Schools face a pound;1 billion shortfall over the next three years, research by consultants Price-waterhouseCoopers suggests.

Rising costs will outstrip increases in funding until at least 2006, according to the report commissioned by the National Union of Teachers.

The findings represent a stark warning of further teacher redundancies and raise the prospect of schools having insufficient money to implement the workload agreement. With a general election as little as 18 months away, the report will increase the pressure on Charles Clarke, Education Secretary, to win more money for schools.

The National Association of Head Teachers has threatened to join the NUT in opposing the workload agreement unless more funding is found.

The NUT warned that any cuts in the next two years could have devastating consequences for schools because many heads have set deficit budgets this year in the hope that a more generous settlement later would allow them to avoid staff cuts.

A TES survey published last month suggests that more than 3,000 teaching and almost 1,500 support staff jobs have so far been lost as a result of this year’s funding crisis.

PWC examined cost pressures in 36 schools in six local education authorities - Durham, Essex, Wiltshire, the London borough of Hammersmith and Fulham, Brighton and Hove, and Birmingham. The six were selected to to give a cross-section of circumstances and to include schools with different funding conditions.

Costs for primary schools will rise slightly faster than those for secondaries, by an average of 16 per cent this year, 24 per cent next year and 27 per cent in 20056, the report says.

The consultants did not draw firm national conclusions, but calculations by the NUT based on PWC’s findings suggest a shortfall over three years of pound;1bn.

Primary schools will be hardest hit, facing a funding gap of more than pound;200 million in each of the three years, rising to pound;297m in 20056. Secondaries will face smaller funding gaps of pound;50m-pound;100m each year.

Staffing costs and implementing the workload agreement are the main reason schools face higher costs, but there are also other, less obvious, concerns.

One Brighton school reported needing to spend pound;100,000 on five stairlifts to meet the access requirements of the Disability Discrimination Act.

Secondary schools in Essex complained of rising curriculum costs and said that exam fees had doubled in the past six years.

Doug McAvoy, NUT general secretary, said that the report may underestimate cost pressures because it assumes an inflation-only pay rise for staff.

The largest support staff union, Unison, has threatened to pull out of the workload deal unless it wins significant improvements in pay and conditions.

Mr McAvoy, said: “The underlying assumptions on pay and price increases used by PWC are extremely cautious. Yet the evidence points to a dramatic problem arising from a massive shortfall in funding for our schools.

“The Government claims that falling rolls are at the root of this year’s problems, but PWC looked at schools with stable rolls.

“The Government has urged raiding other areas of school funds to deal with this year’s problems. That only deepens the difficulties for the future.”

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