Government Announces Funded 5.5% Pay Increase for Teachers

Teachers will be balloted on the offer but teaching unions have reacted positively to the news, which suggests that further strike action is unlikely.

Most schools have budgeted for a 3% increase with effect from September 2024.  However, the government has committed to fully funding this increase. An additional £1.2 billion will be allocated in the financial year 2024-25 to support these costs.

This funding includes:

• £945 million for mainstream schools
• £140 million for high needs provisions
• £11 million for centrally employed teachers, all delivered through the new Core Schools Budget Grant (CSBG).

The CSBG covers the financial year 2024-25, addressing the portion of the pay award from September 2024 to March 2025. Discussions on budgets for the 2025-26 financial year, which will cover the remainder of the academic year’s costs, are ongoing. Additionally, £97 million will be provided for schools delivering post-16 education (£63 million) and early years provision (£34 million).

To assist schools in understanding their specific allocations, mainstream and high needs rates have been published alongside a calculator tool for estimating grant funding.

The government has acknowledged the challenges and delays faced during this pay process and is committed to improving future timelines. Along with this pay award the government has reiterated its commitment to working collaboratively with educators to address the financial constraints and ensure the best outcomes for children and young people.

Additional Policy Changes Affecting Private Schools

In addition to the above, the government also confirmed that with effect from 1 January 2025,  private school fees will be subject to VAT at the standard rate of 20%.  Importantly, any fees paid from 29 July 2024 which relate to a term starting in January 2025 or later will also be subject to VAT.  This means that private schools will no longer be able to accept advance payments of school fees in the hope that VAT would not be payable on them.

The Labour party had previously pledged that the money raised will be used to recruit 6,500 new teachers.

The government has published a technical note detailing the design, scope, and expected impact of applying a 20% VAT to private school fees across the UK and removing the business rates charitable relief for private schools in England. This technical note aims to provide clarity to affected schools and families. Read more

Draft legislation on the VAT policy change, accompanied by an explanatory note, has also been released. The government invites comments from interested stakeholders on the issues raised in the technical note and the draft legislation to ensure that these measures align with the government’s policy objectives.

For more information please do get in touch with Rachel Blythe or another of our Expert Education Law Specialists.