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Inflation threat to pay rise

Teachers are likely to be 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, 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 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 Chancellor Gordon Brown had said that pensions, benefits and tax thresholds should continue to calculated by the old measure.

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

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

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