Gordon Brown has called on Chancellor Rachel Reeves to hike gambling taxes so she can lift benefit restrictions at her autumn Budget.
The former Labour prime minister and chancellor told the BBC Britain was facing a “social crisis” with a growing need to take children out of poverty.
Hiking taxes on the “undertaxed” gambling industry was “by far the most cost-effective way” for the chancellor to do this, he argued.
The Betting and Gaming Council, which represents gambling companies, warned the “economically reckless” plan would push gamblers into the black market.
Reeves is widely expected to raise taxes at this autumn’s Budget, after poor economic figures and a series of U-turns on welfare cuts made it harder to meet the government’s self-imposed spending rules.
It has prompted speculation about which areas the chancellor, who reportedly kept a framed photo of predecessor Brown in her room as a student, could look to when putting together her Budget this autumn.
Speaking to BBC Radio 4’s Today programme, Brown insisted he did not want to be a “back seat driver,” adding that Reeves would be more aware than he is of the “pressure she is under” on the public finances.
“I’m trying to help the government by saying, here are positive, constructive suggestions,” he added.
Brown, who was Tony Blair’s chancellor for more than a decade, is backing calls from the Institute for Public Policy Research (IPPR) think tank to raise various gambling taxes to raise around £3.2bn extra per year.
It says this would cover the cost of scrapping the two-child benefit cap, which restricts child tax credit and universal credit (UC) to the first two children in most households, and the overall benefit cap in place since 2013.
Children’s charities and campaign groups have called for the limits to be scrapped as part of a government child poverty strategy to be published in the autumn.
In an article for the Guardian, Brown wrote: “Gambling levies aren’t the only source of revenue that could pay to alleviate child poverty. But this should be one straightforward Budget choice.
“The government can fulfil today’s unmet needs by taxing an undertaxed sector.”
Elsewhere in his Today interview, he also suggested the UK should be looking to share the cost of increased defence spending in future years with Nato allies.
He suggested this could take the form of a special Nato defence fund, or by allies borrowing together by using jointly-issued debt, adding it would “create the kind of headroom that Rachel Reeves needs”.
The IPPR proposals focus on online gambling firms – the fast-growing part of the industry – and avoid any changes to bingo or lotteries.
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%.
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.
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.”
