MORE than 100 Labour MPs have urged Chancellor Rachel Reeves to scrap the two-child benefit cap by raising taxes on gambling firms.

They signed a letter that said the costs of lifting the cap could be paid for via a “targeted levy on harmful online gambling products.”

This would “support the government’s manifesto pledge to reduce gambling-related harm and enable vital action to alleviate child poverty,” the MPs wrote.

The letter said that Britain’s effective tax rate on remote gambling “is significantly lower than in many comparable jurisdictions.”

Betting companies “remain highly profitable” while employing relatively few people and often basing operations offshore to lower their tax bills.

Consumer spend on gambling brings little value to the British economy as a whole, they added.

A much-delayed child poverty task force, set up by PM Sir Keir Starmer, is set to recommend lifting the two-child cap before the autumn Budget, according to the Times newspaper.

Lifting the cap was said to be its top recommendation.

The unpopular benefit cap remains in place more than a year after Labour took office and will be a key issue at the Labour Party conference, which starts in Liverpool on Sunday.

There is no economic, moral or political case for keeping the two-child cap, a spokeswoman for Momentum said: “The entire labour movement opposes it including MPs and grassroots members from across the party.

“With conference approaching we are calling for delegates to make their own feelings clear by voting for supporting families in the Priorities Ballot on Sunday to force a proper debate on this heinous policy.

“It’s time to scrap the cap.”

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.

Alex Ballinger, signatory of the letter and member of the all-party parliamentary group 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 Department for Work and Pensions said: “Every child, no matter their background, deserves the best start in life. That’s why our child poverty task force will publish an ambitious strategy to tackle the structural and root causes of child poverty.”