Schools can only afford to raise staff pay by 2.7 per cent over the next two years, the Department for Education has estimated, with leaders expected to “realise and sustain better value” in their budgets.
The Department for Education recommended in evidence to the School Teachers’ Review Body (STRB) that teacher pay should rise by 6.5 per cent between 2026-27 and 2028-29. No extra funding for this has yet been announced.
In its annual school costs technical note, published this week, the department forecasts schools will be able to afford an overall pay increase of just 2.7 per cent over the next two years.
£1 billion of headroom forecast
The report predicts schools will have around £1 billion of “headroom” in the next two years.
It goes on to say this “corresponds to an overall pay increase of 2.7 per cent if the increases are to be affordable within each individual year and all staff were to receive the same awards”.
That is because every 1 percentage point increase in teacher and support staff pay works out as a cost pressure to schools of around £330 million.
In its report, the DfE said it did not yet have enough evidence to provide a corresponding estimate of affordable pay increases for 2028-29.
The department has not specified how the 6.5 per cent overall rise recommended to the STRB would be divided across the three years, but said the awards should be “weighted towards the latter” end of the period.
Support staff pay rises have also not yet been agreed.
A 2.7 per cent pay increase over the next two years would mean teacher pay would need to rise by a further 3.9 per cent in 2028-29 to meet the DfE’s 6.5 per cent three-year recommendation.
The new report says: “It is clear from our analysis that schools will need to realise and sustain better value from existing spending…to support the creation of additional headroom to improve the manageability of a 6.5 per cent pay increase over the three years.”
It says this work would be “supported by guidance, offers, and wider measures to tackle national drivers of cost through the new maximising value for schools programme”.
The document added that the DfE judged making savings to fund pay rises “to be a manageable ask”, but added: “we recognise it will be challenging”.
“Schools and trusts are not alone in this,” it said. “The department is committed to working alongside schools and trusts as part of a shared endeavour to drive better value, to help them improve outcomes for pupils by getting best value from all their resources.” It highlighted its ‘maximising value for pupils’ programme.
‘Ludicrous’ and ‘insulting’
National Education Union general secretary Daniel Kebede warned there were “no easy savings to be made”.
He said government “must invest in the urgent and significant pay correction that is needed to properly value, recruit and retain teachers”, adding that balancing budgets is the “biggest challenge” for school governors and MAT CEOs.
“After 15 years of austerity, there are no easy savings to be made. The government cannot continue to ask schools to do more with less, especially when the government expect mainstream schools to take greater responsibility for SEND provision. To call this a ‘manageable ask’ is not only ludicrous but insulting.”
It comes after schools were this year expected to find the first 1 per cent of pay rises for all staff, by “maximising value for money from existing budgets”. This equated to around 0.6 per cent of their overall spending.
Next year ‘more challenging’
The £1 billion of headroom identified in the document was calculated by looking at how schools’ costs and funding will change in coming years.
Mainstream schools’ costs are expected to rise by 1.9 per cent in total across the next two years, says the school costs document. The modelling excludes future, unconfirmed pay awards.
Meanwhile, schools’ core funding is set to increase by 3.7 per cent over the same period, indicating financial headroom “of 1.8 per cent on average”, or £1 billion nationally across the two years.
The DfE’s evidence to the STRB said a 6.5 per cent teacher pay rise over the next three would be “appropriate”, balancing the need for competitive pay awards with the fact average earnings growth across the wider economy is expected to slow.
In the schools’ costs technical note, the DfE says that of the £1 billion headroom forecast for the next two years, only around one-quarter (or £250 million) is expected to apply to 2026-27.
This would make next financial year “more challenging” financially than 2027-28, it adds.
Meanwhile, the financial headroom calculation also includes a “level of uncertainty” of plus or minus £200 million.
SEND provision costs
In calculating the potential “headroom” for schools, the DfE factored in an expected increase in the cost of delivering SEND provision of £880 million over the next two years.
The schools white paper announced over £4 billion of investment over the next three years to help support more inclusive practice in schools and gear up for recently announced SEND reforms.
The report did not include this in its affordability or headroom calculations, because this funding is “to prioritise early intervention for children and young people with SEND and to support a more inclusive offer for pupils with SEND in mainstream settings”.
However, the report added: “We recognise that a significant proportion of this funding will be spent on workforce, which may help offset the costs of any pay awards”.
