England to Fully Fund Teachers’ Pay Rise After Union Pressure
The government in England has agreed to fully fund the planned pay increases for teachers, removing a funding gap that had threatened to trigger strike action by the country’s largest education union.
The decision means schools will no longer be expected to find part of the cost of the teachers’ pay award from their existing budgets. The government says the additional funding will be made possible by savings resulting from changes to employer contribution rates in the local government pension scheme.
The development affects teachers and schools across England, which is one of the four constituent countries of the United Kingdom. It follows weeks of negotiations between the government and the National Education Union (NEU).
Government changes funding position
The latest decision follows the government’s July announcement of a two-year pay settlement for teachers.
Under that arrangement, teachers were due to receive a 3.5% increase from September 2026, followed by a further 3% increase from September 2027. The government had initially said schools would need to find part of the cost through efficiencies within their existing budgets.
That funding arrangement became a major point of disagreement between the government and education unions.
WANT TO PASS 2027 BECE? REGISTER FOR BECE HOME MOCK
Register your ward for Ghana's premier Home Mock service, active since 2022.
The NEU said schools were being left to cover a 1.1% funding shortfall for the 2026-27 pay award, equivalent to about £460 million. The union argued that schools facing financial pressure should not have to redirect money from education to cover nationally determined pay increases.
The government has now changed that position.
Education Secretary Lucy Powell confirmed the new arrangement in a letter to NEU General Secretary Daniel Kebede.
According to the letter, a recent revaluation of the local government pension scheme will reduce employer contribution rates by 4.9 percentage points. The resulting savings on schools’ support-staff pay costs will remain with schools rather than being recovered by the government.
The government said this would enable schools nationally to meet the cost of the teacher pay award.
Schools expected to receive about £500 million
The change is expected to provide an estimated additional £500 million for schools in England during the current financial year.
The NEU described the announcement as a significant development after months of pressure over the funding of the pay award.
The union had warned that schools could be forced to make spending cuts if they were required to finance part of the increase from existing resources.
Daniel Kebede said the new arrangement addressed the funding gap that had been a central concern for the union.
The Institute for Fiscal Studies also estimated that the latest change amounts to about a £500 million increase in school funding, equivalent to just under a 1% permanent increase. The institute said that, when combined with other funding increases, schools would be about £1.6 billion better off than expected earlier in the summer.
READ: GIST South Korea Fully Funded Scholarship 2027: Masters and PhD Applications Now Open
Strike ballot now under pressure
The funding dispute had moved beyond negotiations and towards possible industrial action.
The NEU had planned a national ballot of its members in October over strike action.
A union poll conducted before the summer break found that 97% of participating members considered it unacceptable for their schools to have to find the funding for the shortfall. A further 89% said they were prepared to take strike action to secure full funding for the pay award.
The NEU’s national executive has yet to make a final decision on whether the planned ballot will proceed.
Powell has asked the union to reconsider the proposed ballot following the change in the funding position and to move away from strike action.
The government has presented the decision as a change in affordability rather than a reversal of its overall pay policy.
What the pay deal means for teachers
The underlying two-year pay arrangement remains a 6.5% increase, consisting of 3.5% from September 2026 and another 3% from September 2027.
The government announced the settlement in July after accepting the recommendations of the School Teachers’ Review Body, the independent body that advises on teachers’ pay and conditions in England.
The July announcement also included £1.8 billion in additional school funding over two years.
At the time, however, schools were expected to find the first 1% of each pay award through efficiencies in their budgets. The new funding arrangement changes how that cost is expected to be absorbed.
The government has also said the pay settlement forms part of wider efforts to support teacher recruitment, retention and wellbeing.
Other teachers’ unions welcome the development
The NEU is not the only teachers’ organisation to have welcomed the funding decision.
Matt Wrack, general secretary of the NASUWT teachers’ union, said the government had finally begun addressing concerns that his union had raised about the funding of the pay award.
The response reflects a broader concern among education unions that nationally determined pay increases should come with sufficient government funding so schools do not have to reduce spending elsewhere.
At the same time, the government maintains that the additional funding is now affordable because of savings created through changes to pension-related employer costs.
Why the decision matters beyond the pay increase
The dispute illustrates how teacher pay decisions can affect school finances beyond individual salaries.
A national pay award determines how much teachers receive, but the funding mechanism determines whether schools have to redirect money from other areas to meet those costs.
For schools operating within fixed budgets, that distinction can influence staffing, resources and other spending decisions.
In England, the latest government decision removes the previously identified funding gap at national level. The remaining question is whether the NEU will respond by withdrawing or changing its planned industrial action process.
For teachers, schools and education authorities, the next stage will therefore focus on how the new funding arrangement is implemented and whether it brings the current dispute to an end.
