Top-performing state schools will be able to break a £120,000 cap on head- teachers’ pay if they agree to lead new not-for-profit groups running less successful institutions.

In a new drive to improve standards and cut costs, weaker schools will be involved in mergers or given new leadership, Ed Balls said in an interview with The Times. The Schools Secretary said that he wanted to give a “strong push” to the spread of new brands of education providers.

An education White Paper published next week will contain measures to enable schools to pool budgets and force local authorities to consider handing control of the weakest schools to new chains accredited by Whitehall, he said.

Good state schools face being marked down by Ofsted, the inspections watchdog, if they refuse to take part in formal mergers or federations.

Sharing the best teachers, administrators and facilities will help to improve standards and reduce costs during the squeeze on public spending, Mr Balls said. He revealed that he would reject a recommendation from the School Teachers’ Review Body for a cap of about £120,000 on the pay of heads who take on responsibility for other schools permanently.

Mr Balls defended his record on public sector reform and said that the latest proposals will ensure no school or pupil is abandoned. “What we are looking to see is a number of not- for-profit state schools directly run by the best education providers,” he said. “We want to see chains of schools run by a single overall leadership, probably with a shared brand, with some shared management and governance with a shared ethos and identity.”

The new providers would be approved under a national accreditation scheme run by the Department for Children, Schools and Families to become operational from the start of next year, he said, adding that he hoped to see hundreds of schools under the direct management of the new chains quickly.

Mr Balls added that there would be consequences for schools that opted to “go it alone” when it came to their Ofsted inspections. “If you are a school that has got the potential to do this but chooses not to, you’re not making a contribution to other schools in your area. Therefore Ofsted will recognise you aren’t being as ambitious as you could be.” He admitted that the potential for savings was a key factor. “In order for us to be more efficient this collaboration will be very important. It is going to be tougher but if you have schools sharing, for example, business managers and administration, that can save money.”

Meanwhile, it emerged last night that single-level tests, which are being piloted by the Government to replace national curriculum tests, are unpredictable and create even more stress for children.

The new tests assess pupils when they are ready, rather than en masse at the end of a key stage, but secret reports have revealed basic problems, The Guardian said. The reports, by the National Assessment Agency and academics, apparently found test results were erratic. One report warned they could add to the burden on pupils.

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