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

Sarah Tang and Jack Worth

12 July 2023

This research examines the forecasted impacts and costs of different levels of pay and financial incentives on teacher supply in England.

The project, funded by the Gatsby Foundation, uses a forecast and simulation model developed by NFER to predict the impact of different pay and financial incentive policy options on the recruitment and retention of teachers between 2023/24 to 2027/28.

The research suggests a new long-term strategy is required to improve recruitment and retention, based on continually improving the competitiveness of teacher pay, well-targeted financial incentives, alongside action to improve the non-financial attractiveness of teaching.

Key Findings

  • Nominal average teacher pay has grown more slowly compared to wages in the wider economy since 2010. Increasing teacher pay at a higher rate than the expected growth in average earnings would begin to restore relative pay and likely have positive effects on teacher supply.  
  • Flattening of the main teacher pay scale by increasing teacher starting salaries at a faster rate than those of more experienced teachers has helped support the Government’s ambition to increase teacher starting salaries to £30,000. Continuing with this approach could be cost-effective as scarce resources are targeted at teachers who are more responsive to changes in pay.  
  • A bolder option for pay would be to separate the primary and secondary pay scales. Under all of the pay models considered in this analysis primary teacher targets are met whereas overall secondary recruitment faces significant shortfalls. There are broader considerations around fairness, potential impacts on quality and increases in the gender pay gap, but splitting the payscales could be a cost-effective longer-term option.  
  • Bursaries and early career payments boost teacher supply through targeting incentives at subjects and schools where challenges are most acute. We recommend expanding early career payments to all subjects that are not reaching their recruitment target to all schools, with teachers in schools with higher proportions of FSM attracting higher payments.