Teachers and other public sector workers should not expect to receive a 1 per cent pay rise from next year, the chief secretary to the Treasury has said.

In a letter to the heads of public sector pay review bodies this week, Greg Hands said that despite a government commitment in the Budget last month to fund a 1 per cent rise for public sector staff for four years from 2016-17, there “should not be an expectation” that every worker would receive this rise.

He said the government would provide funding equivalent to a 1 per cent rise, but that this money should be applied in a “targeted manner” rather than shared evenly among staff.

“This may mean that some workers could receive more than 1 per cent while others could receive less; there should not be an expectation that every worker will receive a 1 per cent award,” he said.

Schools are free to set their own levels of pay for teachers and would have been able to deny some teachers a pay rise without Mr Hands’ letter. However, unions are concerned that the letter could encourage schools not to give teachers the 1 per cent rise.

Kevin Courtney, deputy general secretary of the NUT teaching union, said the policy would be “a disaster for teacher recruitment and retention”.

“Teachers have already had five years of pay caps and pay freezes, while average earnings elsewhere have gone up by 10 per cent,” he said. “New graduates are getting the message that there are no pay prospects in teaching, which is why they are going elsewhere.”