Additional funding for 2026/27 teacher pay award

Following the launch of NASUWT’s Fix Our Future, Fund Education campaign, in which we have made clear that teacher pay awards must be fully funded, the Secretary of State for Education has today written to the recognised teacher and school leader unions with an important update.
 
The government has announced that it will provide up to £500 million of additional funding for 2026/27, meaning schools will no longer be expected to fund any part of the teacher pay award from their existing budgets.
 
This is a significant change in approach and addresses an issue NASUWT has been raising with the government for months.
 
We warned that expecting schools to dip into already stretched budgets to part-fund the pay award would inevitably lead to further pressure on staffing, resources and provision for pupils, with children and young people ultimately paying the price.
 
NASUWT has consistently argued that savings arising from reductions in employers’ pension contributions in the public sector should be reinvested in education to improve the funding position of schools, rather than being retained by the Treasury. We therefore welcome the decision to use these savings, at least in part, to provide this additional £500 million.
 
This funding will improve the situation regarding school budgets although we will need to asses this in full. However, it does not resolve the much wider and longer-term funding challenges facing education. Nor does it address the funding challenges for the pay award for the following year (2027/28).
 
Schools need a sustainable injection of additional funding if they are to meet the increasingly complex needs of children and young people, recruit and retain the teachers and support staff they need, protect educational provision and respond to the emerging demands of twenty-first-century education.
 
This announcement must therefore be the start, rather than the end, of a wider commitment to properly funding education.
 
Through our Fix Our Future, Fund Education campaign, NASUWT will continue to press for long-term pay restoration and for education funding to be increased to a level that enables schools and colleges to meet the needs of pupils and deliver the high-quality education they deserve.

Dedicated schools grant 2026/27 published on 17 December 2025

Schools block national funding formula - key elements

  • Average per pupil funding in the national funding formula (NFF) rises to £6,771, compared with £6,608 per pupil in 2025/26.

  • No structural changes - in terms of the factors used in the formula.

  • Through the minimum per pupil funding levels, every primary school will attract at least £5,115 per pupil and at least £6,640 per pupil for every secondary school.

  • A 2.11% increase has been applied to the basic entitlement, free school meals (FSM) values and the lump sum factors.

  • A 2.11% increase has also been applied to the Income Deprivation Affecting Children Index (IDACI), low prior attainment (LPA), English as an additional language (EAL), mobility, sparsity and split sites factors.

  • Pupil premium (PP) rates for 2026/27 will increase by 2.23% - the same eligibility criteria will apply as in previous years. The Department for Education (DfE) is looking at better ways to identify who should be eligible for PP, looking at parental income rather than the current system. We will be engaged with and part of the consultation process in 2026 for this.

Central schools services block - key elements

  • Total provisional funding for ongoing responsibilities is £379 million in 2026/27.

  • Funding for historical commitments will continue to reduce by 20%, compared to the previous year’s baseline.

High needs block

The high needs NFF is suspended for 2026/27 - there will be a rollover using the 2025/26 formula with the pay grants and employer national insurance contribution (NIC) grants rolled in.

In 2026/27, local authorities’ (LAs’) high needs allocations will be based on their 2025/26 allocations. This means that the total funding for high needs will remain at £12bn nationally in 2026/27.

The Government will publish the Schools White Paper in the new year, confirming plans for reform of the SEND system.

The White Paper will set out further details on the investment provided for SEND reform at Spending Review 2025, on top of the dedicated schools grant (DSG) allocations published today, for schools and LAs.

The DfE is aware that many LAs will be setting deficit budgets in 2026/27 - the LA deficits will be addressed in the final local government settlement in the spring of 2026.

The current LA statutory override facility will come to an end in 2028. This is separate from the extra money.

LA statutory override

The Government announced in June 2025 that the LA statutory override facility has been extended to the end of the 2027/28 financial year.

The Government recognises that the size of deficits that some councils may accrue while the statutory override is in place may not be manageable with local resources alone, saying that it will ‘bring forward arrangements to assist with them as part of broader SEND reform plans.’

The Government goes on to say that ‘whilst we do not expect local authorities to plan based on having to meet deficits in full, any future support will not be unlimited. Councils must continue to work to keep deficits as low as possible.’

The support for LAs with deficits is likely to be announced in February 2026 as part of the final local government finance settlement for 2026/27.

Early years block

The DfE, on average nationally, is increasing the three- and four-year-old hourly funding rate by 4.95%, the two-year-old hourly rate by 4.36%, and the nine-month to two-year-old hourly rate by 4.28%.

There has also been a 15% increase in the early years pupil premium. Further details about the early years funding rates can be accessed at Early years funding: 2026 to 2027.

Early years block total spend will be £9.5bn in 2026 to 2027, an increase of £1bn, as a result of:

  • full-year funding for expanded entitlement;

  • above-inflation increase to the funding rate, as a result of the 2026 National Living Wage rate and the increases in workforce costs faced since April 2025 (employer national insurance contributions); and

  • funding being moved to termly funding based on termly data collection rather than the existing annual funding. As a result, there is additional funding to adjust for this transition for 2026/27. There are, therefore, two figures produced for 2026/27. These will merge going forward.

Underspends in any dedicated schools grant area

Confirmation that none of the four DSG areas (school block, central schools services block, high needs block or early years) are subject to ring-fencing for the purposes of any underspends at LA level.

Any underspend goes to any deficits. Therefore, if, for example, the EY block is underspent, that goes to any HNB deficit.

16-19 funding formula review

The 16-19 formula was first introduced for 2013/14 allocations.

The post-16 Education and Skills White Paper announcement on 20 October 2025 states, ‘We [the Government] will undertake a 16 to 19 funding formula review to maximise the impact of this funding, making sure it goes as far as possible towards achieving our objectives.’

The new formula will:

  • support courses of highest value for young people and the economy, i.e. courses that provide valuable skills effectively; and

  • simplify the formula.

Planned timetable for consultation on the 16-19 funding formula review:

  • Public consultation on proposals, early 2026.

  • Government response and publication of new approach, summer 2026.

  • Implementation in allocations for the 2027/28 academic year.

Free school meals

On 5 June 2025, the Government announced the expansion of free school meals (FSM) to all children in households in receipt of universal credit from September 2026. Currently, this is a £7,400 threshold.

There will be a decoupling of FSM from other benefits, including pupil premium (PP), so that the FSM expansion will only apply to the meals themselves, not the other benefits.

PP and ‘related funding’ are to be ‘reviewed’ in the longer term.

Pupil premium 2026/27

PP funding rates for 2026/27 are increasing by 2.23%, in line with the gross domestic product GDP (gross domestic product) deflator measure of inflation.

Further information

Below are links to the key documents relating to these announcements.

The Written Ministerial Statement on the allocations: 
Education Funding - Written statement by Minister of State for School Standards

The DSG allocations, technical note (to explain how the allocations have been calculated) and conditions of grant: 
Dedicated schools grant (DSG): 2026 to 2027

The high needs funding operational guidance for 2026/27: 
High needs funding arrangements: 2026 to 2027

The DfE has also updated the previously published schools operational guidance for 2026/27 to reference the high needs allocations published on 17 December 2025: 
Schools operational guide: 2026 to 2027

Likewise, it has updated the 2026/27 NFF policy document to include sections on high needs funding: 
National funding formula for schools and high needs from 2025

Finally, the PP rates for 2026/27: 
Pupil premium: overview

 


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