The profits of gloom

Good Wednesday morning. This is Sam Blewett.
CHANGING THE CHANNEL: The government is trying its best to sound tough on small boat crossings — but it’s gloomy visions of Rachel Reeves’ budget that are really sunning it up in the limelight. Still two and a half months out and those “incredibly tough choices” the chancellor is weighing up are trickling out — and it’s not looking pretty.
High rises: The FT gets wind of a new one — allowing inflation-busting social rent hikes over the next decade. Peter Foster and colleagues report in the paper’s splash that Reeves intends to set the national formula for subsidized social housing rent levels to the CPI measure of inflation, plus 1 percent. 
Building at all costs: That’ll please housing associations, of course, and may help them come to grips with the huge maintenance backlogs while driving up house building by providing a little certainty for their books. But it’d also hit the finances of some of those struggling the most with the cost of living. Shelter’s Chief Executive Polly Neate warns there must be mechanisms in place to prevent “extreme rent rises” in case inflation spirals again. 
**A message from Google: Family Link can help you manage your child’s digital habits this summer holiday – no sweat. Personalise their device use, view screen time, set daily limits, schedule downtime, and more. So while school’s out, a fun and balanced summer’s in. Learn more at g.co/familylink.**
In fairness: Housing Secretary Angela Rayner did hint at this back in July by promising the government would provide housing associations with the “rent stability” they need to invest in new and existing homes. Rayner said the government would ensure “appropriate protections” were in place for tenants — no word yet on what they’ll be.
Beware the unintended consequences: As the FT points out, David Cameron and his Tory-led coalition tried a similar move back in 2012 — but Chancellor George Osborne had to back down a few years later to reverse the pressure on the housing benefits bill.
TAX KLAXON: The Guardian’s front page also goes in on the budget. Larry Elliott and Peter Walker pick up on alarm in the Treasury that modest growth in the economy hasn’t been improving the state of public finances. They also hone in on some of the choices under consideration. 
There’s … raising inheritance and capital gains tax … sticking with a 1 percent increase in public spending that’d provoke cuts in some government departments … and refusing to bow to pressure to scrap the two-child benefit cap. Much of this is anticipated in Westminster but that doesn’t mean it’ll go down poorly across various sections of society.
The caveats: Officials Playbook spoke to didn’t rule out any of these measures but naturally pointed out Oct. 30 is a long way away and said the chancellor “has not made any decisions at this stage.” 
But it’s worth bearing in mind: The first budget is always a prime moment to get the nasty stuff done and dusted. It’s a credible time to blame the last bunch in charge and allows ever-election-minded ministers to unveil the sweeteners at a more propitious moment (nearer to the next election). Plus, gloom-mongering this far out may even be helpful to Labour, making any little treat seem that much sweeter when the budget finally comes.
Stare into the abyss: The ONS has just dropped its latest set of borrowing figures. Click here to check out the state of that “black hole.”
F***! says business: The Times splashes loud and proud on a warning from businesses that strengthening unions could damage growth. Oliver Wright hears that business chiefs raised their concerns at a meeting with Rayner and Business Secretary Jonathan Reynolds last week. One senior executive of a FTSE company moaned to the Times that they’ve already got unions “knocking on the door” gleeful about the new powers coming their way. But officials insisted no specific gripes were raised at the gathering of ministers, trade unions and business leaders. 
Hold my beer (and sandwiches): No. 10 may have been left “extremely” disappointed by ASLEF announcing separate industrial action shortly after securing a pay rise for train drivers to end their strikes — but there are more requests that’ll anger some. The Telegraph reports that the TSSA has requested 38 days off a year and a 35-hour week for its members.
NOW READ THIS: The New Statesman’s George Eaton has a good look at the internal splits over Reeves’ decision over cuts to the winter fuel allowance. Ministers, in private, concede to him that protecting the payments for only the poorest pensioners is too mean, while one normally loyal backbencher says: “As a standalone cut, it’s almost suicidal.” Read the piece here.
And the public seems to agree: YouGov polling for the Energy and Climate Intelligence Unit suggests 59 percent of Brits oppose removing universal winter fuel payments for pensioners, with 28 percent supporting the move to means test it. 
WHAT LABOUR ACTUALLY WANTS TO TALK ABOUT: Yvette Cooper is pledging that the next six months will see the highest rates of removals of failed asylum seekers since 2018 — that’s more than 14,500 people, according to Charles Hymas’ calculations on the front page of the Telegraph.
