Teachers could be faced with “severe” real-terms pay cuts as a result of higher rates of inflation, financial experts have warned.
The Institute for Fiscal Studies (IFS) has said that the chancellor, Rishi Sunak, will need to either impose real-terms pay cuts on public sector jobs, including teaching, cut planned spending in other areas or increase borrowing.
The IFS today released new analysis ahead of the chancellor’s Spring Statement this month, warning that “heightened uncertainty” and the “spectre of inflation” hang over the announcement.
One teachers’ union, reacting to the IFS report, said that teachers and other educators cannot afford to have “any more pay cuts”.
The IFS analysis says: “The chancellor’s Spring Statement, due on 23 March, was not supposed to be a major fiscal event. But rapidly rising inflation and the onset of the conflict in Ukraine might force the chancellor to produce more than just a new set of economic and fiscal forecasts.”
Teachers ‘cannot afford more pay cuts’
It warns that households and public services will be squeezed by higher inflation; the economy could be rocked by heightened uncertainty; and public finances could be “buffeted” by the fallout from the war in Ukraine.
The analysis says that higher inflation will wipe out at least a quarter of the real-terms increases to public service spending announced in October.
As part of its analysis, the IFS sets out a range of scenarios that the chancellor might have to decide on.
In one scenario, the IFS warns that the chancellor will have to either impose “severe real pay cuts” on teachers and other public sector workers or add “even more” to public borrowing.
It adds that the hit to teacher pay would “come on top of real pay cuts” of between 5 and 10 per cent for the teaching profession over the past decade.
The IFS also states that higher inflation would “wipe out at least a quarter of the real-terms increases to public service spending announced back in October”.
While final decisions on public sector pay will not be made until later this year, Mr Sunak should give an indication of overall pay policy in the Spring Statement.
In the report, the IFS says that “given the inflation outlook, and the budget increases planned for departments”, cash increases would “seem a certainty”.
However, it adds that below-inflation pay awards seem “highly likely”.
“For schools, a 5 per cent nominal pay award would cost £1.75 billion, take up almost half of the planned budget increase and, again, still imply a real wage cut for teachers and other support staff.”
Dr Mary Bousted, joint general secretary of the NEU teaching union, said: “The IFS research and the worsening inflation outlook reinforce the NEU’s call for the restoration of the pay losses imposed on teachers and other educators since 2010.”
She added that pay losses had “already resulted in major recruitment and retention problems”, and “cuts to educators’ living standards”.
“Teachers and other educators are key workers whose contribution to the pandemic response has been immense. The government must protect their living standards instead of continuing to cut their pay,” said Dr Bousted.
Last week, five unions demanded an uplift in teacher pay to reverse the “devastating” impact of pay “attacks” on the profession, warning that teacher supply “teeters on the brink”.
Last Thursday, the Department for Education set out a plan in its submission to the School Teachers’ Review Body (STRB) for a £30,000 teacher starting salary by 2023.
Dr Bousted said: “The real-terms growth rate in Department for Education funding announced for the Spending Review period (2022-23 to 2024-25) is 2 per cent a year. This was already a slowing from the previous three-year period.”
“Teachers and other educators are already in the midst of a cost-of-living crisis even before the impact of higher inflation. They can’t afford any more pay cuts, but the government can afford to invest in our public services, including education.”
