The independent pay review body has reportedly recommended that teachers receive a 6.5 per cent pay increase this year.
As yet there has been no word from the government on whether this recommendation will be approved and, if so, whether this pay rise will be fully funded.
With academy trusts facing an uncertain financial outlook and cash reserves rapidly shrinking, it is hard to see how anything other than a centrally funded pay rise would work.
Will the teacher pay rise be funded?
From our work with trusts, we had seen increases in their cash reserves over the past two years. This may, on the face of it, seem encouraging and suggest that they could potentially swallow the cost of a teacher pay rise.
However, these increases in reserves were due to some very unusual circumstances brought about by school closures during the pandemic, and trusts are forecasting that these excess reserves will disappear very quickly.
Indeed, the Kreston Academies Benchmark Report 2023 outlined a stark outlook, with cash reserves built up over the past few years already being squeezed due to high inflation, the increased cost of energy and the pressure to increase teachers’ wages within existing budgets.
As many as 88 per cent of schools surveyed admitted they expected cash reserves to further decline over the next three years. It may be unrealistic, then, to expect trusts to fund a potential 6.5 per cent pay increase themselves.
While the pay recommendation from the School Teachers’ Review Body has not yet been officially released, reports say it makes the case that the education sector needs a larger pay increase in 2023-24 than other areas of the public sector to keep it on a sustainable footing.
The 6.5 per cent increase that it reportedly recommends is more than two percentage points higher than the latest offer from the Department of Education and the pay rise would apply to the current financial year.
The four major teacher and school leader unions - the NEU, the NASUWT, the NAHT and the Association of School and College Leaders, which have rejected the government’s offer of a 4.5 per cent pay rise plus a £1,000 bonus - have said they would welcome a 6.5 per cent rise, but some said it would still not make up for the poor pay awards over recent years.
One of the reasons why the unions rejected the government’s offer was because although the government claimed it would be “fully funded”, the pay rise would only partly be matched by an increase in school funding.
This would mean the £1,000 bonus would be paid for by the government but schools would only receive enough extra funding to cover a 0.5 per cent pay rise, with the rest to be found within existing budgets.
In response to this, Kevin Courtney, joint general secretary of the NEU, said: “The majority of schools will not be able to afford even a 4.5 per cent pay rise without making cuts to provision.”
The impact of financial uncertainty
It’s been widely acknowledged that the pandemic led to a huge widening of the gap between advantaged and disadvantaged students. There was also a significant impact on mental health across the board.
The uncertainty around the teacher pay rise and whether or not it will be funded has meant that trusts are struggling to produce meaningful cash forecasts.
Payroll is a trust’s largest individual cost and decisions with regards to adding or reducing staff numbers cannot be made overnight, especially while finances are up in the air as we await a decision on pay rises.
It is imperative that trusts receive financial certainty soon to allow them to make the right appointments to support their students and avoid a situation where young people are let down again.
Of course, it is not just the students themselves who miss out through a disrupted education. Ultimately, it has a detrimental effect on society as a whole in years to come.
The ongoing uncertainty is of no benefit to anyone and we can only hope that the situation is resolved swiftly so trusts and teachers can focus on what really matters: the education of our young people.
Rachel Barrett is head of academies at accounting firm Duncan & Toplis
