for the environment. Earlier this year, Miliband gave a speech comparing his plan directly to the landmark US Inflation Reduction Act, saying: “We need to stop moaning about the Inflation Reduction Act … Sore loser syndrome won’t win any jobs for Britain.”

Boushey said she had advised her British counterparts not to be ideological about how to manage the transition to cleaner energy. “When we’re dealing with the existential threat of climate change it’s really important to get solutions that work at scale and you can get across the finish line,” she said.

A month after Reeves’s visit, Morgan McSweeney, Labour’s campaign director, was in the White House meeting Neera Tanden, the director of Biden’s domestic policy council. McSweeney’s visit coincided with the official visit of Rishi Sunak to Washington, and was kept quiet at the time for fear of upsetting diplomatic relations.

Last month, Thomas-Symonds also travelled to Washington, where he met the US trade representative, Katherine Tai. The pair talked about a potential digital trade deal in the future, in a sign of how seriously the Biden administration is taking the prospect of a Labour win.

Thomas-Symonds said: “My visit and that of Rachel Reeves before me were a real statement of intent that we share the fundamental beliefs of the Biden administration in jobs-led growth and secure supply chains.”

Thinktanks on both sides of the Atlantic are also cooperating closely. The Institute for Public Policy Research, possibly the most influential thinktank with Keir Starmer’s Labour party, has held regular forums with American counterparts such as Todd Tucker, the director of industrial policy and trade at the Roosevelt Institute.

Tucker gave a briefing in February to members of staff for both Starmer and Reeves during which he stressed the Biden administration wanted to use international trade deals to boost labour and environmental protections around the world. If Labour were to win the next election it should do the same, he urged.

“There are a lot of opportunities for the UK to join the US in shaping the world, including in things like international trade negotiations,” Tucker said.

In Washington, the Progressive Policy Institute, a thinktank that was closely allied with Clinton and is now influential in Biden’s White House, has hired Claire Ainsley, Starmer’s former policy chief, to direct a project on centre-left renewal.

“Rachel’s visit and her speech rightly referenced the economic agenda that the Biden administration is pursuing. For Labour right now, that is a beacon of what a modern industrial strategy can look like,” Ainsley said.

Back in the UK, Common Wealth has hired an American researcher, Melanie Brusseler, to explore what the US Inflation Reduction Act might mean for the UK. She said: “The experience of the pandemic has been that really robust intervention can work. Both Labour and the Democrats are now in this moment of rethinking state intervention.”

Labour strategists say they are also looking to other countries for inspiration, including Australia and Germany, where centre-left parties recently won elections after a long period out of power. But the history of UK-US ties, and the recent memory of Blair and Clinton together developing “third way” politics, have persuaded many on the British and American left they can jointly remake their countries once again.

“I remember seeing a high-profile conference with Clinton and Blair and thinking these guys seem intent on shredding the social safety net,” said Tucker. “Politicians on both sides of the Atlantic are only now catching up with the ramifications of that, and looking to do something about it.”