Britain has not seen poverty this bad for more than half a century, Gordon Brown has warned, urging Sir Keir Starmer to scrap the two-child benefit cap at the next budget.
The former prime minister and Labour chancellor – who said “we are dealing with a divided Britain” and a “social crisis” – backed reforms to gambling taxes in order to generate the £3.2bn needed to scrap the cap.
Mr Brown said the gambling industry is “under taxed”, throwing his weight behind a report from The Institute For Public Policy Research (IPPR) which said that around half a million children could be lifted out of poverty through the reforms.
The two child benefit cap, which was imposed by Tory former chancellor George Osborne, prevents parents from claiming benefits for any third or subsequent child born after April 2017.
Speaking to BBC Radio 4’s Today programme, the former Labour prime minister issued a stark warning about the state of Britain after 14 years of austerity under the Conservatives, urging the current government to take action.
“Look, we’re dealing with a divided Britain. We’re dealing with a social crisis”, he said.
“This problem is getting worse. It’s going to worsen over the next few years, because there’s a built-in escalator in the poverty figures, because of the two-child rule.”
He added: “I live in the constituency in which I grew up. I still live here. I see every day this situation getting worse, and I did not think I would see the kind of poverty I saw when I was growing up, when we had slum housing, when we had traveling people coming to my school.
“This is a return to the kind of poverty of 60 years ago, and I think we’ve got to act now, and that’s why it’s urgent that we take action in this budget.”
Speaking to ITV, he added: “You cannot have a situation where under a Labour government, child poverty numbers just go up and up, and up.”
Rachel Reeves left the door open to a hike in gambling tax following Mr Brown’s comments, saying she saw the former prime minister last week and is “deeply concerned around the levels of child poverty in Britain”.
Asked whether she was considering his proposals, the chancellor said on a visit to Dyffryn, Wales: “No child should grow up hungry or parents not be able to afford the basics for their family.
“We’re a Labour government. Of course we care about child poverty. That’s why one of the first things we did as a government was to set up a child poverty taskforce that will be reporting in the autumn and respond to it then.”
She added: “And on gambling taxes, we’ve already launched a review into gambling taxes. We’re taking evidence on that at the moment and, again, we’ll set out our policies in the normal way, in our budget later this year.”
Sir Keir Starmer is thought to personally be in favour of scrapping the cap, but after a number of expensive U-turns and a new report from top economists warning that the chancellor is facing a £51bn black hole in the public finances, there are growing questions over how the prime minister would be able to fund such a move.
MPs from across Labour have repeatedly urged the prime minister to scrap or ease the limit amid growing concern over the direction of the party.
Critics of the policy say removing it would be the most effective way of reducing child poverty amid warnings that as many as 100 children are pulled into poverty every day by the limit.
Kate Osborne – Labour MP for Jarrow and Gateshead East – backed Mr Brown’s intervention, saying she “completely agrees” with the former prime minister, urging the government to scrap the two child benefit cap “as soon as possible”.
“Tackling child poverty should be our number one priority. Child poverty scars people for life”, she said.
“The North East has the highest levels of child poverty, it has reached nearly 40 per cent in my constituency.
“Scrapping the cap would take 500,000 kids out of poverty immediately – it should be done as soon as possible and should be paid for by taxing the richest in society and those that make a profit out of other peoples pain and addiction.”
York Central MP Rachael Maskell, who was suspended from Labour after leading a rebellion against the government’s controversial welfare reforms earlier this year, urged the government to go even further than scrapping the two child limit.
“It is vital that the right fiscal interventions are seen as a priority and hypothecating a gambling tax, is a positive start to lift the first 360,000 children out of poverty through scrapping the 2-child limit. However, scrapping the cap will not be enough”, she said.
“Families need stability and support, wages need to pay the bills, and children need environments in which they can thrive.”
Ms Maskell added: “The contribution that the former prime minister, Gordon Brown has made to this debate is significant a head of the Autumn Budget. I trust government will follow the evidence and ensure every child has the best start in life.”
It is thought that a decision on the cap won’t be taken until the government publishes its child poverty strategy, which has now been delayed until the autumn.
Mr Brown said he understands that Rachel Reeves has “inherited a very difficult fiscal situation, but warned: “At the budget the government has one straightforward choice: gambling will not build our country for the next generation, but children free from poverty will.”
His comments came after an IPPR report urged the government to look at measures which could raise £3.2 billion from changes to how gambling is taxed, suggesting an increase on taxes on online casinos from 21 per cent to 50 per cent and raising those on slots and gaming machines from 20 per cent to 50 per cent.
The organisation also proposed raising general betting duty on non-racing bets from 15 per cent to 25 per cent which it said would bring other sports in line with the rates paid by horseracing.
The IPPR said raising gambling taxes like this would be unlikely to reduce overall government revenue.
But a spokesperson for the Betting and Gaming Council rejected the “economically reckless, factually misleading” proposals which “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.”
The Treasury has been contacted for comment.
