In an attempt to lay down the law to striking firefighters, Gordon Brown used his pre-budget speech to say he would not put the economy at risk by sanctioning big pay rises in the public sector unless they were matched by productivity gains.
"When inflation is around 2 per cent, we should not put our hard-won stability at risk by yielding to pay settlements that would put low inflation and interest rates in jeopardy and damage the wider economy," Mr Brown said.
Worsening economic conditions and the prospect of war with Iraq forced the Chancellor to increase his forecast of total public borrowing. That meant no new money for schools, although Mr Brown said that he would stand by the Government's commitment to increase spending on education by pound;15 billion by 2005-6. Cutting public spending would risk rising unemployment and a return to "boom and bust", he added.
John Bangs, head of education at the National Union of Teachers, said: "If this is the Government's attempt to hack back an award which would recruit and retain teachers then it has clearly put 'education, education, education' on the back-burner."
A new pound;109 million package to improve skills was announced - including a target for 90 per cent of 22 year-olds to have a qualification which will lead to higher education or skilled employment by 2010.
Schools will now anxiously await the results of the Government's review of education funding, due to be published next Thursday.
The new formula for council education budgets is designed to address the complaints of many local authorities that their schools are unfairly treated. But it is not clear that those currently at the bottom of the pile will benefit.
FE Focus, 29