The DfE's latest report on schools' costs and pay trends (2023-2025)

Some useful data has recently been published by the DfE on Schools' costs 2023 to 2025  together with the Government evidence to the STRB  for the 24/25 pay award, to support the STRB’s development of their recommendations. These documents will be a useful starting point for your first draft budgets for 24/25.

Some of the highlights include:

• Pupil numbers in state-funded schools are projected to fall by 10% between 2022/23 and 2031/32.
• £900 million of funding has been identified to support schools with the 2023 teachers’ pay award in 2024-25.
• The Office for Budget Responsibility (OBR) forecasts that inflation will continue to ease, averaging 2.1% over academic year 2024/25. But overall costs in 2024-25 are estimated to increase by 1.9 per cent on average by the DfE, excluding the pay awards due for 2024-25.
• Individually, the energy inflation rate for 2024-25 is predicted at 6.2%.
• The DfE suggests that this year it would be appropriate for the pay award to be distributed equally across all pay points on each pay range and across all allowances, without any additional targeting.
• Mainstream academies will receive an additional allocation of TPAG to cover April to August 2025 because their funding cycle follows the academic year – this will represent five-twelfths of academies’ 2024 to 2025 allocations.
• The amount of additional funding for the increase in employer contributions to the Teacher Pensions Scheme will be announced in due course.

The documents make it clear that the difference between the 3.1 per cent increase in funding and the 1.9 per cent increase in costs indicates that schools could increase their spending by a further 1.2 per cent on average, or around £600 million at the national level in 2024-25. This is before accounting for pay awards for both teachers (2024/25) and support staff (2024-25). This estimate will inform the Department’s overall assessment of what pay awards, for both teachers and support staff, might be absorbed within schools’ existing aggregate budgets.

The DfE also points out: “The STRB will be aware that the teacher pay system is set up to reward teachers as they progress through their career, encouraging retention through an annual review that sees teachers moving through the pay points as they develop. Typically, around 40% of the workforce progress in this way each year”. The important point here for budgeting is to estimate the future staff mix, and as staff move through the pay points, costs will increase, meaning teachers that leave cannot necessarily be replaced like for like if costs are to be controlled.

The DfE also state: “it is the department's view that the overall reward package for teachers, the recruitment and retention picture, and the more stable economic context support the return of teacher pay awards to a more sustainable level than the previous two historically high pay awards. The STRB should be mindful that pay awards achieve a careful balance between recognising the vital importance of public sector workers, whilst delivering value for the taxpayer and not increasing the country’s debt further.

How this will translate into the final STRB recommendations later in 2024 we do not know, but it is certainly a different approach to the prior year, where the DfE stated “there is a clear case for the greatest pay awards to be targeted at early career pay points, plus a 3.5% overall teacher pay award for 2023/24 will need to be managed within schools’ existing funding”. Overall for 23/24 the DfE recommended that uplifts for all teachers and leaders were comparable with the rest of the public sector and broader workforces.