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Written by Wesleyan

What does the Autumn budget mean for teachers?

financial planning
teaching and education
3 min read

With a difficult balancing act to strike between supporting public services and filling the hole in the nation’s finances, Rishi Sunak has today laid out his Budget for a post-Covid economy against a backdrop of rising inflation and concern over the cost of living. 

In this short overview, we take a look at the Budget’s key announcements and what they could mean for you, as well as the profession as a whole. 

Earnings

The National Living Wage will rise from £8.91 per hour to £9.50 from April next year, while the pay freeze imposed on public sector workers last November will be lifted.

How much public sector pay packets will increase will be based on recommendations from independent pay review bodies, though it is thought to be unlikely to keep pace with inflation, which is forecast at 4% for the next year.

Simon Rake, head of the teachers division at the Wesleyan Group, welcomed the news: “Simon Rake, head of the teachers division at the Wesleyan Group, the specialist financial services mutual for teachers, said: “The lifting of the public sector pay freeze is hugely welcome.

“Professionals like teachers have served the public tirelessly throughout the pandemic and it is only right that they don’t get left behind – particularly after decades of real-term pay cuts.

“It remains to be seen, however, exactly how much of an increase they will get and whether this will be an actual, real-term boost that beats inflation. 

“With the country facing rising costs of living, anything less would be a real kick in the teeth, and likely only make professions like teaching less attractive, ultimately making it more difficult to attract and retain the educators we need.”

Education

The Chancellor announced a £4.7 billion package for education, with funding per pupil to be restored to 2010 levels over the next three years, including the £560 million Multiply scheme, designed to improve adult numeracy.

But there will be questions marks over how the Multiply initiative will be delivered, given the existing pressures on the teaching profession.

Tax

There was disappointment that the Annual Allowance was frozen at £40,000 and the Lifetime Allowance at just over £1 million, which will have particular implications for senior educators approaching the end of their careers.

Parminder Gill, Advice Policy Consultant at Wesleyan Group, said: “This is clearly a step in the wrong direction.

“The Lifetime Allowance has already been reduced by more than £800,000 since 2010 and freezing the limit, coupled with the rising inflation, means more hard-working individuals – including those in key public services – are going to fall into HMRC’s scopes and could face extra tax charges.”

One of the Budget’s headline announcements was the new Health and Social Care Levy, designed to raise £12 billion a year to tackle the backlog in the NHS and address shortages in the social care sector.

It means a 1.25% rise in National Insurance from April 2022, paid by employers and employees, and a 1.25% increase in tax on income from share dividends.

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