In its evidence to the review body, the Department for Education and Employment says it believes there is a shortage of good candidates for primary headships which could sabotage its aim of raising standards, particularly in literacy and numeracy.

It says primary heads’ pay may not be enough to compensate teachers for the increased responsibilities, so they are reluctant to apply. In schools of roughly the same size, secondary heads typically earn #163;2, 500 more than their primary colleagues.

The Government suggests: fresh guidance on starting salaries; an extension of the heads’ pay spine for smaller schools; and rewards for primary heads who achieve school targets. Giving heads a larger pay award than classroom teachers is not the Government’s favoured option.

David Blunkett, the Education Secretary, said: “Primary headteachers bear a heavy responsibility for the raising of standards in literacy and numeracy. I believe that the pay review body should examine the case for improved rewards for primary heads with appropriate qualifications or experience.” But if primary heads are to be paid more, the money must be found within the existing pay bill, he said.

David Hart, general secretary of the National Association of Head Teachers, said: “Our view is that all headteachers and deputies should be given a substantial rise.”

The DFEE recommends that heads report once a year to their governors on teachers’ performance.

The Government expects to see restraint in pay settlements, says the DFEE, adding that teachers are still benefiting from the generous settlements of the early 1990s.

Its priority is to improve pupil:teacher ratios despite the increasing number of school-age children. It says that a large pay increase could have a knock-on effect on class sizes.

The Budget’s extra #163;1 billion for schools should not be used to fund a generous pay settlement, said Mr Blunkett. He believes that apart from a few shortage subjects, recruitment and retention are good.

John Sutton, general secretary of the Secondary Heads Association, accused the DFEE of putting its head in the sand. “Its evidence flies in the face of every other submission - there is a crisis in recruitment,” he said.

The review body is also asked to look at how an advanced skills teacher grade can be introducedfor staff who will promote good classroom practice in deprived areas that have been declared education action zones. The report seems to suggest that an advanced skills teacher could be paid in line with deputies and their pay determined in the same manner as heads and deputies. The money will come largely from local authorities.

The advanced skills teacher grade does not seem to have much support elsewhere. Heads and governors say many schools will be reluctant to lose their best teacher.

The Government expects homework clubs and summer literacy schools to become part of mainstream schooling, and teachers who take part should be paid overtime if they have to work outside the statutory 1,265 hours, says the report.

But employers say that any activities that teachers take part in should be within the 1,265 hours. They are concerned that if governing bodies have to pay teachers for activities outside these hours, then staff running lunchtime chess clubs and Saturday sports will have to be paid overtime. Heads are also concerned that some teachers will get paid for certain activities while others who are already working more than 50 hours a week get nothing.