North Sea oil and gas producers on Tuesday rebuffed calls for the UK government to levy a windfall tax on their profits to offset the impending rise in household energy bills pointing out it is already reaping higher receipts from the industry.

A one-off windfall tax on the sector is one of several options being considered by the Treasury as ministers come under mounting pressure to address a looming cost of living crisis. The opposition Labour party at the weekend said such a levy could partly fund its proposed cuts of about ￡200 to all household energy bills this year.

Household budgets will come under severe strain in April with the cap that limits energy bills for more than 15m households set to jump by more than ￡700 to ￡2,000. This will coincide with a big rise in national insurance and income tax with inflation at its highest in a decade.