THOUSANDS of teachers will have to sacrifice their pay rises as part of a deal to tackle the funding crisis in schools, the Government is expected to announce today.

Charles Clarke, the Education Secretary, will propose the transfer of £100 million from funds for performancerelated pay to the worst affected local authorities.

It means that tens of thousands of teachers are likely to lose £2,000 merit rises awarded for reaching the top of the classroom pay scale.

The classroom unions said that such action would be a betrayal of their members.

Earlier this month, an analysis of the profession found that more than 20,000 teaching and support staff jobs have been lost in schools this year as a result of the budget settlement for 2003-04. Half of all primary schools and two thirds of secondary schools were left worse off compared with the previous year’s funding allocation; many quickly ran up six-figure deficits.

The money, in the form of grants and loans, will be used to bail out between 40 and 50 authorities with the most serious financial problems. In return, councils will be required to submit a business plan outlining their plans for improving their financial position.

Other authorities will be able to apply for a loan if any of their schools are in deficit and help from central government is the only way they can balance their books.

A guarantee to each school of a rise in funding of around 4 per cent for every pupil next year will be achieved by reversing a pledge to cut £800 million in grants over two years to the school standards fund. The fund is meant to raise standards in specific areas, such as improving literacy or buying computer equipment. The deal, which is designed to avert more politically damaging redundancies in the run up to the general election, is likely to result in an overall shift of funding from local authorities: more money will be going directly to schools.

Ministers argued for a ceiling of 30 per cent on the number of teachers eligible for merit rises, which lever teachers on to the “upper pay spine” from £33,000 to £40,000.

Doug McAvoy, general secretary of the National Union of Teachers, said: “The Government has misled teachers. It’s so-called performance-related pay has nothing to do with performance. The money is being rationed, so that, no matter how good a teacher is, it will be withheld. All because the Government got its sums wrong in funding schools this year.”

David Hart, general secretary of the National Association of Head Teachers, said that the proposed settlement was a “huge political gamble”. He said: “There is no new money. They are dancing on the head of a pin.”

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