Mainstream schools can afford a 2.7 per cent pay rise over the next two years under current funding plans, Department for Education modelling shows.
The rise will come from £1 billion of “financial headroom” that a says schools will have in 2026-27 and 2027-28.
This headroom, it says, equates to an overall pay increase of 2.7 per cent over that period if awards are affordable within each year and applied to all teachers.
The increase comes on top of pay drift, which is estimated to increase average teacher pay by a further 0.5 per cent over the two years.
The DfE has previously proposed in its written evidence to the School Teachers’ Review Body (STRB) that teachers’ pay should rise by 6.5 per cent across the three academic years from 2026-27 to 2028-29.
The department says that a 6.5 per cent award over three years, combined with increases from the previous two pay rounds, would amount to a real-terms rise of almost 4 per cent across the Parliament, based on Office for Budget Responsibility consumer price inflation forecasts.
But Daniel Kebede, general secretary of the NEU teaching union, said: “Teacher pay has already been cut by 23 per cent against [Retail Price Index] inflation since 2010, with devastating consequences for teacher living standards, recruitment and retention.
“The government must invest in the urgent and significant pay correction that is needed to value, recruit and retain teachers properly.”
£1bn headroom, but little next year
The DfE calculates that mainstream school funding will rise by 3.7 per cent across 2026-27 and 2027-28, while costs, excluding undecided pay awards, will increase by 1.9 per cent.
The difference leaves a financial headroom of 1.8 per cent, equivalent to around £1 billion nationally.
However, the DfE states that only around £250 million of that headroom applies in 2026-27, making that year “considerably more challenging” financially than 2027-28.
This headroom would be reduced by about 0.6 percentage points, or approximately £330 million, for every 1 percentage point increase in pay, it warns.
Every 1 percentage point increase in teachers’ pay would also increase costs in the following financial year by 0.2 percentage points or about £120 million, the DfE calculates.
Greater headroom in 2027-28 could allow for a higher award in that year, but any larger increase would reduce the headroom in 2028-29, the DfE says.
To support the affordability of a 6.5 per cent pay increase over three years, schools and trusts will need to “realise and sustain better value from existing spending”, the DfE adds. It describes this as a “manageable ask”.
DfE cannot ‘ask schools to do more with less’
Mr Kebede said: “The government cannot continue to ask schools to do more with less, especially when the government expects mainstream schools to take greater responsibility for SEND provision.
“To call this a ‘manageable ask’ is not only ludicrous but insulting.”
The modelling excludes any undecided future pay awards and is based on projected cost pressures and confirmed funding increases for the two financial years.
It also assumes that levels of provision are maintained and does not take account of individual school and trust decisions, such as drawing on reserves or restructuring staffing.
Additional special educational needs and disabilities costs in mainstream costs will total around £880 million across 2026-27 and 2027-28 under current projections, the DfE says.
The modelling also does not include the £1.6 billion Inclusive Mainstream Fund announced by the DfE in the .
This funding, equivalent to just over £500 million a year over three years, is excluded from the headroom calculations on the basis that it is intended for additional SEND provision rather than existing provision.
The DfE acknowledges that a significant proportion of that funding may be spent on the workforce and could help offset pay costs, but says it has not factored this into its affordability assessment.
However, it adds that it is “aware that many schools will choose to spend this additional funding on their workforce and this may support schools to manage their overall costs”.
“We encourage schools to consider all their funding in the round to respond to the challenge of promoting mainstream inclusion and to respond to wider cost pressures,” it says.
DfE expects school costs to fall
Mainstream schools’ costs are estimated to be increasing by 5.7 per cent in 2025-26, meaning “cost and funding increases net out one another this year”, the DfE says.
But by 2028-29, these costs are projected to fall by 0.3 per cent, it says.
The DfE has asked the STRB to provide an indicative teacher pay award recommendation for 2028-29. However, the DfE says it has insufficient data on funding and costs to calculate headroom for that year.
Uncertainty around SEND reforms and future funding allocations is cited as the reason why it cannot provide an accurate assessment for 2028-29.
Figures provided by the DfE represent national averages and do not account for individual schools’ financial positions, as these will vary.
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