UK rejects fresh calls for a windfall tax on oil and gas profits

LONDON — Britain’s Finance Minister Rishi Sunak has rejected fresh calls for a one-off tax on North Sea oil and gas profits despite millions of households facing a record-breaking increase to energy bills and as oil giant Shell reports bumper annual earnings.

U.K. lawmakers from across the political spectrum have renewed calls on the government to impose a windfall tax on oil and gas to help fund a national package of support for households. The policy, put forward by the main opposition Labour Party earlier this month, is designed to save most households £200 ($271) a year and protect those hardest hit.

A spokesperson for OGUK, a representative body for the U.K. offshore oil and gas industry, and Shell CEO Ben van Beurden have both said a windfall tax would fail to resolve a sharp upswing in energy prices in Britain.

Addressing lawmakers in the House of Commons on Thursday, Sunak said the idea of a windfall tax sounded “superficially appealing,” but it would ultimately deter investment.

Sunak said it would not be sustainable to hold the price of energy at “artificially low” levels and accused Labour of “political opportunism.”

“For me to stand here and pretend we don’t have to adjust to paying higher prices would be wrong and dishonest,” Sunak added. “But what we can do is take the sting out of a significant price shock for millions of families by making sure that increase in prices is smaller initially and spread over a longer period.”

Britain’s energy regulator Ofgem on Thursday announced a whopping 54% increase to its price cap from April. It means U.K. households could see their energy bills rise by around £700 a year, with an estimated 22 million households forecast to see their energy costs increase.

It is feared the hike in energy bills could plunge an additional 1.1 million homes into fuel poverty, while the government’s proposals for support have been sharply criticized by campaigners for doing little but offset or defer part of the most recent rise.

Sunak defended measures that Prime Minister Boris Johnson’s government would offer to help support homes in fuel poverty, saying the plans will take the “sting” out of the rise.

The majority of families will receive a total of £350 to help them adjust to higher energy bills, Sunak said, although only £150 will arrive by the time energy bills rise in April.

Rachel Reeves, shadow finance minister for Labour, accused Sunak on Thursday of choosing to “shield” oil and gas companies with a “buy now, pay later” support scheme.

Sunak was “gambling” with taxpayers’ money since the government’s plan relied on energy prices falling, Reeves said, noting the price…