Headteachers who are used to seeing large real-terms funding increases under Labour should prepare for much smaller rises or even standstill budgets.

The warning will make particularly gloomy news for schools that cut jobs during 20034 in the middle of the present funding “boom”.

It follows the worst government monthly borrowing figures since records began showing that public borrowing in November rose to pound;9.4billion, Pounds 2.5bn more than a year ago.

Funding experts say they are not surprised by the signal from the Department for Education and Skills, which has enjoyed substantial increases in its budget under Labour.

The comprehensive spending review (CSR) announced in March 2004 will mean year-on-year real-terms rises for education continuing until 20078.

But the average 4.4 per cent a year real-terms increase between 20045 to 20078 is below the 6 per cent headteachers have become used to, and now officials are hinting that this could be even lower in future years.

David Hart, the general secretary of the National Association of Head Teachers, said the Government was facing a substantial public spending deficit and might have to cut back after the general election.

“But,” he said, “as far as I am concerned the commitments of the three-year CSR are sacrosanct.” Education remains a priority for the Government but security and law and order measures dominated the Queen’s Speech. The identification card scheme alone is estimated to cost pound;3bn.

It is against this background that the DfES will have to prepare its case for the next comprehensive spending review, covering 2008-2010. Local authority leaders have already told The TES of their concerns about schools being able to fund the workforce deal.

Schools will also have to contribute pound;29m in 20045 and pound;49m in 20056 towards the bill for level 3 of the teachers’ upper pay scale, from management allowance savings many say they do not have.

Support staff salaries will rise by at least 5.45 per cent in 20056, according to government estimates.

The education budget could be further squeezed by the cost of implementing the Tomlinson report, and the rapid expansion of the academy and specialist schools programme, all likely to run into billions of pounds.

Tony Travers, a funding specialist at the London School of Economics said it was almost certain that education spending increases would be lower in future than the previous CSR.

“You can’t have an economy where the proportion of public money being spent on health and education continues rising for ever,” he said.

In a report on public expenditure, published this week, MPs on the education select committee, criticised the Government for its “incredibly short-sighted” reaction to claims of a funding crisis in 20034. The report said ministers had then decided to change the system though there was no evidence that change was necessary.

“Therefore the new system is beginning with a leap of faith that all schools will be adequately funded,” it said.

Increased central control over funding will make it more difficult for local authorities to redistribute money to those who need it most, it said.

The committee cast doubt on Chancellor Gordon Brown’s claims that increased investment since 1997 has pushed up GCSE results. Results rose at least as fast in the early 90s when funding increases were lower, MPs said.

The MPs also questioned the Gershon review’s proposals to cut civil servant jobs. Mr Brown has said the cuts would pay for further public spending. But the select committee has asked the DfES to provide it with a rationale for the 31 per cent proposed cut to its workforce.