The award is equal to the current headline rate of inflation but well below the 3 per cent average for pay awards across the public and private sectors.

Salaries of newly-qualified teachers will increase by almost pound;500 per year from September 2006, while those at the top of the main pay scale will gain pound;700.

The National Union of Teachers and the Association of Teachers and Lecturers said the award would make the profession less attractive to graduates and failed to recognise teachers’ hard work and commitment. But heads and the NASUWT union expressed relief that the Chancellor had been stopped from going below 2.5 per cent.

Headteachers who had lobbied for a bigger increase in pay than classroom teachers were disappointed. The School Teachers’ Review Body, which advises the Government on pay, said there was no evidence that there were immediate recruitment problems, but admitted that they may build up in the future.

Instead it called for an independent review of school leaders’ role and rewards. An Ofsted report this week reported that workforce reforms intended to ease the burden on staff had increased the pressure on many headteachers.

The 2.5 per cent increase was proposed by the review body and accepted by the Government. Teachers moving up the pay spine will receive a bigger increase as the headline rise is in addition to the amount extra they will earn by that progression. About half of teachers are set to benefit in this way.

The Government expects its preferred measure of inflation to be just 2 per cent during the period covered by the award. It is currently 2.3 per cent.

But its evidence to the STRB admitted that headline inflation, which includes house prices and mortgage costs, would be between 2.5 per cent and 2.75 per cent in 2006-7.

The review body promised to look again at the award if headline inflation goes above 3.25 per cent or below 1.75 per cent for a sustained period.

The pay award contrasts sharply with increases in per pupil spending for schools announced this week which are more than double the rate of inflation.

Steve Sinnott, NUT general secretary, said: “This is a standstill award.

Hard work and commitment are not recognised in this imposed settlement.”

Mary Bousted, ATL general secretary, accused the Government of trying to bury “not very good news” by releasing the award on the same day as Gordon Brown’s pre-budget report and said the Chancellor’s intervention was spin designed to lower teachers’ expectations.

John Dunford, general secretary of the Secondary Heads Association, said:

“Two and a half per cent is much as we expected.”

Chris Keates, NASUWT general secretary, welcomed the award, describing it as an above-inflation increase. She said it “should maintain the gains in teachers’ pay secured by NASUWT through agreement with the Government, providing the Chancellor continues to meet his inflation target”.

News 8, 16-18, Leader 22l jon.slater@tes.co.uk