FE gets £485m to help match school teacher pay rise

Colleges and training providers will receive £485 million over two years to help match pay rises for school teachers, the Department for Education has announced.

Education secretary Bridget Phillipson confirmed “colleges and other further education providers” would share £120 million in financial year 2026-27 and £365 million in 2027-28 to contribute towards staff pay awards.

However, it is unclear how the department will distribute the funding. In recent years, funding designed to go towards pay awards has been distributed through the 16 to 19 funding formula, which disadvantaged colleges with larger adult education and apprenticeships cohorts.

Updated guidance suggested 16 to 19 national funding rates, T Level rates, the disadvantage rate related to low prior attainment, and the rate supporting students in care and care leavers would be increased, but it doesn’t say by how much.

Providers that receive national insurance contribution grants for non-16 to 19 education delivery and local authorities with centrally employed teachers will see those grants increase. Again, the DfE has not said how the extra funding will be split across the base rate, formula and other grants.

Meanwhile, grants covering teacher pension scheme employer contributions are set to reduce.

The FE funding announcement comes two weeks after the Association of Colleges (AoC), the University and College Union and Unison jointly warned Phillipson that without a “material change” to funding, a “very low pay award, possibly zero” was the limit of affordability for 2026-27.

Their joint letter also flagged the growing pay gap between school and college teachers, which is now estimated to be £12,500 in favour of school teachers. The AoC’s recommendation for staff pay rises in FE colleges is non-binding.

College leaders told FE Week it would be hard to determine pay awards without sight of how the new funding will be allocated.

In a written ministerial statement to Parliament, Phillipson also announced that, from April 2027, employer contributions to the teachers’ pension scheme (TPS) will fall following its March 2024 revaluation. Phillipson confirmed employer contribution grant funding would reduce but remain “proportionate”, and stressed the change would not erode the value of the scheme to current or retired teachers. It means the cost of TPS employer contributions will drop by £3 billion in 2027-28.

David Hughes, chief executive of the AoC, said the two-year funding boost would help fund a “meaningful pay increase” for staff this year.

He added: “Until now, we had feared we were heading towards a potentially very low or even zero pay award recommendation.

“It shows that the government has been listening to the case we made as a sector and recognises that its funding decisions are critical for ensuring colleges can address the cost-of-living crisis their staff face.”

While the DfE has not yet confirmed how pay funding will be allocated, Hughes said he was “pleased that these funds look like they will benefit not only those predominantly teaching 16 to 19-year-olds, but also those with large adult and other cohorts”.

“Today’s very positive announcement does not mean we will forget that, after a decade of neglect from 2010, college pay still lags a long way behind schools and industry,” he added.

“Our ask on that is that we want to work up and agree, with the unions and government, a long-term plan to close the gap which at the moment is in excess of £10,000 per year between school teachers and college lecturers.”

UCU general secretary Jo Grady said: “Colleges will only be blessed to fix the recruitment and retention crisis by closing the pay gap between further education staff and their counterparts in schools.

“This will require a pay award above 3.5 per cent.”

Last year, the Sixth Form Colleges Association (SFCA), which negotiates pay in sixth form colleges, came close to taking the government to court over unequal pay rise funding settlements between schools and colleges. Threats of legal action were dropped following assurances there would be additional funding to cover wage increases.

Bill Watkin, SFCA chief executive, said: “A fundamental principle established following the settlement of our legal action against the government last year was that colleges will be treated in the same way as schools when it comes to supporting the implementation of pay awards.

“Colleges will be pleased that this principle has been upheld for the second consecutive year. This will go a long way towards making it possible to afford a more appropriate pay award for college staff who, through their dedication, skill and impact on young people’s lives, have shown that they deserve nothing less”.

Meanwhile in schools, where the government does set teacher pay levels, ministers have accepted the School Teachers’ Review Body recommendation for a 3.5 per cent pay increase for 2026-27 and a further 3 per cent in 2027-28. Despite the extra funding being provided to schools, they will have to fund around a third of both years’ pay rises themselves, our sister paper Schools Week reports.