The Government has changed course over funding for teachers' pay in England after the country's largest education union prepared to ballot members for strike action, with schools now expected to be able to meet the full cost of the pay award without making the previously required savings from existing budgets.
Education Secretary Lucy Powell confirmed the change in a letter to the National Education Union (NEU) on Wednesday, following weeks of pressure over the funding of a 3.5% teacher pay rise from September 2026.
Under the settlement announced in July, teachers and school leaders were awarded a 3.5% increase from September 2026 followed by a further 3% from September 2027. However, the Government said schools would be expected to find the first 1% of each pay award through efficiencies in their existing budgets.
The NEU estimated that the arrangement left a £460 million hole in school budgets and had been preparing a formal ballot for industrial action beginning on 3 October.
What has changed?
Powell told the NEU that recent revaluations of the Local Government Pension Scheme would reduce employer contribution rates by 4.9 percentage points, creating significant savings on schools' support-staff pay bills.
Crucially, the Education Secretary confirmed that those savings would not be clawed back. She said ministers were therefore confident schools could cover the costs of the teacher pay award at a national level.
The NEU describes the change as securing a fully funded pay increase and estimates the change addresses a shortfall of around £460 million.
Government had previously told schools to find savings
The move represents a significant change from the funding position announced by the Department for Education on 1 July.
When the Government accepted the School Teachers' Review Body recommendations, it announced £700 million in additional funding for schools in the current financial year, rising to £1.115 billion in 2027-28.
But ministers explicitly said schools would still be expected to find the first 1% of each pay award through efforts to maximise value from their existing budgets.
The NEU opposed that requirement, arguing that schools were already under financial pressure and could be forced to make cuts elsewhere to meet the cost.
Teachers had threatened strike action
An NEU snap poll conducted in July found that 97% of participating teacher members in maintained schools considered it unacceptable that schools would have to make up the funding shortfall. The union said 89% were prepared to take strike action to ensure the award was fully funded.
The NEU executive subsequently reaffirmed plans for a formal ballot of teacher members in maintained schools in England, scheduled to open on 3 October and close on 15 December.
Powell asks union to step back from strike ballot
Following the change in the funding position, Powell has asked the NEU to reconsider the planned ballot.
The union has welcomed the development but has not yet formally cancelled the ballot. Its national executive is expected to meet on 24 September to consider its response.
NEU claims significant victory
NEU general secretary Daniel Kebede described the change as a significant step and said the Government had accepted that teacher pay awards needed to be fully funded.
Kebede attributed the change to pressure from NEU members. That is the union's assessment; the Government's position is that the pension revaluation has materially changed the affordability calculation.
Teachers receiving 3.5% rise
The underlying pay award has not changed. Teachers and leaders in England are receiving a 3.5% increase from September 2026, followed by a further 3% from September 2027.
The dispute has centred on how those increases are funded and whether schools would have to meet part of the cost from existing resources.
Is the strike threat over?
Not yet. The new funding position removes one of the central objections raised by the NEU, but the planned ballot has not formally been withdrawn.
The union's national executive is due to consider the Government's letter on 24 September. Any decision to withdraw or alter the ballot would be a further development.