The grand plan: The home secretary is announcing the immediate recruitment of up to 100 new intelligence and investigation officers at the National Crime Agency to target people-smuggling gangs. On top of that, she’s planning to expand the Campsfield and Haslar immigration removal centers. 
Who’s the hardest? Cooper said they are “strong and clear” steps to boost border security … but her critics (particularly those campaigning to be the next Tory leader) disagree. Shadow Home Secretary James Cleverly said the plans aren’t “nearly ambitious enough,” while former Immigration Minister Robert Jenrick goes in all guns blazing to call Labour’s target “farcical.”
WHILE YOU WERE SLEEPING: Democrats gathered in Chicago for Day Two of their national convention. Our Stateside colleague David Siders writes in with this dispatch from on the ground …
FLASHBACK: When Barack Obama tried passing the baton to Hillary Clinton at the Democratic National Convention in Philadelphia eight years ago, he cast her Republican opponent’s “deeply pessimistic vision” of the country as out of step with the America he knew.
Now back at a party convention, this time in Chicago, he and the former first lady, Michelle Obama, were stumping for another history-making candidate, Kamala Harris. But the Republican opponent, Donald Trump, is the same. And for Democrats, the sale they needed the Obamas to make is: Don’t go back to him.
Americans now are far more familiar with — and many are more weary of — Trump: They’ve witnessed his two impeachments, his defeat in 2020 and the riot at the Capitol in 2021. Next month, they’ll tune in to coverage of Trump’s sentencing on his conviction of falsifying business records to cover up a hush money payment to a porn star (if it isn’t delayed again).
Even after surviving an assassination attempt, and with his favorability ratings climbing slightly higher, Trump isn’t very well liked or trusted by most Americans, as my colleague Steven Shepard has detailed. In a recent ABC News/Washington Post/Ipsos poll, 35 percent of respondents had a favorable opinion of Trump — about 10 percentage points lower than for Harris.
“Yes, she can,” Barack Obama said of Harris in the early hours of this morning, trotting out a modified version of one of this favorite lines during a rousing speech to close out the second night of the convention.
Reality check: But eight years ago, the polling following the DNC looked good for Clinton, too. “I think that worked,” Obama reportedly said when he came off the convention stage that year. Spoiler alert: It hadn’t.
Trump is more of an animating force for the Democratic Party now. He’s polling behind Harris, but only narrowly. There’s a reason speaker after speaker at the convention this week has been bashing him — it’s an effort, as Obama tried eight years ago, to persuade Americans that their vision of the country is different than his. My Stateside colleagues have the story.
Where’s Kamala? Harris skipped Day Two of the DNC, and traveled instead to a rally in nearby Milwaukee, in a demonstration of how vital the state of Wisconsin is for the Democrats, as my colleague Myah Ward reports.
THE NOTORIOUS D.N.C.: British Ambassador Karen Pierce revealed during a POLITICO event that she received a coveted invite to a 50 years of hip-hop party hosted by her Washington neighbors — Harris and second gentleman Doug Emhoff, my colleague Eric Bazail-Eimil writes.  
Outkast: The top British diplomat attended with husband and former Treasury perm sec Charles Roxburgh. “I am very sorry to say we were totally out of place, but we had a great time,” Pierce said cheerfully.
Mos Defening: Pierce demurred when asked if her proximity to Harris afforded any unique insights into the Democratic nominee’s foreign policy vision. “It’s quite hard to talk about foreign policy during hip-hop — it doesn’t kind of lend itself to that discussion,” she quipped.
MORE FROM CHICAGO: Follow along with POLITICO’s live blog, and make sure you’re subscribed to Suzanne Lynch’s Global Playbook and Anne McElvoy’s Power Play podcast.
TIME’S TICKING: U.S. Secretary of State Antony Blinken warned “time is of the essence” as he wrapped up his ninth trip to the Middle East since the war in Gaza began — without securing a major breakthrough on a cease-fire deal. “This needs to get done and it needs to get done in the days ahead,” he told reporters in Qatar.
Bad news: My colleague Erin Banco hears from U.S. and Israeli officials that the deal to bring an end to the fighting is on the brink of collapsing. She hears Hamas and Israel are at odds and there’s no clear path to resolution during the negotiations. Read her piece here.
Hopes fading: At the weekend, President Joe Biden said he was “optimistic” that a deal could be brokered, adding: “We are closer than we’ve ever been.” Those comments raised the hopes of everyone who wants to see the Israeli hostages released and the end of the bloodshed that’s so far killed a reported 40,000 Palestinians.
