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Inflation change is pay cut by stealth

Teachers are likely to have their wage packets short-changed by hundreds of pounds because of a new method of calculating inflation.

Unions and experts are questioning the change, which does not apply to all public-sector workers. It could cost experienced teachers more than pound;500 over two years and shave pound;333 million from the teachers' pay bill.

The 2 per cent annual rise being proposed by education ministers, between September 2006 and August 2008, is based on a target inflation level calculated according to the consumer price index (CPI), adopted by the Government last year.

The CPI, introduced to bring Britain into line with Europe, is generally lower than the old retail price index, excluding mortgage payments, (RPIX) because it excludes other housing costs. Last year the average difference between the CPI and RPIX - used to set the previous teachers' pay deal - was 0.9 per cent.

If that trend was repeated over the period of the next pay deal then a teacher on the first level of the upper pay scale would lose out by pound;559, assuming the 2 per cent proposal is approved.

The latest military pay deal also took place after the Government changed its inflation measure. But the armed forces pay review body, which recommended a 3 per cent rise for 2005, was asked to take both the CPI and RPIX into account.

Carl Emmerson, from the Institute of Fiscal Studies, said he was surprised at the Department for Education and Skills' decision given that the Chancellor had said that pensions, benefits and tax thresholds should continue to be calculated by the old measure.

"If the Government thinks the right measure for benefits, pensions and taxation is the RPI then it seems a little strange that for teachers' pay it should be the CPI," he said.

Steve Sinnott, National Union of Teachers' general secretary, said: "The idea of using an index that doesn't include housing costs is utterly unbelievable. Housing costs are the biggest single item to come out of teachers' salaries."

Mary Bousted, Association of Teachers and Lecturers' general secretary, said: "Whatever indicator the Government uses, the increase has got to be more than 2 per cent."

A DfES spokesperson said: "We have in our evidence to the School Teachers'

Review Body proposed what the increase should be based on the CPI measure of inflation which we believe to be fair.

"However, it is for the review body, having consulted all relevant parties, to make a recommendation to the Secretary of State. They are free to consider all measures of inflation available."

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