(Bonus) Thursday thoughts: Who wins and who loses from today’s teacher pay settlement?

Jonathan Simons
4 min readJul 13, 2023

In January, I speculated as to how the strikes might end. Today, we have an answer, and it’s close to option 2 from January – DfE has paid more. The settlement gives teachers 6.5% from September 2023 (up from the 4.5% offer in March, pre strikes). Schools are now expected to pay 3.5% of this offer – down from 4% – and DfE are funding the remaining 3% through reprioritisation of underspends at departmental level, which is boring wonky talk for money held at DfE level that didn’t get spent – most likely to be NTP underspend.

This deal lasts for two years – 23–24 and 24–25. From Sep 2025, technically, the 3% is unfunded, though that’s into the next Spending Review period, and it’s implausible that any government (and this is after the election) doesn’t pick up that tab, at least in part, because it’s all part of what (more wonkery) then becomes the “baseline” of school costs.

5 quick reflections on what today’s deal means:

A good deal for teachers. First and foremost, this is the highest pay award for 30 years for teachers. They’ve lost the £1000 they were promised for 22–23 if they’d have taken the 4.5%, but overall they’re much better off (because the higher pay gets paid every year, as opposed to a one off sum)

…and a pretty good deal for schools. Schools are assumed to be able to cover 3.5% of this bill – down from 4% in March. Some will still struggle, especially smaller ones, but that figure has been floating around for a while now and hopefully it has percolated into SLT and Governor budget setting processes so it shouldn’t be a shock. There’s a small but welcome announcement of £40m hardship for schools in the toughest situations (though I’d want to see the details on what schools need to do and promise in order to access that – these generous offers are often less than they first appear, to avoid the moral hazard of schools being incentivised to run their finances badly). A multi year deal of this top up means that when the STRB makes a recommendation for 2024, schools oughtn’t be left hanging this time next year to know both what their paybill costs will be, and what their revenue is to pay for it, for Sep 2024.

Strikes….work? It’s hard to avoid the conclusion that absent the unprecedented action by all school unions, we wouldn’t have got to this position. In particular, I suspect ASCL and NAHT rowing in behind NEU increased the pressure for a deal. Will this lead to a resurgence of strikes later down the line? A lot of that will depend on judgements as to how close ASCL in particular would have got to their ballot threshold, and whether that could be once again mobilised in future strikes. But chalk one up for collective action, here.

DfE will be pleased. Obviously, first and foremost, because the strikes are off. The joint statement, and immediate confirmation that the strikes were off, is also a hell of a thing to have got – with some pretty good wording from DfE’s perspective that the unions signed up to. I imagine that took an awful lot of negotiating. DfE will also be pleased that they have shown the sector that they recognise their concerns, and were able to do a deal at governnent level with No10 and HMT. The content of the deal is also better than it could have been, in that DfE is funding 3%, not the full 6.5% – and is doing so via underspends rather than any front line service cuts (a promise which has been made and which the unions accept). My guess is, as above, that it’s funded from NTP underspend. And DfE will also be pleased they don’t have to this all again next year. So win win win, really, for schools, teachers and govt.

What happens in the future? Not all is rosy. Funding recurrent expenditure through one off reallocations of underspend is terrible, terrible financial management. And that’s not just for schools. The NHS deal is apparently funded in part through increases in visa fees and health surcharges. This is silly – the equivalent of digging around the sofa for some spare coins to pay a gas bill. It’s also silly because of course it’s not funded that way because that’s not how government funding works. But it shows the silliness of needing to find plausible amounts which can make it seem funded. The truth is that the next spending review – covering financial years 25/26, 26/27, and 27/28 – now has a series of additional cost pressures in them which are technically unfunded. The DfE 3% is £900m a year. That has to now be found by DfE and HMT in the next SR. It’s not a stupid amount of money that breaks the bank, but neither is it a rounding error. And it’s not a million miles off the total sum which Labour thinks it can raise through VAT on private school fees.

So a good day for everyone today. But a lot of harder decisions punted to the other side of the election – again.