Telephone diplomacy: Keir Starmer spoke to Benjamin Netanyahu Tuesday to discuss the efforts to secure a cease-fire, expressing his condolences after the military said the remains of six hostages — including British national Nadav Popplewell — had been recovered from Gaza. The prime minister told his Israeli counterpart he welcomed his support for the American “bridging proposal,” details of which are unclear, though Blinken has said it contains a clear schedule for the IDF’s withdrawal from Gaza.
But but but: Starmer “emphasized the need to move quickly,” according to Downing Street’s readout of the call. Foreign Secretary David Lammy also spoke to Blinken to discuss where the negotiations are at.
PARLIAMENT: Chilling out on hump day.
CRASHING THE ROLLS-ROYCE: Labour’s continuing to come under Conservative fire for installing Jess Sargeant, the former Labour Together staffer, in a role at the center of the Cabinet Office. My daylight-dwelling colleague Emilio Casalicchio hears the former Institute for Government expert will be leading on the thorny topic of Lords reform. 
PET peeves: But it’s her apparent title of deputy director of the Cabinet Office Propriety and Constitution Group that’s raising concerns. Tory peer and former Cabinet Office minister David Frost said the move would “destroy” confidence in the propriety and ethics team (PET). The Telegraph somehow places its bête noire Sue Gray at the center of it all. The IfG’s Jill Rutter says Labour’s made a “presentational mess” of it all and should instead be “less squeamish” in admitting it’s appointing advisers.
Peerless timing: My POLITICO colleague Esther Webber has a cracking piece on the last of the hereditary peers, who Starmer plans to confine to history. Among the word-count-busting names is some great insight on why the government is so in favor of Lords reform (it’s popular, cost-free and contains a pleasant whiff of class warfare). Read Esther’s piece here.
THE NEVER-ENDING TORY CONTEST: Kemi Badenoch has picked up nominations from two MPs on the opposite wings of the Conservative Party. Ben Spencer, in the left corner, and Gareth Bacon, on the right, endorse the shadow housing secretary in an article for the Telegraph, arguing she’s got a record of “saying what’s needed, not what’s easy.”
SORRY CLACTON, ARIZONA CALLS: Nigel Farage is going back to what seems to be his favorite place to work — the U.S. He’ll be the keynote speaker at the Keep Arizona Free Summit, the Mirror’s Nick Sommerlad reports. The Clacton MP has pocketed £12,000 for the appearance. The Reform leader defended saying it was booked “over a year ago.”
Trouble in paradise: Reform’s CEO Paul Oakden has been kicked out of the party, the Mirror’s Mikey Smith reports, after a decision to “sunset” the CEO position. Farage’s controlling shareholding has gone from 53 percent to 60 percent, according to the paper. 
HOUSING HEADACHE: Data from those FOI-loving Lib Dems reveals 82 percent of councils have had someone on their social housing waitlist for more than a decade. The figures also focus on how sharply the waitlists have risen, with nearly 44,000 people joining in six years.
KER-CHING: Analysis from LabourList shows over 200 Labour MPs collectively received more than £2 million in donations from trade unions in the year leading up to the general election, including 11 members of the Cabinet. Grahame Morris was the MP to bag the most cash from the unions, cashing in a whopping £56,454.
MORE PRISON PROBLEMS: Alice Jill Edwards, the U.N. special rapporteur on torture, called on Keir Starmer to investigate the cases of people jailed under notorious IPP sentences. “The U.K. justice system is meant to be an exemplar of the rule of law — that so many individuals languish without hope is a terrible indictment,” Edwards told the Independent.
TERRIBLE ODDS: GambleAware’s annual treatment and support survey reveals 1.65 million children live in households where an adult is tackling “problem gambling.” Children exposed to problem gambling are found to be four times more likely to experience it themselves.
ON FIXING FRACTURES: Crossbench peer Michael Hastings has joined racial justice charity Pathway Fund as chair, and calls on the government to use funds in the dormant assets scheme to “repair riot-ruptured communities.”
GOING OUT QUIETLY, THEN: Outgoing Scottish Conservative Leader Douglas Ross has called Conservatives MSPs who “briefed against” him “scheming bastards,” the Telegraph’s Simon Johnson reports. The leadership race is heating up, with nominations closing Thursday. MSP Brian Whittle has pulled out, pledging support for Murdo Fraser, who is competing against Meghan Gallacher, Jamie Greene, Russell Findlay and Liam Kerr. 
ARE EU READY? The prospect of Donald Trump’s return to the White House is pushing the EU to double down on economic security as Brussels fears he’ll once again inflict damage on the bloc’s free-trade agenda, my colleagues Camille Gijs and Koen Verhelst write.
