Warm weather saves government £260m in energy support payouts

The nation’s finances have received a surprise boost after unseasonably warm weather last month saved the government £260m in energy support payouts.

Temperatures in October rose to the early 20s on some days, several degrees higher than the typical 14-15C that the UK usually experiences.

As a result, households were not forced to switch on their heating – which meant natural gas demand last month dropped by nearly a fifth (19%) from its typical levels, the BFY Group told Bloomberg News.

Energy support payments consequently were lower than expected, with the total cost of household power and gas use to the government in October estimated to be £2.7bn – a saving of £260m.

While the unexpected saving will prove welcome to the government, forecasters have warned of a colder and earlier winter starting later this month – adding extra burden to the cost of living crisis.

The European Centre for Medium-Range Weather Forecasts (ECMWF) said this year’s La Niña – a weather pattern influenced by cooler temperatures in the Pacific – is set to create high pressure in Europe at the start of winter.

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The disruption to westerly winds would mean easterly winds instead bringing in colder temperatures and prompting increased need for gas usage to heat homes.

Carlo Buontempo, the director of the Copernicus Climate Change Service, told The Guardian: “There is a higher than usual chance of having a cold outbreak at the beginning of winter.”

Nevertheless, the recent savings will provide a small amount of legroom for prime minister Rishi Sunak and chancellor Jeremy Hunt as they prepare to announce cuts in the upcoming autumn statement.

Sunak and Hunt are considering tax rises for millions of households and a squeeze on spending to address a black hole of up to £50bn in the public finances.

Hunt will set out his plans in the autumn statement on 17 November and is considering splitting the burden equally between tax rises and spending cuts.

Health spending is one of several major areas that could face further spending constraints, while they are also expected to extend a freeze on the thresholds at which people start to pay the different rates of income tax and national insurance – which could result in more people being dragged into higher tax bands as wages increase.

Public sector workers could face deep real-terms cuts to wages, with The Times reporting that the Treasury is looking at an increase of 2% across the board for 2023-24, at a time when inflation is expected to be well above that threshold.

With BP unveiling profits that doubled to more than £7.1bn in the three months to September, pressure is continuing to mount for an enhanced windfall tax on oil and gas giants to help fill the Treasury coffers.