Tens of thousands of experienced teachers could be denied pay rises of more than pound;1,000 because schools cannot afford them, councils and heads have warned.
Around 90,000 teachers are being considered for progression from point two to three of the upper pay scale (UPS) this autumn and a large majority are expected to qualify for the pound;1,128 rise.
But local authority officials from metropolitan and shire areas, have told The TES that their schools will struggle to fund the increases.
They blame the cost to schools of the agreement on UPS reached by representatives of Government, employers and all major teaching unions except the National Union of Teachers in February.
Under the deal, schools must fund more than a third of the bill for rises through management allowance savings, with most of the burden falling on the secondary sector. But council officials say schools have either not made savings or spent them elsewhere.
The agreement was originally hailed as a breakthrough by all its signatories. But this week, one of them, David Hart, National Association of Head Teachers' general secretary, said he too had doubted whether secondaries would be able to fund the pay rises.
Schools were supposed to contribute pound;29million towards a pound;77m package for the increases in 200405.
Savings worth pound;24m were expected because management allowances have not risen in line with inflation, with another pound;5m from cutting the number of allowances as teaching staff are relieved of administrative tasks.
Two councils said they thought there would be barely enough cash to fund half of eligible candidates to climb to UPS3.
But they were accused of scaremongering by the Secondary Heads Association and Chris Keates, National Association of School Masters Union of Women Teachers' acting general secretary, accused local authorities of trying to undermine an agreement their national representatives had signed up to.
Nigel Middleton, from Head Support, a consultancy advising schools on performance pay, said that heads had not realised the implications of the deal and the amount they would have to contribute. "They will feel cheated," he said.
Giles Bird, head of Kingsmead school, Enfield, said he had had to increase the number of management allowances he was paying, to deal with extra Government initiatives. Any money saved from freezing them had been eaten up by a pound;50,000 budget deficit.