GOING NUCLEAR: Joe Biden approved a highly classified nuclear strategic plan in March that would reorient America’s deterrent strategy to focus on China’s rapid nuclear arsenal expansion, the New York Times reports. The Pentagon believes that in the next decade, China’s stockpile will rival the size and diversity of the United States’ and Russia’s. My Stateside colleagues have more.
UKRAINE BANS MOSCOW-LINKED CHURCH: Ukraine’s parliament passed a bill banning religious organizations that have ties with Russia, including the Ukrainian Orthodox Church. Veronika Melkozerova has the story.
INDIAN HOSPITAL SAFETY: The Indian Supreme Court has launched a hospital safety task force following the rape and murder of a doctor in Kolkata, which sparked national outrage and mass doctors’ protests, per Reuters. “If women cannot go to a place of work and be safe, then we are denying them the basic conditions of equality,” said Chief Justice Dhananjaya Yeshwant Chandrachud. 
**A message from Google: With the summer holidays in full swing, more free time can mean more screen time for your child. By downloading the Family Link app, you can manage and monitor your family’s digital habits to choose a healthy balance that suits you and your child. View their screen time and set daily limits to make sure they don’t miss out on the outdoor fun, schedule downtime for when the BBQ is ready and manage privacy settings so you know they are safe and sound all summer long. Family Link can even help you find age-appropriate apps and games, perfect for that road trip to the seaside or a rainy day. So while school’s out, a fun and balanced summer’s very much in. Learn more at g.co/familylink.**
No government or opposition round. Having a nice long coffee. 
On GB News Breakfast: Liberal Democrat Housing Spokesperson Helen Morgan (8 a.m.). 
Times Radio Breakfast: Former Reform UK Deputy Leader Ben Habib (7.05 a.m.) … TUC Assistant General Secretary Kate Bell (8.05 a.m.) … Conservative peer and friend of Mike Lynch John Gummer (8.15 a.m.) … Former U.S. Secretary of Health and Human Services Kathleen Sebelius (8.35 a.m.).LBC News: Helen Morgan (7.45 a.m.).
POLITICO UK: The last of the Lords. 
Daily Express: Horror video shows yacht’s final moments.
Daily Mail: Could anyone still be alive? 
Daily Mirror: Sven: My goodbye.
Daily Star: Chew what?
Financial Times: Reeves plans above-inflation rise in social rents to boost housebuilding.
i: Brits without new €7 EU visa face being turned away at airport in 2025.
Metro: Hopes fade for the missing six. 
The Daily Telegraph: Probe into ‘hatches left open’ on doomed superyacht.
The Guardian: Reeves plans tax rise amid alarm over ‘black hole.’ 
The Independent: Bodies of UK hostage found as families urge truce ‘before all die.’
The Times: PM warned: Empowering unions will stifle growth.
WESTMINSTER WEATHER: Morning dwellers, today is your lucky day — sunny spells in the morning changing to cloudy by lunch. High 22C, low 15C.
SPOTTED … getting excited about Taylor Swift performing in Wembley for the last day of the European leg of the Eras Tour: Chief Secretary to the Treasury Darren Jones, sporting a “dad” beaded bracelet. 
NEW GIGS: Caitlin Prowle has joined the Co-Op Party as head of politics, having previously served as an adviser to Yvette Cooper. 
CONGRATS 1: To former Conservative MP Jonathan Gullis on his wedding to Nkita Weldon in Worcestershire Tuesday, where — in a sign of changing times? — the catering was vegan. 
CONGRATS 2: To former Conservative SpAd James Price on his engagement.
WRITING PLAYBOOK PM: Emilio Casalicchio.
WRITING PLAYBOOK THURSDAY MORNING: Dan Bloom.
HAPPY BIRTHDAY TO: Assistant Government Whip Gerald Jones … Former North Warwickshire MP Craig Tracey … Former Tory MP Ben Howlett … ITV News presenter Julie Etchingham … Lib Dem peer Lindsay Northover.
PLAYBOOK COULDN’T HAPPEN WITHOUT: My editors Zoya Sheftalovich, Jack Blanchard and Alex Spence, diary reporter Bethany Dawson and producer Dean Southwell.
SUBSCRIBE to the POLITICO newsletter family: Brussels Playbook | London Playbook | London Playbook PM | Playbook Paris | EU Election Playbook | Berlin Playbook | Global Playbook | POLITICO Confidential | Sunday Crunch | EU Influence | London Influence | Digital Bridge | China Watcher | Berlin Bulletin | D.C. Playbook | D.C. Influence | All our POLITICO Pro policy morning newsletters