Labour shakes magic money tree again and finds another £500m to fully fund teachers' 3.5pc pay rise to appease union and avert walk-outs

See more Daily Mail on Google - save us as a Preferred Source Published: 11:42 EDT, 16 September 2026 | Updated: 12:14 EDT, 16 September 2026 Lucy Powell has caved in to union threats of strikes with a last-minute U-turn to provide more money for teacher pay rises.The Education Secretary has backtracked on a previous Labour decision not to fully fund the increase, which is 3.5 per cent this year and 3 per cent next year.Previously, schools had been expected to fund roughly half of the rise through their existing budgets – with the rest coming from additional government funding.However, the National Education Union (NEU), which has 500,000 members, said in the summer it would hold a ballot for strikes this autumn if the Government continued with its plan.The NEU, Britain's largest teaching union, previously estimated schools would have to find about £460million from their budgets.Walk-outs had been expected to take place after Christmas.But in a letter to NEU general secretary Daniel Kebede, Ms Powell today confirmed schools can use savings from lower pension contributions to fund the pay rise this year, with an estimated £500million to be made available.The NEU said this amounts to 'a fully funded pay increase for all teachers throughout England', hailing it as 'a significant step'. Lucy Powell has caved in to union threats of strikes with a last-minute U-turn to provide more money for teacher pay rises (pictured: NEU General Secretary Daniel Kebede)Ms Powell's letter said a 4.9 percentage point reduction in what employers are expected to contribute to the local government pension scheme will deliver 'significant savings' on the pay bill for support staff.The letter said: 'We can confirm this reduction in costs will not be clawed back and as such, we are confident that schools will be able to cover the costs of the teacher pay award, at a national level.'It added: 'Given the material change to the affordability position, I would ask that the NEU revisits its proposed ballot of members planned for October and moves away from strike action.' Mr Kebede responded today: 'Finally, we have a government that accepts the reality that any teacher pay award must be fully funded.'Plugging the £460 million black hole in school budgets signals a welcome return to reality, and a message of hope for the entire school community.'He said the 'significant ground conceded by government' was 'a consequence of NEU members' 'willingness to take a stand'.'Schools have been running on empty for far too long,' he added.'Leaders simply could not afford to fund the pay award as set out by the previous Education Secretary. The new administration has accepted that it is wrong to force schools to make cuts to education just to make ends meet.'He added: 'We hope to work with this government to ensure that education is truly valued in this country. We hope today marks an important turning point, and one we as a union will aim to build from. We must make austerity in the classroom a thing of the past.'The NEU was due to hold a formal strike ballot which would open in two-and-a-half weeks.The union's executive now plans to discuss its response to Ms Powell's letter on September 24.Matt Wrack, general secretary of the NASUWT, another teaching union, said: 'Finally the government has seen sense and started to address the issue we have been raising for months around the funding of the teachers’ pay award.'We warned that expecting schools to dip into their budgets to part-fund the pay award would only lead to further cuts to staffing, resources and provision for pupils, with children’s education ultimately paying the price.'Announcing the 3.5 per cent rise in July, the government said 1.8 per cent was expected to come from schools' existing budgets.