Teachers unions reacted with trepidation today after Ed Balls, the Schools Secretary, announced plans to save more than £2 billion in a massive cost-cutting excercise.

In an interview with The Sunday Times, Mr Balls became the first Cabinet minister to spell out how Labour plans to make the cuts needed to rein in public debt. His spending blueprint proposes cuts of around 5 per cent of the total schools budget.

Mr Balls said that up to 3,000 senior positions, including heads and deputies, could be axed. He also said that new “federations” of schools could help shave millions from running costs and teachers would have to swallow pay curbs - although frontline staff would not be affected.

But the National Union of Teachers said that schools must not be forced into mergers just to say money. Its general secretary, Christine Blower, warned that senior school staff should not be treated as part of the education bureaucracy.

“Any characterisation of heads, deputy heads or even departmental heads as bureaucrats is nonsense. They are teachers,” Ms Blower told the BBC.

“Federations between schools may be a good idea but must not be required as a way to make cuts,” she added - calling for the Government’s academies programme to bear the brunt of cuts.

“Where we could make savings is to scrap the academies programme with some of its extremely costly buildings and heads who are paid bonuses,” she said.

For his part, the Liberal Democrat leader Nick Clegg branded the proposal “silly” and said it would be “absolute madness” to make any cuts that put young people’s futures at risk.

The first indication of where the cuts could fall - days after Gordon Brown publicly admitted they were needed for the first time - came amid a furious political row over Tory claims that Labour was planning a secret income tax rise.

George Osborne, the Shadow Chancellor, said that leaked Treasury figures showed a £14.8 billion rise in expected revenues in 2011/12 - the equivalent of a 3p rise in the income tax rate - which could not be explained by a predicted economic recovery.

But ministers said the figures were published at the time of the Budget in April, denied any tax-raising plan and accused the Tories of “the politics of the big lie”.

David Miliband, the Foreign Secretary, said: “It is simply not serious to take publications that were made at the time of the Budget, splash them in a press release and pretend that they are a great revelation. It is the politics of the big lie and the big smear and it is very important that they are held to account.”

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