Supplementary Submission to the School Teachers Review Body

NATIONAL UNION OF TEACHERS

SUPPLEMENTARY SUBMISSION TO THE SCHOOL TEACHERS’ REVIEW BODY

JUNE 2007

TEACHERS’ PAY 1 SEPTEMBER 2006 AND 1 SEPTEMBER 2007 – THE PAY REVIEW MECHANISM

1. In its 15th Report, the STRB recommended increases in teachers’ pay from 1 September 2006 and 1 September 2007 of 2.5 per cent. In addition the STRB recommended a review mechanism in the event of headline inflation differing significantly from the proposed pay increases. The STRB’s recommendations on pay and the review mechanism were accepted without qualification by the Secretary of State.

1. The review mechanism provided for any of the consultees to ask the STRB to seek a remit from the Secretary of State if the average rate of headline inflation for the period April 2006 to March 2007 fell below 1.75 per cent or exceeded 3.25 per cent. In the event, the average rate of headline inflation (the Retail Prices Index, or RPI) for the period April 2006 to March 2007 was 3.73 per cent, well above the 3.25 per cent ceiling specified in the review mechanism. The latest figures available at the time of writing showed RPI at 4.3 per cent in May 2007.

1. We referred in our first set of evidence to the significant pay losses that teachers have experienced as a result of the high level of inflation. An experienced classroom teacher at UPS3 will see their real pay reduced by more than £1,000 if, as expected, inflation stays close to 4 per cent in September 2007.

1. Following requests for review from the NUT and other consultees, the STRB sought a remit to undertake a review of teachers’ pay. In his letter to the Secretary of State of 18 April 2007, the STRB Chair Bill Cockburn noted the STRB’s view that there was a “prima facie” case for a review. We are pleased that the STRB fulfilled its responsibilities with regard to the review mechanism in place for the current pay period by writing to the Secretary of State to seek a remit to undertake a review of teachers’ pay for the period September 2006 to August 2008.

1. The Secretary of State’s response was to refuse the STRB a separateremit to review the current pay settlement, despite the fact that inflation had been significantly in excess of the 2.5 per cent pay award for the whole of the period since September 2006. The Secretary of State argued that the STRB’s new remit for the next teachers’ pay award should be used to address concerns over the levels of inflation over the current pay award period.

1. The Secretary of State’s response explicitly recognises the concerns over the failure of the current pay levels to meet inflation. It does not prevent the STRB from making recommendations to operate prior to 1 September 2008.

The Inflation Outlook

1. The latest figures available at the time of writing showed inflation as measured by the Retail Prices Index at 4.3 per cent in May 2007. Teachers have continued to lose out in real terms as inflation has stayed significantly higher than the 2.5 per cent pay award of September 2006. Surveys of independent analysts show that teachers face the prospect of inflation remaining significantly above 2.5 per cent when the second stage of the current pay award is implemented in September 2007.

1. We note the argument in the DfES’ evidence to the STRB, that: “Recent increases in inflation have in large part been due to the temporary impact of higher oil prices” (DfES’ evidence, paragraph 24). The DfES’ evidence went on to argue that: “Once the impact of oil (and other goods with volatile prices) is stripped out, underlying or “core” inflation has remained low and close to 2 per cent.”

1. The DfES’ analysis does not appear to be shared by the Governor of the Bank of England Mervyn King. On 12 June the Times reported Mr King’s comments to a meeting of business leaders in Wales. The Governor noted that: “even accounting for the temporary influences, more persistent inflationary pressures have picked up.” He went on to say: “There has been some underlying upward pressure on inflation that is in part hidden by the volatility in domestic energy prices.”

1. The DfES’ view also appears to be at odds with City analysts such as HSBC and Oxford Economics, who have highlighted the possibility that RPI may increase due to oil prices pushing up the cost of petrol.

