If teachers’ pay rises at only two per cent a year, while inflation continues at 4.2 per cent, then the average teacher will be facing a pound;3,000 pay gap by 2011.

Gordon Brown is trying to clamp down on pay rises above two per cent. The next pay deal will come into force in September 2008. And as the Treasury prepares the 2008 to 2011 comprenhensive spending review, teachers’ pay will have to compete with government aims to build and refurbish schools, keep an extra 270,000 students in education and training until 18 and to close the funding gap between public and private school pupils.

While other public servants have the opportunity to renegotiate their pay annually, teachers face longer deals.

Mary Bousted, general secretary of the Association of Teachers and Lecturers, said she was content in principle with multi-year pay deals, as long as conditions were built in for pay to increase in line with inflation. She said: “If the Treasury plays hard ball on the trigger for the current round, that will make it more difficult for ATL and other unions to sell another multi-year deal to members.”

Barry Fawcett, the NUT’s head of pay, said the country’s biggest teachers’

union would oppose another multi-year pay deal. But the NASUWT union and the Professional Association of Teachers said multi-year pay deals provided schools with financial security and stability.

Some of the pound;10 billion required for Building Schools for the Future can be financed through government borrowing. But the pound;5 billion to extend compulsory schooling or training to 18 must come from revenue streams. So must the pound;22billion a year ultimately required to increase pupil funding in the public sector to match that in the private sector.

Further clues on spending priorities come from a Treasury discussion paper which said that children’s attainment is largely determined in their early years.