Education Secretary Lucy Powell has reversed Labour's previous decision to make schools partly self-fund a teacher pay rise, agreeing instead to fully fund the increase after the National Education Union (NEU) threatened strike action. The union, which represents 500,000 members, had warned it would ballot for walk-outs this autumn if schools were left to find around £460 million from their own budgets to cover the award, with action expected after Christmas. The U-turn averts what could have been widespread school disruption and marks a shift in the government's approach to public sector pay disputes.

The pay rise is set at 3.5 per cent this year and 3 per cent next year; previously schools were expected to cover roughly half of this from existing budgets. In a letter to NEU general secretary Daniel Kebede, Powell said savings of around £500 million from reduced employer pension contributions under the Local Government Pension Scheme would be made available to schools and would not be clawed back, meaning the pay award should now be fully funded nationally. Kebede welcomed the move as "a significant step" and "a welcome return to reality," while the union's executive is due to discuss its formal response on 24 September, having previously planned to open a strike ballot within two-and-a-half weeks.