Gillian Shephard, the Education Secretary, this week publicly admitted that the Government is taking a tough approach on the teachers' pay deal, and appeared to hint that the case for extra funds was still being considered.
Talking to heads at an Industrial Society conference, she said ministers were waiting to see the impact on schools once the dust had settled.
"It is a tough settlement. I have made no secret of my views. The impact on local authorities will be patchy. We may find that in some areas there are no budget problems and in others there are tough decisions to be taken," she said. Two councils, Devon and Leicestershire, had decided to fund the pay rise in full, she added.
Mrs Shephard pointed out that she was due to meet the local government employers and the unions in three weeks. At that point, she said, ministers would have a clearer view of the position. However, the provision of local government grant did not allow the Government to find any targeted solution (for areas in difficulty).
In her speech, Mrs Shephard said that Chris Woodhead, chief inspector of schools had noted that school budgets are generally well-managed, but that some schools are holding larger balances than are justified.
She commended a scheme in North Yorkshire, initiated by Harrogate Grammar. The school is part of a group which regularly shares spending data to compare different approaches to allocating resources.
The Department for Education is running a similar project that allows 40 primary schools across five local authorities to share financial data. The results of the project will be available in April.
Mrs Shephard also outlined findings from the DFE's research on the effectiveness of appraisal. While teachers are often positive about appraisal, the research suggests that it should focus more on helping them to overcome their weaknesses.
In particular, she said, the appraisal of heads ought to focus more on setting targets and agreed plans for achievement of targets. It was also clear, she said, that few heads give sufficient attention to their own training.
She also suggested teachers could be used to help assess heads' performance. The national appraisal scheme does not explicitly recommend teacher involvement in assessing heads, but schools are free to introduce it, she said. Such schemes of upward appraisal are becoming more common in the private sector.
The Teacher Training Agency has begun consultations on the training package, Headlamp, aimed at providing management training for newly-appointed heads. Another scheme is being developed to provide training for those likely to be looking for promotion to head.