School leaders have warned that an “unfunded” increase in the teacher pay award announced this week has left them facing budget deficits of tens of thousands of pounds next year.
On Tuesday it was announced that experienced teachers would get a 5 per cent pay rise from September 2022, which is higher than the 3 per cent figure the department had originally proposed in its evidence to the School Teachers’ Review Body (STRB) in March.
But headteachers have warned that the announcement came after academy trust leaders had already set their budgets for next year - and with no additional funding attached to meet the extra costs involved.
One leading headteacher told Tes that the pay award announcement had turned an “already tight” budget surplus at their school into a deficit.
The STRB - which makes recommendations on the pay, professional duties and working time of school teachers in England - said it was “necessary and appropriate” to exceed the government’s proposed pay increase “to address the risks to teacher supply while balancing the needs of affordability”.
But education leaders have questioned how schools will pay teachers the additional cash. Geoff Barton, general secretary of the Association of School and College Leaders, warned there was “no additional money for schools to afford the cost of the award”.
Teacher pay to rise without extra school funding
Mr Barton said this lack of funding for the pay rises would “exacerbate” the “dire financial situation” that schools face, while Paul Whiteman, general secretary of the NAHT school leaders’ union, said it would create “unsustainable” pressure that “could lead to a situation where schools are having to consider cuts to essential services or even redundancies”.
Heads and academy trust leaders say they have generally already set their budgets for next academic year, and many had done so on the basis that the pay rise would be 3 per cent, with any extra being funded by additional resources.
Without any extra funding to cover the bigger pay rises, they will have to cut costs or run a deficit - where spending exceeds income.
Robin Bevan, headteacher at Southend High School for Boys in Essex, said that Tuesday’s announcement had turned an “already tight” budget surplus into a deficit.
“Along with every other academy in the country, we had already closed our budgeting cycle for 2022-23 and submitted the budget return to the DfE. Governors have signed it off and did so on the assumption that any teacher pay rise above the government’s STRB submission would be funded,” he said.
Mr Bevan said that rising energy bills and other costs meant his budget was predicted to have a tight surplus of £20,000.
But he said the unfunded pay announcement meant his school would now have to eat into cash it has left over from previous years, leaving it with just one week’s worth of reserves left.
“It’s shockingly bad public policy that will have profound consequences and underlines the devastating lack of political vision for our schools and young people,” Mr Bevan added.
Similarly, Rob McDonough, chief executive of the East Midlands Education Trust (EMET), said his 20 schools were collectively looking to find an extra £615,000 as a result of the pay announcement.
“They will eat into reserves where possible, but this will tip a number of our schools into deficit,” he said, adding that he was “looking closely at the implications”.
Garret Fay, chief executive officer at Insignis Academy Trust, said the trust had initially intended to fund pay rises at its schools centrally, based on the initial proposals from the DfE earlier this year.
But he added that the extra rise proposed earlier this week will mean it cannot do this
“This could push one school into a significant deficit and mean two others have to use reserves” he said.
He said that the pay rise, combined with other factors, meant the trust was looking at re-writing September’s school budgets.
“We are looking at things like rolling back or curtailing capital investments, and a possible hiring freeze”, he said.
Andy Byers, headteacher at Framwellgate School Durham, said it was “completely unacceptable” for the government to make the pay decision without providing additional funding as schools broke up for the summer.
“We set a balanced budget and have calculated that this decision will cost us £70,000 in year one,” he wrote on social media.
The timing of the pay award announcement has at least partly been blamed on the DfE submitting its evidence to the STRB over two weeks later than it was initially asked to.
The STRB has said its report on teacher pay recommendations was supposed to have been delivered to the prime minister and DfE in May, and added that it asked the education secretary to submit evidence by 16 February 2022.
But it added: “The Department for Education subsequently informed us that it would be unable to meet this deadline so it was extended to 4 March for all consultees. Subsequently, this report is being submitted to the secretary of state and prime minister in June 2022.
“Any delay to the process is unfortunate and adds to the concerns of consultees about our reports increasingly being published at the end of the academic year, making timely implementation more challenging.”
Writing for Tes, education secretary James Cleverly said that he knows schools are “feeling the pinch” at the moment.
“This need to pitch the pay rise at a manageable level has been one of the key factors in our decision-making. Thankfully, we fought for and secured a generous school funding settlement at last year’s Spending Review,” he wrote.
“The settlement is heavily frontloaded with £4 billion extra going into schools this year and a total increase of £7 billion over the three years up to 2024-25.”
The additional financial difficulty created by an unfunded pay increase comes at a time when schools are facing an array of monetary pressures.
Energy bills have increased for some schools by 300 per cent in the past year, while building and repair costs and catering prices have also increased because of rising inflation.
Many heads have also exceeded their supply budgets because of high staff absence this year, caused partly by the Covid pandemic.
DfE guidance warns trusts that if a deficit arises, they “must be in a position to know at an early point in the financial cycle, have options available that will allow the academy trust to return to balance and have processes to give assurance that recovery plans are on track”.
“Successive deficits will consume cash, and ultimately could lead to insolvency”, it continues.
