LONDON: The British government is not ruling out a windfall tax on oil and gas firms if the companies fail to invest their profits into boosting capacity soon, Chief Secretary to the Treasury Simon Clarke said on Monday.

The Times reported the government was drawing up plans for a temporary levy on oil and gas companies, something the opposition Labour Party has been pushing for, to help ease a cost of living crisis.

"If we don’t see that investment starting to materialise in short order, then obviously the government cannot rule out a windfall tax," Clarke told Times Radio.

"We don’t want to have to do this but if we don’t see the sector reinvesting these profits into something productive for the real economy then all options are clearly on the table."

Asked whether he could confirm one option being looked at was a windfall tax that was more lenient on firms that commit to investment, Clarke said he could not either confirm or deny specific proposals.

"We are obviously looking at what needs to be done to support households at what is an exceptionally difficult time and a windfall tax is one of those options that is something that any responsible government would need to look at."

(Reporting by Kylie MacLellan and Farouq Suleiman, Editing by Paul Sandle and Elizabeth Piper)