An independent pay review body has recommended that teachers should receive a 6.5% pay increase this year.
As yet, there has been no word from the government on whether this recommendation will be approved and, if so, whether such a pay rise would be fully funded.
With academy trusts facing an uncertain financial outlook and cash reserves rapidly shrinking, it is hard to see how anything other than a centrally funded pay rise would work.
From our work with trusts, we have seen increases in their cash reserves over the last two years. This may, on the face of it, seem encouraging and suggest that they could potentially swallow the cost of a pay rise.
However, these increases in reserves were due to some very unusual circumstances brought about by school closures during the pandemic, and trusts are forecasting these excess reserves will disappear very quickly.
Indeed, the Kreston Academies Benchmark Report 2023 outlined a stark outlook, with cash reserves built up over the last few years already being squeezed thanks to high levels of inflation, the increased costs of energy bills, and the pressure to increase teachers’ wages within existing budgets.
As many as 88% of schools surveyed admitted to expecting cash reserves to further decline over the next three years. It may be unrealistic then to expect trusts to fund a potential 6.5% pay increase themselves.
While the recommendation has not yet been officially released, the Sunday Times reports that it makes the case that the education sector needs a larger pay increase in 2023-24 than other areas of the public sector to keep it on a sustainable footing.
The 6.5% increase it recommends is more than two percentage points higher than the latest offer from the Department of Education (DfE) and the pay rise would apply to the current financial year.
Teaching unions, the NEU, ASCL, NAHT, and NASUWT, which have rejected the government’s offer of a 4.5% pay rise plus a £1,000 bonus, have said they would welcome a 6.5% rise but some said it would not make up for the poor pay awards seen over recent years.
One of the reasons behind the unions rejecting the government’s offer was that although the government claims it is “fully-funded”, the pay rise would only partly be matched by an increase in school funding. This would mean the £1,000 bonus would be paid for by the government but schools would only receive enough extra funding to cover a 0.5% pay rise, with the rest to be found within existing budgets.
To this, General Secretary of the NEU, Keven Courtney said: “The majority of schools will not be able to afford even a 4.5% pay rise without making cuts to provision.”
It’s been widely acknowledged that the pandemic led to a huge widening of the gap between advantaged and disadvantaged students. There was also a significant impact on mental health across the board.
The uncertainty around the pay rise and whether or not it will be funded has meant that trusts are struggling to produce meaningful cash forecasts. Payroll is a trust's largest individual cost and making decisions with regards to adding or reducing staff numbers cannot be made overnight, especially while finances are so up in the air as we await a decision on pay rises.
It is imperative that trusts receive financial certainty soon to allow them to make the right appointments to support their students and avoid a situation where young people are let down again.
Of course, it is not just the students themselves who miss out through a disrupted education, but, ultimately, it has a detrimental effect on society as a whole in years to come. The ongoing uncertainty is of no benefit to anyone and we can only hope that the situation is resolved swiftly so trusts and teachers can focus on what really matters, the education of our young people.
At Duncan & Toplis, we have a dedicated academies team that has a well-established reputation of working in partnership with academies to support, advise and guide the future of your trust, especially in such challenging times. Get in touch with us to find out how we can help you.