Schools will get an extra pound;1,000 per pupil by 2008 as part of an pound;8.5 billion education settlement, Chancellor Gordon Brown promised in his Budget this week.

Increases in education spending were the central theme of the Budget, despite warnings from some experts that economic problems would force him to cut back on public services.

Mr Brown said headteachers would be given greater flexibility in how to spend the extra money and promised direct grants of pound;55,000 for the average primary and pound;180,000 for a typical secondary in 2005-6.

The Chancellor said: “Instead of cutting these budgets I believe it essential that as skills, knowledge and technology become more central to our future prosperity, now is exactly the right time to raise investment in British education.”

Rachel Phillips, head of Kew Riverside primary in Richmond, said: “I think it is a great thing that this money is coming to schools.

“It seems they are backing up their policies with finance.

“The money will help to reduce teachers’ workload. We are going to need finance in order to give teachers non-contact time.”

The Chancellor’s announcement about increased education spending was accompanied by a pledge to cut central bureaucracy to ensure that more money reaches schools.

Almost a third of jobs at the Department for Education and Skills will be cut, a move which prompted an immediate threat of strike action from the Public and Commercial Services union, A government source said: “We aim to be a smaller, more strategic department which puts every penny possible at the front line in schools and colleges. Our role will be supporting, not interfering.”

Early-years education and childcare will rise by pound;669 million between 2004-5 and 2007-8, an average, annual real-terms increase of 17 per cent.

Mr Brown promised that a New Deal for Skills would give every adult the opportunity to gain GCSE-level qualifications and ensure that every young person would be able to stay in education up to the age of 18.

The Budget received a cautious welcome from unions.

Doug McAvoy, general secretary of the National Union of Teachers, said:

“The Chancellor appears to have responded to the needs of the education service. But in the past, what looked like an increase resulted in schools continuing to be underfunded.

“We will monitor carefully how the Government intends the money to be spent.”

Details of the Government’s spending plans for 2005-8 were not expected to be revealed until the announcement of the results of the latest three-year spending review, due this summer.

Education Secretary Charles Clarke said that the early announcement showed that education remains Labour’s number one priority.

“We can now build on the progress we have made since 1997 at every stage of learning, from early years to adult skills,” he said.

Education funding in the UK will increase by pound;8.5bn (pound;7.4bn for England) between 2005-6 and 2006-7, a rise expected to be 4.4 per cent above inflation.

Further details of the money schools can expect will be released later this year. Spending levels in Scotland and Wales will be set by their devolved administrations.

Ministers hope that an efficiency drive will help avoid the problems faced by many schools in last year’s funding crisis.

By 2008, DfES staff numbers will be cut by 1,460 - from 4,400.

Combined with savings from new technology, savings of 2.5 per cent per year are predicted between 2005 and 2008.

Tony Conway, president of the DfES wing of the civil servants union PCS, said the cuts would damage support for schools and undermine attempts to transform children’s services.

David Hart, general secretary of the National Association of Head Teachers, disagreed. “I have no fear about that at all,” he said.

Brendan Barber, general secretary of the Trades Union Congress, said: “The Chancellor has today confounded his critics who predicted that education spending would lose out in the forthcoming public expenditure round.”

Opposition leader Michael Howard accused the Government of borrowing now before increasing tax later. “This is a credit-card Budget from a credit-card Chancellor,” he said.

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