1. The impact of inflation needs to be measured in terms of how it has affected the costs faced by teachers. It therefore makes no sense to remove from the equation factors which will have had a real impact on teachers’ standard of living.

1. Higher oil prices can feed into inflation in other areas – where, for example, firms raise their prices to reflect higher transport costs. We note in this context that the year-on-year increase in food prices as measured by the RPI was around 5 per cent throughout the period March to May 2007. Furthermore, IDS noted that inflationary risks came from food prices as well as from commodities.

1. This is to say nothing, of course, about the possibility of another period of higher oil prices due to political instability in the Middle East. In this context IDS noted that inflation projections had been revised upwards due to the risk from oil prices.

1. The STRB needs to undertake a credible analysis based on the real costs that teachers have faced, rather than on a selective version that strips out significant elements of those costs.

1. We noted in our May evidence that the Government’s use of the Consumer Prices Index (CPI) for pay purposes is unjustified due to the exclusion from the CPI of significant cost elements such as housing. The most credible measure of inflation for pay bargaining purposes – the RPI – has remained significantly higher than the teachers’ pay award for the whole of the period of that award so far. Furthermore, the latest information suggests that RPI is unlikely to fall significantly for the foreseeable future.

1. We note the comment in the DfES’ evidence, that inflation should be considered: “on the basis of the expectations for the relevant period rather than the current, temporary levels” (DfES’ evidence to STRB, paragraph 71). In this context, it needs to be pointed out that the “expectations” of independent analysts are that inflation will remain above the level of the current pay award for the remainder of the current pay period, September 2006-August 2008.

1. The IDS average of inflation forecasts shows that city analysts expected RPI to remain higher than the teachers’ pay award of 2.5 per cent up to and including August 2008. Should these forecasts prove to be accurate, teachers would see the value of their pay reduced by inflation in every month of the two-year pay settlement for the period September 2006 to August 2008.

1. The latest data from experts in the City and the comments made by the Governor of the Bank of England show that no assumption should be made that inflation will fall quickly and that this fall will be sustained. Furthermore, it would be dangerous to make recommendations on teachers’ pay from September 2008 on the basis of rose-tinted Government claims of a significant decline in inflation.

Conclusion

1. Our consistent view has been that the level of the current pay award is inadequate. Nothing that has happened since has changed our view and indeed the foregoing independent evidence further demonstrates the inadequacy of the current award. Without prejudice therefore to our previous pay claim for 2006, teachers should at the very least be compensated for the pay losses they will have suffered in the period covered by the current pay award.

1. In particular, the 2006 levels of pay should at the very minimum be uprated to ensure that teachers do not suffer a real terms pay cut through levels of salary that do not keep pace with inflation.

1. The latest IDS review of inflation forecasts shows that city analysts had revised upwards their predictions for headline inflation, the RPI. RPI was expected to be 3.8 per cent in September 2007. RPI was expected to remain above 2.5 per cent for the remainder of the current pay award period, through to August 2008.

1. This means that when teachers receive their 2.5 per cent increase in September 2007 inflation is still likely to be close to 4 per cent. Having lost out as a result of the September 2006 pay award, teachers are set to lose out again as a result of the September 2007 award. The consequences of such a “double whammy” for teachers will be felt in terms of recruitment, retention, motivation and morale.

1. It is clear therefore that both the September 2006 and September 2007 current pay awards will fail to protect teachers’ standards of living. The September 2006 and September 2007 increases of 2.5 per cent should therefore both be increased and the revised increase we seek from September 2007 should be on the basis of the improved 2006 levels in order to properly protect teachers against inflation.

1. We note the comments in the DfES evidence to the STRB on possible future arrangements for review of a pay award for the period September 2008 to August 2011 (DfES evidence, paragraph 40). The DfES evidence argues that any thresholds to anticipate significant changes in circumstances would need to be high, to maintain stability for schools.

