‘Performance’ Without Pay? Managing School Budgets Under Performance Related Pay: Evidence from the First Year of PRP

This paper reports research in ten secondary schools in London and East Anglia on the first year of the performance related pay (PRP) scheme for teachers introduced by the (UK) Labour Government. It focuses on tensions between the resultant additional claims on school budgets created by PRP and the Government's refusal to guarantee that such additions to the pay bill will be centrally funded on a long‐term basis. The research involved semi‐structured interviews with heads and staff with specific responsibility for managing the school budget. It was designed to explore strategic responses to reconciling the operation of PRP in an uncertain funding environment with school performance management. Two types of strategy were contrasted: ‘forced distribution’ where PRP awards were effectively rationed to the available financial resources and ‘accommodation’ where a criterion based approach was taken to PRP and increases in the pay bill stemming from PRP would be absorbed by cutting non‐teaching pay components of the budget or increasing school income. It was found that the overwhelming majority of heads interviewed rejected forced distribution on the grounds that it undermined performance management in schools and created equity problems in the pay system. However, school managers were doubtful of scope for accommodation in the context of the limited scope for cutting expenditure without damaging standards and the difficulties of finding new income streams for schools.