Teachers could see another salary increase beyond this week’s pay rise that broke the public sector cap. The Government has been forced to agree to an end-of-year pay review that will take inflation plus recruitment and retention of teachers into account.

The review, part-way into the unprecedented three-year pay award, undermines the Prime Minister’s plan for multi-year deals for all public servants.

Under pressure from his pay advisory body and the teacher unions, Ed Balls agreed this week to raise teachers’ pay by 2.45 per cent from September and 2.3 per cent for 2009 and 2010. The Children, Schools and Families Secretary had hoped for an award of no more than 2 per cent. While agreeing to the review, he warned that he would want “clear evidence of a significant and material change in (economic) factors” to deviate from the indicative 2.3 per cent pay rises.

The School Teachers’ Review Body said a robust review was needed so that teachers did not bear the burden of the risk of rising costs of living.

The review body had said it would withhold recommendations for 2009 and 2010 if Mr Balls did not agree to the review. It was concerned that the current two-year deal failed teachers when inflation rose unexpectedly high, and it wanted to ensure that did not happen again in 2008 to 2011. The cost of living rose 4 per cent last year.

Steve Sinnott, general secretary of the National Union of Teachers, said the review body’s extreme action was necessary because teachers and other public servants had lost faith in multi-year settlements.

“There is not a great deal of trust that the Government will honour its commitments,” he said.

The union is to decide on Thursday whether to ballot for strike action, but the Government’s agreement to reopen the pay settlement in December is likely to take the heat out of teachers’ anger. Most other teachers’ unions welcomed the award.

Though the pay rises are smaller than those in the private sector, teachers have done better than police and nurses. English and Welsh teachers’ average pay will rise to about pound;35,000 in September, and significantly more in London.

Teachers in London can look forward to starting salaries of pound;25,000, rising pound;1,000 each year and pay rises of up to 4 per cent for some senior teachers.

Unions are already preparing to push at Christmas for bigger pay rises next year: the National Association of Head Teachers said the review must recognise school leaders’ new responsibilities, for example, in federations and extended schools.

Ministers have rejected the review body’s advice that junior teachers’ pay rises should be conditional on their performance, and said proposed changes to unqualified teachers’ pay were too complex.

Headteachers’ and governors’ associations have expressed concern about whether schools can afford the pay rises. But Jim Knight, a schools minister, told The TES that the three-year deal, even with the pay review part-way through, would give heads greater certainty in managing their budgets.

Full report, pages 16-17.