1. As we have made clear in our original evidence we are opposed to a further multi-year pay award. That opposition is clearly reinforced by the Secretary of State’s refusal to give the STRB a dedicated remit in accordance with the review mechanism. If, in spite of that opposition to a further multi-year award, the STRB does recommend such an award it will have little credibility with teachers if no action is taken in respect of the existing review mechanism, and there are no guaranteed arrangements for a further review mechanism to protect teachers against future inflation.

TEACHERS’ PAY FROM 1 SEPTEMBER 2008

1. Our evidence of May 2007 set out our case for an increase of £3,000 or 10 per cent (whichever is the greater) for all teacher salaries, along with an increase of 10 per cent in allowances and new allowances for London and the Fringe Area. Such a pay increase is necessary to reverse the recent cuts in the value of teachers’ pay and to demonstrate the value of teachers to society.

1. The evidence from the DfES, in contrast, argues for a pay award resulting in a basic settlement of a maximum of 2 per cent a year for the period September 2008 to August 2011, in line with the Government’s public sector pay policy.

1. Teachers, along with other public sector workers, are being singled out for low pay awards that will do nothing to improve the position of the profession in pay terms relative to comparable professions. There is no justification for this. It is simply wrong, in principle and in practice, for the Government to force low pay awards on public sector workers.

1. In practical terms, another low pay award for teachers will lead to significant problems for the profession in terms of recruitment, retention, morale and motivation. Having suffered a real terms pay cut during the period of the current award, teachers would face three more years of low pay awards.

1. In its evidence to the STRB the DfES noted that teachers’ pay stagnated in real terms between 1994 and 1998 (DfES, paragraph 45). The DfES went on to point out that by the end of the 1990s schools had problems in recruiting and retaining teachers. This was no accident: low pay awards cause significant recruitment and retention problems.

1. The Government is in danger of repeating the mistakes of the 1990s,and indeed those for earlier periods, and of recreating the “boom and bust” cycle for teacher pay and supply that we referred to in our evidence of May 2007.

1. The continued unavailability of the Pay Survey has again hampered our work on teachers’ pay and we reserve the right to make a further submission in the light of its findings. Nevertheless, it is clear that many classroom teachers have reached the top of the Upper Pay Scale and will not benefit from incremental progression. This means that the pay award is the only increase that many teachers will receive and underlines the importance of the level of the pay award to recruitment, retention and morale.

1. The importance of pay to recruitment and retention was underlined by the evidence to the STRB from the Training and Development Agency (TDA).

1. The TDA noted the following at paragraph 25 of its evidence: “Most of the growth in recruitment in the first half of this decade has taken place during a period of substantial real-terms increases in teacher salaries.”

1. IDS reported in June 2007 that median pay settlements for the whole economy remained at 3.5 per cent. The median pay settlement level has been at or around 3.5 per cent since January 2007. The proportion of pay deals at 4 per cent or above has risen significantly, from a quarter to a third. This means that teachers have lost ground against other groups in the economy and are likely to continue to do so as we move into the second year of the current two-year pay settlement.

1. IDS noted in May 2007 that the climate for pay bargaining had changed. In addition to high inflation, a robust labour market was leading to skills shortages and recruitment and retention difficulties. In the context of the teaching profession, the competitiveness of the graduate jobs market noted in our May evidence is likely to cause problems without significant improvements in pay for teachers. For example the UK Graduate Careers Survey 2007, from High Fliers research in conjunction with The Times, found that graduate pay expectations had increased significantly with anticipated starting salaries up by 6.8 per cent compared to last year.

Conclusion

1. We have used data from IDS to demonstrate the gap that exists between teachers and other graduates in terms of starting salary and salary progression. IDS measures data from graduate employers and this is the most appropriate measure to use given that teaching is an all-graduate profession. In 1997 there was a gap between the starting salary of teachers and that of the average graduate of 12 per cent. That gap remains virtually unchanged in 2007. Similarly, teachers’ rates of pay progression continue to compare poorly with those of other graduates.

