Schools have £400 million of “headroom” to put towards teacher pay next year - but this will only cover a 1.3 per cent rise, the Department for Education has said.
The DfE has recommended a 2.8 per cent pay award for teachers for 2025-26.
The department today said schools are set to see costs increase by 3.6 per cent in 2025-26, while core funding to mainstream schools will increase by 4.3 per cent.
It said this means mainstream schools will be able to increase spending by 0.8 per cent, amounting to around £400 million nationally.
“Looking uniformly across both support staff and teachers’ pay together, the £400 million headroom matches the costs that would arise in 2025-26 from an increase in pay of around 1.3 per cent,” the
It added that schools could generate £550 million in headroom by finding a 1 per cent efficiency in their budgets. £550 million would cover a 1.7 per cent staff pay rise, the DfE said.
Teacher pay and national insurance rise
Meanwhile, the DfE has also announced more than £1 billion in funding for schools to cover increased employer national insurance contributions (NICs), and small increases to pupil premium rates for 2025-26.
The eligible for free school meals will increase by £35, while the secondary rate will increase by £25.
Paul Whiteman, general secretary of the NAHT school leaders’ union, welcomed the NIC funding and the pupil premium increase, but said “today’s announcement does not change the overall picture on school funding - as government looks towards the spending review, it is critical that schools are urgently prioritised for significant and long-term investment”.
Schools and high-needs settings will receive more than £930 million in funding for increased employers’ NICs next year.
The DfE has also announced there will be £25 million for schools with early years provision and £155 million for post-16 schools and academies and further education colleges.
‘Poor timing’ to announce funding
Luke Sibieta, research fellow at the Institute for Fiscal Studies, said the funding will “likely” compensate schools for higher employer NICs at a national level.
“However, announcing the funding rates two weeks before the start of the financial year is pretty poor,” he added.
“Treasury confirmed the total allocation across the public sector in the Autumn Budget. The government could and should have confirmed these funding rates months ago.”
Mr Whiteman said the funding rates take into account the “disproportionate” cost impact of the NIC rise on primary schools, which have a higher proportion of lower-paid staff.
Neil O’Brien, Conservative shadow schools minister, pointed out that the funding will not help schools with indirect cost rises that will occur if suppliers raise their prices to mitigate their own increased NICs.
He added: “It looks like the DfE has decided today is the day to bury bad news. They’ve chosen to sneak out inadequate NICs on the day when eyes are looking elsewhere at the welfare changes being announced.”
Funding ‘could amount to a loss’
Simon Oxenham, the Institute of School Business Leadership’s national lead on school finance, said suppliers “have already indicated they will need to increase their prices due to the national insurance increase”, so the funding could amount to a “modest loss”.
Funding allocations for schools and high-needs settings will be published in May 2025. In the meantime, the DfE has provided a calculator tool intended to help schools estimate how much they will get. However, at the time of writing this did not appear to be functioning correctly.
Julia Harnden, funding specialist at the Association of School and College Leaders, said the DfE has used cost modelling intended to reflect actual costs to schools depending on their workforce, but that it was not yet clear how well it has worked.
The government announced that employer NICs would rise from April 2025 in the budget last year. The DfE confirmed schools would be compensated to cope with the increase, but it was awaiting confirmation from the Treasury on how much money it would get.
The DfE said in November that the funding should match national school costs for the rise but the DfE “cannot guarantee that that will be the case for every individual school”.
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