The Treasury could claw back any savings made by schools from an anticipated fall in employer contributions to teachers’ pensions, Schools Week understands. Skills minister Jacqui Smith told the House of Lords yesterday that a “considerable reduction” to schools’ contributions to the teachers’ pension scheme was “highly likely” following a revaluation of the scheme. The amount schools pay increased in recent years from 16.48 per cent of teachers’ salaries in to 28.6 per cent. Along with other public sector pension schemes, the TPS is revalued periodically and rates are adjusted accordingly. The government gave schools additional grant funding to pay for recent increases in contributions. That grant has since been rolled into the wider national funding formula for schools. The news of the impending reduction had prompted speculation that schools might be allowed to use the resulting savings to fund a higher pay award if one is recommended by the school teachers’ review body (STRB). But Schools Week understands some or all of the savings could be clawed back by central government to fund other priorities, like defence. A Whitehall source said: “Yes contributions are coming down – but I’d point out government has always adjusted funding in line with contributions. “In the context of wider spending pressures – not least defence – it would be fair to say the chances of a break with precedent are slim to none.” Ministers face funding cuts decisions It is not known what mechanism the government would use to claw back savings. Ministers could choose to cut overall school funding to reflect the reduction, or reduce the planned increases in the schools budget over the coming years. Any move to cut school funding in cash terms would be unprecedented in recent history. Funding fell in real-terms for much of the 2010s, meaning it did not keep up with costs, but it has risen in cash terms for many years as the number of pupils has increased. Ministers will also face a decision soon on whether to cut the total schools budget in cash terms in response to falling rolls. In the current spending review period, the core schools budget is due to increase from £67 billion this year to £69.5 billion by 2028-29. Asked about the issue by MPs today, education secretary Bridget Phillipson said government would continue to look at funding overall, but added there were protections in place for some schools, like those in rural areas. ‘Challenge’ of falling rolls Schools can get funding to support them with falling rolls, but only if they expect numbers to rise again in the short-term. Phillipson said there was “a challenge there because were we to continue for an extended period of time to fund schools beyond that, where the numbers had fallen significantly, quite rightly others in other parts of the country where they are seeing an increase would say hang on there’s a fairness point about how we manage that. “There’s a balance here both in terms of how we deliver those protections, how we ensure rural communities in particularly have the necessary provision required alongside the overall fairness across the education system where it is a fair way of allocating funding that the funding broadly follows the pupil.” Schools are still awaiting the publication of the STRB’s report, which will make recommendations on teacher pay for the next three academic years. In its evidence to the STRB, the Department for Education said it “felt a 6.5 per cent pay award over 2026-27, 2027-28 and 2028-29 would be appropriate”. However, it subsequently acknowledged schools could only afford a rise of around 2.7 per cent over the first two years of that period, and said leaders would need to “realise and sustain better value”.