Earlier this week, the Secretary of State wrote to the National Education Union(NEU)  about funding for the Teachers Pay Settlement. I cannot find the text of the letter on the DfE’s website, but the NEU helpfully stated that:

The NEU has secured through negotiations with the Secretary of State for Education a fully funded pay increase for all teachers throughout England. This is a significant step. In a letter to the General Secretary of the NEU Lucy Powell outlined her proposals for funding alongside a willingness to address issues around accountability, workload, and well-being. NEU secures from Government full funding for teacher pay offer | National Education Union

Since then, doubts have been cast upon whether there is enough money for a ‘fully funded’ pay rise for all teachers. Given that the NEU was considering industrial action over pay, this statement looked like a real win for the Union.

However, this announcement was never likely to create produce a ‘fully funded’ pay increase because of the manner in which the National Funding Formula for schools operates. Schools have different mixes of staff salaries, some have many inexperienced teachers near the bottom of the main scale, whereas other schools have many long-serving teachers at the top of the Upper Pay Spine. Schools also differ in how they reward additional activities with Teaching and Learning responsibility points (TLRs). The Formula cannot take these differences into account.

Asa result, some schools would be more than fully funded and other left still needing to find the rest of the pay award.

Subsequently, it seems that the DfE assumed that the funding for the pay award will come for the saving schools experience as a result of the reduction in the employer’s contribution to the non-teaching staff pension scheme: the LGPS. That seems like wishful thinking to many commentators, including myself.

First there are a number of LGPS Pools, with different outcomes, and hence different rates of employer contribution. As a result, a school with a high percentage of staff at the top of the Upper Pay Spine, few support staff and located in an LGPS fund with one of the higher contribution rates will fare far less well  from this announcement than a school with the opposite profile.

Also, making an announcement in September mean that every school budget is already set, and the only spare cash is in any ‘contingency’ line on the budget. The DfE should know that fact. As a result, this announcement looks like either something of a face-saving act or another of the Labour government’s gross miscalculations. Either way, it seems likely many schools, if not most, will have given only a faint cheer on hearing the announcement, if they managed to raise a cheer at all.

I am told that the DfE clawed back the savings from reductions in employers’ contributions to the Teachers Pension Scheme. Unlike LGPS, where there are real schemes, with investments than can go up and down, the TPS, like the Civil Service Pension Fund, doesn’t actually exist as a fund, but is held by The Treasury as a notional fund.