ED BALLS, the schools secretary, last night became the first minister to spell out how Labour would make spending cuts, announcing plans to axe thousands of school staff and restrain public sector pay.

In an interview with The Sunday Times, Balls detailed more than £2 billion of cost savings worth 5% of the total schools budget.

The schools spending blueprint, which Balls revealed days after the prime minister first admitted that cuts needed to be made, will put pressure on other cabinet ministers to give details of savings in their departments.

“It is going to be tougher on spending over the next few years,” said Balls. The squeeze will begin after 2011.

Warning of post-election pay curbs, he added: “If we are going to keep teachers and teaching assistants on the front line, that means we are going to have to be disciplined on public sector pay, including in education.”

Teachers’ salaries have risen by 19% in real terms since 1997. Balls said that while teachers’ pay was set by an independent body, he was keen to ensure wage rises in the next three-year deal starting in 2011 were kept low.

Until recently, Balls had been one of the most outspoken supporters of Gordon Brown’s now discredited strategy of contrasting Tory cuts with Labour “investment”.

However, the schools secretary, who has been tipped to become the next Labour leader, denied suggestions of a climbdown and said he had been working on his efficiency plans for several months.

The Conservatives last night ratcheted up the pressure on Labour over public finances by publishing leaked Treasury documents that they claim reveal secret plans to increase income tax by £14.8 billion — the equivalent of 3p on the basic rate. Liam Byrne, chief secretary to the Treasury, dismissed the figures and said the Tories were “misleading the British public”.

While there has been speculation that Labour might cancel projects such as the Trident nuclear deterrent and ID cards, until now no minister has publicly revealed how Whitehall costs might be cut. Balls stressed that he had no plans to cut the number of teachers and teaching assistants.

However, he claimed the number of bureaucrats and senior school staff such as head teachers, deputies, assistant heads and heads of departments could be reduced without damaging teaching quality.

The schools secretary believes big savings could be made by urging comprehensives to come together in “federations”. “You might have a head teacher and a team of deputy heads working across the different schools,” he said. “But we are not going to have larger class sizes.” Other cost savings arising from the creation of school federations could contribute up to £500m, Balls believes.

Officials believe about 3,000 senior school jobs could go, mainly through “natural wastage”, saving the department about £250m a year.

More than 300 Whitehall officials employed in “field forces” that advise schools on the curriculum are also likely to be axed, saving £100m.

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