Next year’s 2.5 per cent pay deal for teachers is a pay freeze and will lead to serious recruitment and retention problems, unions warned this week.

Ministers hope that the two-and-a-half-year pay deal for teachers with rises of 2.5 per cent in April 2004 and April 2005 and of 3.25 per cent in September 2005 will help stabilise school funding.

But the National Union of Teachers, Britain’s biggest teaching union, dubbed the award a pay freeze as Doug McAvoy, its general secretary, said it offered a “bleak prospect to teachers”.

As predicted by The TES, the School Teachers’ Review Body backed the Government call to peg pay to projected inflation levels between April 2004 and August 2006.

It rejected the demand by Charles Clarke, the Education Secretary, to slash numbers of teachers progressing through the upper pay scale by two-thirds in 2004.

Tens of thousands of experienced teachers are expecting to qualify for level 3 of the scale and a pound;1,000 merit rise in September. Faced with widespread opposition to plans to let no more than 30 per cent qualify, Mr Clarke has accepted the review body’s call for talks with unions and employers to find a new solution by January 5. Headteachers have already warned that the controversy over the upper pay scale could lead to a revolt (see page 6).

The independent review body normally reports in January but brought its recommendations forward to this week to help schools plan their budgets.

Salaries account for 80 per cent of spending in most schools. Ministers were keen to avoid a repeat of this year’s funding fiasco and the review body agreed to demands for the first multi-year pay deal for the 430,000 teachers in England and Wales.

Mr Clarke says the wage deal is fair to teachers and provides “real stability and certainty” for schools. “The Government has ended the times when teachers were underpaid and undervalued and most teachers have a good standard of living,” he said.

He backed review body recommendations to make September, not April, the new date for teacher pay awards, to bring in two new scales for outer London and “fringe” areas and to drop recruitment and retention allowance scales.

More than half of teachers have management allowances worth between pound;1,638 and pound;2,739 each and totalling more than pound;1 billion annually. These will be frozen next April in the hope that a revised system - taking the workload agrement into account - can be agreed. The new allowances will be capped at pound;11,000.

But Mr Clarke annoyed unions by postponing the 3.25 per cent pay deal recommended by the review body for April 2005 to September 2005.

Mary Bousted, general secretary of the Association of Teachers and Lecturers, said the delay would do nothing to support teacher recruitment and retention and that the ATL had never accepted the case for a multi-year deal.

Eamonn O’Kane, general secretary of the National Association of Schoolmasters Union of Women Teachers, said teachers would be “deeply disappointed” by a multi-year award and added that Mr Clarke was staging the 3.25 per cent rise “without any credible justification”.

Mr McAvoy warned that the Government would “force” schools to use unqualified staff. “By one route or another this Government will ensure teaching on the cheap,” he said.

But Graham Lane, education chair of the Local Government Association, said the deal was what employers wanted. He added that it was not a mean settlement as teachers would receive generous rises through the incremental pay structure.

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THE TERMS OF SETTLEMENT

* Teachers’ pay to rise by 2.5 per cent in April 2004, by 2.5 per cent in April 2005 and by 3.25 per cent in September 2005 in a deal lasting until the end of August 2006.

* Possibility of a review if the average rate of inflation over the 20045 or 20056 financial years exceeds 3.25 per cent or falls below 1.75 per cent.

* Discussions between Government, unions and employers to find a new framework for progression to upper pay scale level three by January 5.

* September to replace April as the date for all pay awards from 2005.

* Two new pay scales for outer London and fringe areas of the Home Counties bordering the capital.

* Higher starting salaries for inner and outer London teachers and differential increases for all outer London teachers, but from September 2005 rather than April 2005 as the STRB had recommended.

* New system of management allowances to be introduced in April 2004, a year earlier than the STRB recommended.

* Recruitment and retention allowance scales to be dropped in favour of school-determined allowances to be given for fixed periods.