Government Allocates Extra £500m to Fully Fund Teacher Pay Rise

By the Editorial Team · Thursday, September 17, 2026

The UK government has allocated an extra £500 million to fully fund a planned teacher pay increase in England, reversing earlier plans that would have required schools to share the cost. This move aims to ease financial pressures on schools and potentially prevent strike action that the National Education Union was preparing to ballot for.

The UK government has announced an additional £500 million in funding to fully cover a planned pay rise for teachers in England, following pressure from the National Education Union (NEU). The move marks a reversal from earlier plans that would have required schools to fund part of the increase from their own budgets.

The pay award includes a 3.5% increase this year and a further 3% rise next year. Initially, the government had expected schools to contribute nearly a third of the cost from existing resources, prompting concern from teachers and unions about the financial strain on school budgets.

The new education secretary, Lucy Powell, communicated the revised funding approach in a letter to the NEU, explaining that savings from a 4.9 percentage point reduction in employer contributions to the local government pension scheme would generate "significant savings" to cover the pay rise. This pension revaluation is estimated to provide around £500 million in additional resources for schools.

Daniel Kebede, general secretary of the NEU, welcomed the government’s change, describing it as a “significant step” that acknowledges the necessity of fully funding any teacher pay award. Kebede emphasized that the union’s readiness to take strike action had been a key factor in prompting the government’s decision. The NEU had planned to ballot its 500,000 members for strike action this autumn if the original funding arrangements remained unchanged.

While the union’s national executive is yet to decide whether to proceed with the strike ballot following the announcement, government officials expressed hope that this development would ease tensions and avert industrial action. A spokesperson for the education secretary reiterated the administration’s commitment to supporting teacher recruitment, retention, and wellbeing, stating that high-quality teaching is essential for improving student outcomes.

Some argue that the government’s reversal reflects a recognition of the strain on school budgets and the importance of maintaining stability in schools. Others suggest the intervention was prompted primarily by the threat of widespread strikes, which could disrupt education nationwide.

The full implications of the funding adjustment remain to be seen, with the NEU set to meet on September 24 to determine their next steps. Meanwhile, schools are expected to benefit from the additional funds, which may help alleviate concerns about balancing budgets amid rising costs and the pay increase.

Overall, the government’s decision to provide full funding for the teacher pay rise marks a notable shift in policy and a response to ongoing negotiations with the teaching profession.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.