1. Any improvements in teachers’ pay levels over recent years have not been sufficient to close the crucial gap between starting pay for teachers and for other graduates. The below-inflation pay increases of 2006 and 2007 are likely to increase this gap, with the result that teaching will not be able to offer competitive starting pay when compared to other graduate employers.

1. Teachers’ pay also continues to compare poorly against comparable professions. The latest IDS survey of managerial pay showed that the average midpoint salary for middle/junior managers in the period February-April 2007 was £51,284. Such a salary level is only available in the teachers’ pay structure at points 18 and above of the Leadership Group pay spine.

TEACHER RETENTION AND SUPPLY

1. Our view, expressed in our May evidence, is that significant problems remain in terms of teacher supply. We provided details in our May evidence of problems in the following areas: teacher numbers; teacher recruitment and retention; senior staff; the age profile of the teaching profession; and pay and career equalities Issues. Teacher retention and supply problems have not been eliminated and will worsen if the current climate of low pay awards for teachers is allowed to continue.

1. The DfES has claimed that: “… we now have broadly the right size of workforce to deliver our policy goals” (DfES evidence, paragraph 33). The DfES’ view ignores key problems of teacher supply such as the ageing profile of the profession. As we noted in our May evidence, there is a significant age imbalance with a high proportion of teachers approaching retirement. The imminent “retirement bulge” needs to be addressed by making teaching sufficiently competitive to recruit and retain young graduates.

1. The complacency of the DfES contrasts with the real and serious concerns expressed by the TDA. The TDA, in its evidence to the STRB, argued that: “…salaries, particularly starting salaries, should remain sufficiently competitive to attract sufficient numbers of able and committed trainees into teaching” (TDA evidence, paragraph 19). The TDA went on to note that any cooling in the graduate labour market needed to be seen in the context of extremely high increases in graduate starting salaries in the previous year (TDA evidence, paragraph 31). The TDA also stressed that graduate starting pay tended to be highest in “numerate” or technical sectors which competed with teaching to attract maths, science and ICT graduates (TDA evidence, paragraph 32).

1. The TDA’s evidence to the STRB showed that the overwhelming majority of secondary subjects failed to recruit to target in 2006-07 despite those targets having been lowered. Looking ahead, the TDA noted that recruitment efforts would need to be “supported by identification of, and recruitment from, new pools of potential teachers, particularly in priority subjects” (TDA evidence paragraph 90).

1. Since 1997 some key subjects have failed consistently to hit their recruitment targets. Between 1997-98 and 2005-06, for example, the cumulative shortfall in mathematics and modern foreign language recruits to target was close to 5,000. The shortfall for science was some 3,000 over the same period. The consistent failure to recruit to target over many years is likely to have had an adverse impact on schools’ ability to match teachers’ expertise to subjects and therefore to deliver the curriculum. A further period of low pay awards for teachers is bound to make matters worse.

1. There are plans to reduce financial incentives in both England and Wales. There will be a significant reduction in the bursary for primary postgraduate courses and in the funding available for secondary postgraduate courses in English, dance and drama. This is despite the significant fall in applications to English noted below.

1. In this context, the TDA noted in its evidence the importance of financial incentives to removing barriers to the profession. The TDA also argued that: “Any changes in the financial incentives would be likely to have an effect on applications and acceptances to ITT and/or progression from training to employment” (TDA evidence, paragraph 33).

1. The validity of the TDA’s concerns has now been underlined by recent figures on applications to teacher training. Applications to secondary postgraduate initial teacher training courses in England and Wales were down by 7 per cent as at 4 June 2007 compared with a year earlier, with most subjects seeing a decline. Even in Scotland, where the position has been better than England and Wales, applications were significantly lower. The figures below are for England and Wales.

Secondary by subjectChange in applications, 2006-07 to 2007-08 (%)