England's Teacher Pay Award Will Now Be Fully Funded: What Changed
The UK government has agreed to fully fund the teacher pay award in England.
The National Education Union (NEU) said Education Secretary Lucy Powell confirmed in a letter to the union that the full offer would be funded. The confirmation was reported on 16 September 2026. The Guardian The NEU described the outcome as a significant victory.
The pay deal
The award is a 3.5% increase from September 2026, with a further 3% from September 2027. Powell succeeded Bridget Phillipson as education secretary.
Under the previous funding plan, schools would have had to find almost a third of the increases from existing budgets. The gap was a 1.1% shortfall in government funding. The union said that shortfall made the headline award unaffordable at school level.
The Department for Education announced the 2026 and 2027 awards on 1 July 2026, alongside £700 million in additional funding for schools. Department for Education Ministers have described the awards as part of a cumulative 17% rise since the general election. Reuters
Where the money will come from
The funding will now come from recent revaluations of the local government pension scheme. A revaluation is a regular check of what a pension fund needs to pay future pensions. Powell said those revaluations will cut employer contribution rates, the share schools pay toward staff pensions, by 4.9 percentage points.
NEU general secretary Daniel Kebede said the decision would mean an estimated additional £500m for schools this year.
Separately, the Department will provide £18 million to support eligible public-sector early years settings with costs under the Early Years Teachers' Pay Grant for 2026 to 2027. Department for Education
What happens to the strike vote
The ballot is still live. NEU members were due to vote on strike action over the pay offer, with a national ballot planned for October. A ballot is a formal vote by members on strike action. Powell has asked the union to revisit that plan and move away from strike action. The NEU national executive is yet to decide on the fate of the ballot. The union's published campaign envisages balloting teachers in England over pay and funding between 3 October and 15 December as part of its Save education campaign. NEU
In a snap poll before the summer break, 97% of participating NEU members said it was unacceptable that their school would have to fund the 1.1% shortfall, and 89% said they were prepared to take strike action to ensure the award was fully funded. Earlier Deltapoll polling reported by the NEU found 95% of members believed their school would struggle to afford an unfunded pay rise. NEU
The broader context here is affordability rather than the headline percentage. For school leaders, the dispute was about cash for budgets and employer pension costs, and whether savings from the pension revaluation could be passed to schools without reducing per-pupil funding elsewhere. For the government, full funding removes the immediate trigger for industrial action and tests whether a technical pensions adjustment can settle a pay dispute. The test now is procedural. If the executive suspends or narrows the October ballot, escalation pauses. If it proceeds, ministers will have to defend how the £500m is put into practice, its timing and its distribution at school level.
