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Rachel Reeves is under growing pressure to raise taxes on gambling firms to cover the cost of lifting the two-child benefit cap. More than 100 Labour MPs have signed a letter to the chancellor as she prepares for the autumn Budget, urging her to scrap the limit long blamed for keeping children in poverty. This could be paid for with a ‘targeted levy on harmful online gambling products’, which would ‘support the government’s manifesto pledge to reduce gambling-related harm and enable vital action to alleviate child poverty’, the MPs wrote. They argued that the UK’s effective tax rate on remote gambling ‘is significantly lower than in many comparable jurisdictions’. Betting companies ‘remain highly profitable’, they wrote, while employing relatively few people and often basing operations offshore to lower their tax bills. Consumer spending on gambling brings little value to the UK economy as a whole, they added. The parliamentarians cited a report by the Institute for Public Policy Research, backed by former prime minister Gordon Brown, which said restoring gambling levies could generate the £3.2 billion needed to scrap the two-child limit and benefit cap. The think tank suggested increasing taxes on online casinos from 21% to 50% and raising those on slots and gaming machines from 20% to 50%. Alex Ballinger, signatory of the letter and member of the All-Party Parliamentary Groups on gambling reform, said: ‘No child should grow up in poverty while gambling companies make record profits. ‘Gambling harms are increasing, yet gambling is VAT exempt.’ The two-child benefit cap, widely unpopular among Labour members, remains in place more than a year after Labour took office, making it a key issue at the party conference starting in Liverpool on Sunday. The issue has also been central to the contest to succeed Angela Rayner as deputy leader, with both candidates, Bridget Phillipson and Lucy Powell, suggesting the limit should be abolished. Education Secretary Phillipson’s comment that scrapping the ‘spiteful’ cap is ‘on the table’ has been seen as a clear sign that ministers are considering the move. Reeves on Monday also said the changes were ‘on the table’. Speaking to ITV before the MPs’ letter was sent, the chancellor said: ‘I didn’t need MPs or former chancellors to tell me to launch an inquiry into gambling taxation. ‘I did that as chancellor, and I’ll set out the plans on the taxation of gambling and indeed of other areas in my budget on November 26.’ The policy was announced in 2015 by the then-Conservative government and restricts child tax credit and universal credit to the first two children in most households. By Sophie Wingate, PA Deputy Political Editor source: PA Copyright 2025 Alliance News Ltd. All Rights Reserved.
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