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 cap could be raised even further in October.

On affirming the party’s push for a windfall tax, Reeves said of Shell’s bumper annual profits: “Dividends up, profits up, and people’s energy bills up too.”

Shell CEO’s, however, said a one-off tax on North Sea oil and gas profits would not help to solve the energy crisis.

“I’m not convinced that windfall taxes, popular though they seem, will help us with supply, nor is it going to help us with demand,” Shell’s van Beurden told reporters on Thursday.

His comments came shortly after the British oil major posted a massive upswing in annual profits, beating analyst expectations on rebounding commodity prices. The energy giant reported adjusted earnings of $19.29 billion for the full-year 2021, more than four times its level a year earlier when the coronavirus pandemic hit oil demand.

As a result, Shell said it was “stepping up” its distributions to shareholders with a commitment to buy back $8.5 billion in shares in the first half of the year. The company also said it expects to increase its dividend by 4% to $0.25 per share in the first quarter.

Shell’s CEO said the company was in conversation with the U.K. government to find ways to alleviate the worsening cost of living crisis.

Tessa Khan, an international climate change and human rights lawyer and founder of campaign group Uplift, said it was “obscene” Shell’s shareholders were getting rich at a time when people face “real hardship.”

“And yet this government still bends over backwards to serve Shell’s interests,” Khan said. “Take the tax system, which by design makes the UK the most profitable place in the world for companies like Shell to develop large oil and gas projects.”

She added: “In 2020, not only did Shell not pay any tax in the UK, the only country in which it operates where it didn’t, Shell picked up nearly £100 million from taxpayers in rebates. Yet, even now, the Chancellor is refusing to step in and try and claw some back with a windfall tax.”

A spokesperson for British oil giant BP, which is set to report its quarterly earnings on Tuesday, did not respond when contacted for comment.

Mike Tholen, sustainability director at OGUK, said a windfall tax on North Sea oil and gas profits “will deter investment to replenish the gas and oil we need to meet near-term demand and will further undermine energy security.”

“These companies are not just simply ‘oil and gas companies,’ they are the same companies investing heavily in low-carbon and renewable energy, so any knee-jerk tax hike is likely to stifle the acceleration of green energy development,” he added.