The government has confirmed funding arrangements intended to enable schools in England to meet the cost of a teacher pay rise, as the National Education Union (NEU) prepares to reconsider a planned ballot for industrial action. The pay offer provides for a 3.5 per cent increase from this month, followed by a further 3 per cent from September 2027.
The change centres on how schools will finance the award rather than requiring them to absorb its cost through existing budgets. According to Birmingham Live, the Labour government has agreed that the forthcoming increase will be fully funded, addressing concerns raised by the NEU about the pressure the settlement could place on school finances.
Pension Savings Change the Funding Position for Schools
Education Secretary Lucy Powell acknowledged concerns that the funding available in 2026-27 would not be sufficient to meet the costs associated with the recent pay award. The government’s position has changed following a revaluation of the Local Government Pension Scheme. According to Powell, the revaluation will result in a 4.9 percentage-point reduction in employer contribution rates. That reduction is expected to deliver significant savings on the amount schools spend on support staff.
The government has confirmed that these savings will not be clawed back. Powell said ministers were therefore confident that schools would be able to cover the cost of the teacher pay award at a national level.
The NEU had argued that schools could not afford to finance the settlement without additional support. Its general secretary, Daniel Kebede, described the government’s decision as recognition that teacher pay awards needed to be fully funded.
“Plugging the £460m black hole in school budgets signals a welcome return to reality, and a message of hope for the entire school community,” Kebede said, according to Birmingham Live. He said school leaders had been unable to afford the award under the arrangements set out by the previous education secretary. Kebede also argued that schools should not have to make cuts to education simply to balance their finances.
Government Asks NEU to Reconsider Planned Strike Ballot
The funding change comes as the NEU had been preparing to ballot its members over strike action in October. Following the revised affordability position, Powell has asked the union to reconsider that plan.
“Given the material change to the affordability position, I would ask that the NEU revisits its proposed ballot of members planned for October and moves away from strike action,” she said.
The government’s pay offer provides teachers with a 3.5 per cent increase from September 2026 and an additional 3 per cent from September 2027, according to Birmingham Live. The revised funding position is intended to address the union’s concern that schools would otherwise have to meet the cost from their own budgets.
The wider discussion over education pay has also involved colleges. David Hughes, chief executive of the Association of Colleges, said when the initial offer was announced that the sector had feared a very low, or even zero, pay award recommendation.
Hughes said the offer showed that the government had listened to the case presented by the sector and recognised the role of its funding decisions in allowing colleges to respond to the cost-of-living pressures faced by staff.
For schools, the immediate issue now rests with the proposed NEU ballot. Ministers have linked their request for the union to step away from industrial action directly to the pension-related savings and the resulting change in the affordability of the teacher pay settlement.
