Heads in London and the South-east this week warned that they would struggle to meet Government demands to reduce their salary bills, which are now well above average.

Charles Clarke said last week that it was up to local authorities and schools to make sure their budgets were balanced and that many might have to make “difficult decisions”.

The Education Secretary’s funding package guaranteed schools a minimum increase of 4 per cent per pupil.

But it depended on a calculation that the average rise in schools’ costs next year would be 3.4 per cent. This assumed that schools spent 60 per cent of their budgets on teachers, and 19 per cent on support staff.

Mr Clarke said that schools where spending on staff as a proportion of total budget varied significantly from the national average of 80 per cent needed to act to “get back into balance”.

This pressure for heads to get rid of staff comes as more are needed to implement the workload agreement.

John Dunford, Secondary Heads Association general secretary, said that, while staff costs of 80 per cent of the budget represented a “good rule of thumb”, the fact that many schools had exceeded it was down to ministers rather than headteachers.

He said heads had been encouraged to offer bonuses in areas where teachers were hard to find. “In London and the South-east the Government has encouraged schools to use available flexibilities in the pay scales to overcome the recruitment crisis and this has sent staff costs soaring over the 80 per cent mark,” he said.

“That is not bad management from the heads, that is schools following Government advice.”

Tim Joiner, Westminster Council’s cabinet member for schools, said the average proportion of school budgets spent on staff in his borough last year was 84-85 per cent, with eight primaries spending more than 90 per cent and one, Soho Parish, 110 per cent.

The Conservative councillor said that it was “completely ridiculous” for the Government to expect central London schools to reduce staff costs in the way it had suggested.

In south London Lesley Morrison, head of St Martins-in-the-Fields Church of England school in Lambeth, agreed and said she felt “very let down” by Mr Clarke’s statement. She said she would rather resign than be forced into making staff cuts.

The girls secondary school, serving some of the most deprived areas of Southwark and Lambeth, spends 85-90 per cent of its budget on staffing, well above Mr Clarke’s average.

But Mrs Morrison said much of the extra expense was thanks to funding from Government schemes designed to combat deprivation which had led to the employment of seven additional staff.

She was also following New Labour’s extended schools agenda, by opening her school from 8am-5pm every day and on Saturday mornings, but that also meant higher staff costs.

“If he (Charles Clarke) is saying difficult decisions have to be made then this is the sort of thing we are going to have to scrap,” said Mrs Morrison. “For all of his talk about social inclusion it is schools like us that will be hit.”

She also had to pay the extra teacher recruitment and retention costs faced by any school in the capital.

Mrs Morrison said: “Teachers in London can name their price,” she said. “It is very rare that we appoint someone without offering them a management or recruitment and retention allowance and it is very, very expensive.

“We are a successful school that has bucked the trend at both GCSE and key stage three. We do this by being very creative with our staffing and ploughing everything we can into teaching and learning so I make no apologies for spending money on staffing.

“I have had sleepless nights about this. I became a head to make a difference in the lives of pupils not to see standards drop but that is what will happen unless we are funded properly.”