Teacher pay increase fully funded?

It is reported that the education secretary has committed to fully funding this year’s teacher pay rise following lobbying by the National Education Union.

Teacher pay is due to increase by 3.5% this month and schools were expected to fund 1.8% of the overall increase. The NEU had estimated that schools would have to find about £460 million from their budgets.

In a letter to the NEU, Education Secretary Lucy Powell confirmed schools can use savings from lower support staff pension contributions to fund pay rises. It is estimated these savings will amount to around £500 million nationally, however it is not quite that straightforward.

The recent revaluations to the Local Government Pension Scheme (LGPS) see a 4.9ppt reduction in employer contribution rates and as this reduction in costs will now ‘not be clawed back’,  DfE believe that schools will be able to use it to cover the costs of the teacher pay award.  However LGPS rates are set at local level and support staff pension savings have been known about since April and factored into budgets already with no earlier indication from government that the money was ever due to be clawed back. A school finance officer is quoted as saying they “…did not receive extra money from the DfE…when employers’ LGPS contribution rates increased so why would the DfE feel justified in clawing back the equivalent cash when the rate (temporarily) drops?”

Whilst schools have also seen a considerable reduction in contributions to teachers’ pensions, these savings are still expected to be clawed back by central government .