Schools in England are set to receive approximately £500 million in extra funding for the current academic year, a move designed to eliminate the need for institutions to use existing budgets to cover a 3.5% salary increase for teachers. This financial injection significantly reduces the likelihood of a strike ballot being launched by the National Education Union (NEU), the largest education union in the country.
The proposal had previously faced strong opposition from NEU leaders, who argued that schools were already financially strained and should not be tasked with subsidizing pay awards. In a letter to the union seen by the BBC, the government confirmed that the additional funds would be sourced from savings generated by a 4.9 percentage point reduction in employer contributions to the local government pension scheme.
Daniel Kebede, the NEU General Secretary, described the offer as a “significant” step forward in negotiations. He stated that the funding signaled a “welcome return to reality” and offered hope to the school community, acknowledging that schools have been “running on empty.”
The pay settlement, agreed upon in July following recommendations from the independent pay review body, mandates a 3.5% increase starting in September 2026, followed by a 3% rise the subsequent year. While the government had previously allocated £700 million for 2026-27 and £1.1 billion for the following year, independent economists at the Institute for Fiscal Studies (IFS) calculated that schools still faced a funding shortfall of roughly 1% due to rising costs.
Luke Sibieta, a research fellow at the IFS, noted that the new funding would ensure the pay increase is fully covered this year. He added that, combined with other planned increases, schools would be £1.6 billion better off by next year than initially projected for the summer.
Other education leaders also reacted positively. Paul Whiteman of the National Association of Headteachers called the decision welcome but emphasized the need to verify that the pay uplift is genuinely fully funded. Pepe Di’Iasio of the Association of School and College Leaders expressed pleasure at the announcement but warned that budgetary pressures remain intense. Matt Wrack of the NASUWT union welcomed the news but stressed the need for sustainable, long-term funding.
The development comes after an indicative ballot in April showed 90% of voting teachers were prepared to take industrial action over pay and funding, with a turnout of 48%. A formal ballot was scheduled to run from October 3 to December 15, which could have led to strikes in early 2027.
The NEU national executive is scheduled to meet on September 24 to decide whether to cancel the formal ballot in light of the government’s updated offer. A spokesperson for Education Secretary Lucy Powell stated that the government is confident schools can now meet the award costs at a national level, reaffirming that teacher recruitment, retention, and wellbeing remain top priorities.
But will this cover inflation too? Schools are still running on empty according to the NEU boss himself.
Finally, some realism from the government. Paying for the raise directly is the only fair way to do this.