HEADTEACHERS play a vital role in schools. Their leadership often makes the difference between success and failure.

We have recognised their importance in our Green Paper on teaching reform with plans for a new National College of School Leadership. Heads and deputies will play an important part in delivering the proposed performance management system too.

During our consultation, both the Secondary Heads Association and the National Association of Head Teachers have offered constructive suggestions on the detail of our proposed reforms.

In the Green Paper, published in December, we said that we believed a modern pay system should attract and retain sufficient people of the right calibre, reward good performance, improve career progression and enable the best teachers to gain high rewards. We added that it should offer a great deal of flexibility for schools within a national framework.

Those remain our principles - and to underpin them we plan to introduce a performance threshold to enable those teachers earning around pound;23,000 to gain a pound;2,000 pay increase with the chance to earn up to pound;35,000 following a fair performance assessment. In effect this is “performance-related promotion”. We have an extra pound;1 billion over the next two years to fund our Green Paper reforms.

Appraisal will have a key role - and will be an important factor for heads to consider in deciding, for example, whether to award more to those above the threshold or whether to offer double increments below.

The SHA, to whom I am speaking today, has sought to improve the manageability of the system. We have repeatedly made clear that we want bureaucracy kept to a minimum - while ensuring that the increased pay is awarded fairly and rigorously.

That is why we have proposed national standards and external assessment, which will be particularly important in the early years of the new system. But we are open to practical suggestions on how we get that balance right. The pay review body proposal this year to establish a new pay structure for headteachers was particularly important in tackling recruitment difficulties among primary heads.

We recognise too the important role which deputies play - and will continue to play. I will confirm to SHA today that we will be asking the review body to consider the pay of deputies for the next pay round in the context of the new pay structure resulting from the Green Paper.

Appraisal is an essential part of any modern management system. It is important for teachers’ development and should be the right of any professional. It can show where improvements can be made and where extra training can help. It can also help heads and others in school management to see where teachers are performing well and where they need extra help.

The system that we inherited needed reform. Recognising concerns from heads about how quickly we could get the system up and working in every school - we have announced a revised timetable for the new system. From this September, we will start to introduce the new appraisal with regulations coming into force from September 2000. Clearly teachers will still be expected to be appraised under the existing system in those schools where the new system is not in place this September.

For some, the idea that there can be any link between appraisal and pay is anathema. I know that is not the view of most heads - nor according to teaching union polls is it the view of most teachers. But it would be unfair to disregard appraisal in deciding on extra pay awards, since it is the fairest available assessment of performance. It would also be wrong to suggest that there can be no consideration of the performance of pupils, since to do so would imply that teachers don’t make a difference. It should be one of a number of factorsconsidered.

There are those who worry that any new system will be “divisive”. This sits oddly with the different pay levels that already exist in schools. First, experienced teachers are paid more. Second, teachers earn more for extra responsibilities which heads tell us are often in effect awarded for good performance. So, there is no flat rate pay equality in schools - and I doubt there are many staffrooms where those who go the extra mile don’t grumble about those who do the absolute minimum. We want to open up higher salaries to those who perform well without their having to take on management responsibilities.

In the next few months we will consider the consultation responses and we will develop the new pay system. We shall work with those - including heads - who are willing to work with us on getting the details right. When teachers see the system in operation, I believe they will see it as a real opportunity rather than a threat.

Estelle Morris is Minister of State for Education