Former Labour Prime Minister Gordon Brown has repeated his call for higher taxes on gambling to lift half a million children out of poverty.
He has backed a think tank report from the Institute for Public Policy Research (IPPR), saying the move could raise £3.2bn to fund scrapping the two-child limit and benefit cap.
Brown, who was also chancellor under Tony Blair, said taxing online casinos and slot machines would be “the first crucial step in the war we must wage against child poverty”.
A spokesperson for the Betting and Gaming Council rejected the proposals, describing them as “economically reckless” and claiming they could push gamblers onto the black market.
The Department for Media, Culture and Sport has been contacted for comment.
The two-child limit and benefit cap affects 1.6 million children and is blamed for rising rates of food insecurity by anti-poverty campaigners, who say getting rid of the cap is the “single most effective” step the chancellor could take to reduce child poverty.
The two-child limit restricts child tax credit and universal credit (UC) to the first two children in most households, while the benefit cap sees the amount of benefits a household receives reduced to ensure claimants do not get more than the limit.
The government is expected to publish a child poverty strategy in autumn, and children’s charities and campaign groups have been united in calling for the two-child limit to be scrapped.
Writing in the Guardian, Brown states: “Britain is now enduring the worst levels of child poverty since modern records began, even worse than in the Thatcher-Major years, and far worse than in most European countries…
“These are austerity’s children, the victims of 14 years of Tory rule, an era whose most vindictive act was to treat newborn third and fourth children as second-class citizens, depriving them of all the income support available to their first and second siblings.”
Flagging that child poverty is set to rise to “a wholly unacceptable” 4.8 million, Brown urges Chancellor Rachel Reeves to make “a straightforward budget choice” to raise taxes on online gambling companies to fund tackling child poverty.
The proposals focus on online gambling firms – the fast-growing part of the industry – and avoid any changes to bingo or lotteries.
The IPPR suggested increasing taxes on online casinos from 21% to 50% and raising those on slots and gaming machines from 20% to 50%.
Many online gambling firms are based offshore and pay little or no UK corporation tax, the IPPR report flags, and already benefits from unique tax advantages, including a complete exemption from VAT.
The IPPR said raising gambling taxes in the way they suggested would be unlikely to reduce overall government revenue.
Henry Parkes, principal economist and head of quantitative research at IPPR, said: “The gambling industry is highly profitable, yet is exempt from paying VAT and often pays no corporation tax, with many online firms based offshore.
“It is also inescapable that gambling causes serious harm, especially in its most high-stakes forms.
“Set against a context of stark and rising levels of child poverty, it only feels fair to ask this industry to contribute a little more.”
But a spokesperson for the Betting and Gaming Council said they rejected the “economically reckless, factually misleading” proposals which they insisted “risk driving huge numbers to the growing, unsafe, unregulated gambling black market, which doesn’t protect consumers and contributes zero tax”.
They added: “Further tax rises, fresh off the back of government reforms which cost the sector over a billion in lost revenue, would do more harm than good – for punters, jobs, growth and public finances.”