The chancellor has declined to rule out raising taxes on gambling after a thinktank said the move could raise £3.2bn for the public coffers and cover the cost of lifting 500,000 children out of poverty.

According to the Institute for Public Policy Research (IPPR), hiking taxes on online casinos and slot machines could raise enough revenue to fund scrapping the two-child benefit cap, with the organisation arguing that there is “no other measure which provides comparable headline child poverty reduction per pound spent”.

The proposals have been backed by former prime minister Gordon Brown, but the Betting and Gaming Council says they are “economically reckless” and could drive punters towards the black market.

The chancellor has not ruled out taking forward the proposals, telling broadcasters that a review into gambling taxes is under way, and policies will be set out at the budget in the autumn.

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The IPPR says in its report that the chancellor should consider increasing taxes on online casinos from 21% to 50% and raising those on slots and gaming machines from 20% to 50%, as well as raising general betting duty on non-racing bets from 15% to 25% which it said would bring other sports in line with the rates paid by horse racing.

These measures could bring in £3.2bn for the Treasury, which would cover the cost of lifting the two-child benefit cap.

The cap was introduced by the Conservative government in April 2017, and it restricts universal credit and child tax credits to the first two children in a family, where the third or subsequent children are born after this date.

According to the thinktank’s analysis of data from the Department for Work and Pensions, 115,000 families are affected, with an average financial impact of £60 per week.

Overall, the policy is keeping over 450,000 in poverty currently, which is set to rise to 550,000 by the end of the decade, it adds.

The IPPR says raising these taxes is unlikely to reduce overall revenue for the Exchequer because firms are likely to “seek to protect their bottom lines by worsening odds”, which means a “strong possibility of higher government revenue” than their forecasts expect.

‘An investment in our children’s future’

Henry Parkes, principal economist and head of quantitative research at IPPR, said in a statement: “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.”

Progressive campaign group 38 Degrees has started a petition calling on the government to implement the proposals, and former prime minister Gordon Brown said in a statement: “Gambling will not build a brighter future for our children. But taxing it properly might just get them properly nourished. Decent clothes. A warm bed. And the full stomachs that let them fill their brains in school.

“Taxing the betting industry to support our children won’t be a gamble. It will be an investment in their future. One where everyone wins.”

Proposals ‘would do more harm than good’

The government has long been facing calls from its own backbenches to scrap the two-child benefit cap, and has not ruled it out doing so as part of a broader package of measures to tackle child poverty, due to be published in the autumn.

Speaking to broadcasters this afternoon, Chancellor Rachel Reeves said she speaks to the former premier “regularly”, and, like him, is “deeply concerned around the levels of child poverty in Britain”.

She continued: “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.

“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.”

But the Betting and Gaming Council says raising taxes on its members is not a sound way of funding measures to reduce poverty, with a spokesperson saying the proposals are “economically reckless, factually misleading, and 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.”

A shocking revelation was unearthed by the i Paper on Thursday that homelessness minister Rushanara Ali had evicted her tenants before hiking up the rent on her east London property by £700.

The Conservatives promptly called on the Bethnal Green and Stepney MP to resign, with their party chair (who is also a landlord) saying: “You can’t say those things, then do the opposite in practice as a landlord. She’s got to resign.”

It’s not hard to spot the hypocrisy. A minister who has called for more protection of tenants now accused of exploiting her own will read very badly.

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But on Thursday, two cabinet ministers came to her defence. Rachel Reeves and Yvette Cooper stated that, while they did not know all the facts, they understood she had complied with the law. It seems she will also not be referring herself to the ministerial standards adviser for an investigation.

Those laws, though – Labour was hoping to change. The Renters’ Reform Bill, which is set to become law next year, is designed to stop the exploitation of the private rental market, with the new regulations aiming to stop landlords from re-letting their property at an increased rental price within six months of evicting tenants to sell it.

And it’s particularly awkward for Labour, as this is not their first indiscretion within their ranks for bad landlord practice.

A BBC investigation found that the MP Jas Athwal had rented properties infested with ants and riddled with black mould. He said he was “shocked” by the findings of the investigation and had been “unaware” of the state of the properties, and that some licences were out of date, and he would repair the properties.

Ms Ali herself had previously criticised private landlords, but after the general election, Labour became the biggest party of landlords.

According to parliament’s register of interests, there are 85 MPs who declare themselves as landlords, or 13% of parliamentarians who own 184 rental properties between them. And Jas Athwal is the biggest landlord out of them all, renting out 15 residential properties and three commercial properties.

Labour has 44 landlords, 11% of its 404 MPs, the Tory party has 28, a quarter of its 121 MPs, and the Liberal Democrats have eight among their 72 MPs.

The government insists Ms Ali has done everything in accordance with the law, and there is no evidence to suggest her conduct was illegal. But Labour need to be careful not to let hypocrisy in their ranks be something that sticks.

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Nothing has emerged so far that’s such an explicit rule break that it would trigger an automatic sacking or resignation and a spokesperson for Ms Ali said she takes her responsibilities seriously and “the tenants stayed for the entirety of their fixed term contract, and were informed they could stay beyond the expiration of the fixed term, while the property remained on the market, but this was not taken up, and they decided to leave the property”.

But we have seen this previously when the anti-corruption minister, Tulip Siddiq, eventually resigned after the ministerial standards adviser, Sir Laurie Magnus, ruled she had not broken the ministerial code, but had “inadvertently misled” the public about a flat gifted by an ally of her aunt, Bangladesh’s ousted former prime minister.

The danger for Ms Ali – and by extension, Sir Keir Starmer – is that it may start to look bad just keeping her around, potentially endorsing this behaviour, and she becomes politically paralysed simply by the weight of the allegation.