Policy options for a long-term teacher pay and financial incentives strategy

12 July 2023 Jenni French

New NFER analysis reveals the need for a long-term strategy on teacher pay and financial incentives to address the currently intense teacher supply challenge.

The latest NFER research study, funded by Gatsby, suggests that a new long-term strategy is required to improve recruitment and retention of teachers. The research provides a detailed analysis of a range of teacher pay and financial incentive policy options, whilst simultaneously emphasising the non-financial aspects of teaching and recruitment.

The report also suggests that if pay awards in 2024/25 and beyond merely match the anticipated growth in average earnings in the wider labour market then the pressing recruitment and retention challenges are unlikely to be significantly addressed.  

As the recruitment and retention of teachers – particularly specialist teachers in physics and maths – continues to be a significant challenge, this timely report provides yet more evidence of the impact of financial incentives on teacher numbers.

This and other Gatsby supported research has demonstrated various ways in which government could use salary, bursary, and retention payments to increase the number of pupils who are taught by specialist teachers. I hope that the thoughtful recommendations set out in today’s report are given serious consideration.
Jenni French, Head of STEM in Schools at Gatsby

Key findings from the report:

  •  A recommendation by the School Teachers’ Review Body (STRB) for teacher pay to increase by 6.5% in 2023/24 would be a welcome first step for addressing the lost competitiveness in teachers’ pay over the last decade.
  • However, over the longer-term the analysis shows that even a pay award of 6.5% is unlikely to make a highly significant difference to the overall supply picture on its own.
  • Further flattening of the main pay scale – with lower pay points increasing at higher rates than higher points on the pay scale – may be relatively cost effective because it targets resource at teachers who are more responsive to changes in pay. However, pay flattening also has implications for the incentives to progress and the balance of early career and more experienced teachers within the school system.
  • Setting the pay of primary and secondary teachers separately and increasing secondary teacher pay by more than primary teacher pay may also be relatively cost effective, when comparing just the total costs and teacher supply impacts.
  • The end of the current funding for the ‘levelling up premium’ early career payment in 2024/25 gives an opportunity to redesign the policy. NFER analysis suggests that there is a strong case for increasing the funding allocated to early career payments in the next spending review and that payments have higher cost effectiveness when targeted at early career teachers rather than all teachers.

Read the full report here.