Budget crises in schools continue to dominate national headlines. But in many of the schools affected, the gloom is more than financial. Morale, trust and commitment are also taking a battering, leaving an all-round state of shock and anger from which there is no easy route back.

Broadwater primary, in the south London borough of Wandsworth, is large, lively and multicultural. The smell of sponge cake cooking wafts through the hall before lunchtime, and the 480-pupil school has the feeling of an institution at ease with itself. Under the experienced leadership of Denzil Shepheard, and with a recent outstanding Ofsted, that is perhaps unsurprising. But the image masks an increasing sense of turmoil, as Broadwater tries to deal with a desperate financial shortfall.

Mr Shepheard, 54, has been here for 18 years. His style is summarised by one of his teachers: “He’s always in school. And his door is always open.”

Staffing has never been a problem here; experienced teachers stay on and trainees tend to join the staff if invited. “We’ve been very successful at recruitment and retention,” says the head. “So we have a lot of people who are expensive.”

When Mr Shepheard did his sums for this financial year, the figures did not add up. A slight fall in the roll (Broadwater is among the top six primaries in the borough for pupil mobility) knocked last year’s pound;1,640,000 down to pound;1,600,000. But costs - particularly pay, national insurance and pensions - have risen by 15 per cent. Far from having more money, Mr Shepheard couldn’t even match the funding of the past few years.

“If we spend the same on everything, from people to toilet paper, we’re pound;150,000 short,” he says. “To say it is difficult trivialises it. It feels more like a kick in the teeth. We had an extremely positive Ofsted and people are our best resource. Six months later, you’re saying ‘thanks, but goodbye’.”

Mr Shepheard has cut funding in every area for which the school is responsible, to the point where “we’re on a knife edge and will be until the next school year”. He is making further savings by not replacing one retiring teacher and one retiring member of the support staff. After intensive national and local lobbying, the local education authority came forward at the 11th hour (the last day of last term) with a one-off pound;20,000 handout, protecting one teacher post for a further year. Still, redundancies loom.

Mr Shepheard saw only two options for avoiding staff cuts. The first was to set a deficit budget. He decided against that. “Difficult and terrible as it is now, if pupil numbers change in 12 months’ time, it could be disastrous.”

The other option was leaving, which, for the first time in his 33-year career, he seriously considered. His wife, a deputy head in a neighbouring borough, told him to put pension considerations aside and do what he thought right. “I considered resigning,” he says, “not to run away, but as a point of principle and protest. It’s a feeling of betrayal. Eventually I decided not to go. It could be seen as running away from the most difficult thing we’ve had to do.”

Mr Shepheard is uneasily aware that if he finds it stressful - the trousers he bought last autumn are hanging off him, colleagues pointed out after he conducted at a recent Music Association concert - it is much worse for some members of his staff.

When it became clear that 2.7 teaching posts would have to be lost, vulnerable staff - identified according to LEA guidelines - were told. Sian Thompson was devastated to find that her 17 years’ service at the school (including six as a governor) would not protect her. As a class teacher without management responsibility, she - along with six others, including two NQTs in their qualifying year - were up for possible redundancy. Thanks to Wandsworth’s ex-gratia payment, her job is safe for now, and the cuts reduced to 1.7 posts. But Ms Thompson is not the teacher she was. “To find that 17 years’ loyalty counts for nothing is devastating,” she says. “And then you think, is there an issue of equal opportunities? I haven’t accepted management responsibilities because I’m a working mother. I made those decisions in the best interests of the school, and it’s all backfired on me.”

Ms Thompson’s threshold pay rise has lost its gloss, too. “The Government’s policy to improve teachers’ salaries has potentially made us unemployable,” she says.

She is looking for another teaching job. “I’ve been reprieved, but the damage is done. Something’s been destroyed and I don’t want to carry on here feeling resentful or bitter. It’s not just any old job; you invest hugely in it but it seems that’s not enough. You have to have climbed on a ladder and ticked some boxes.”

For Joanna Lauder, the impact is even worse, as she has received official notice that she stands to lose half her job. In her ninth year at Broadwater, she is an Emag teacher for half the week (funded by an ethnic minority achievement grant), and a “workload support” teacher on a temporary contract the rest of the time. This latter, newly created post - which she took last September - is to be abolished, with the head and deputies providing cover instead. “There’s all this talk from government about the need to release teachers from 25 tasks. Yet they’re chopping my job, when I’m the person who gives them the release,” says Ms Lauder.

“Everything is talk and hot air. I am very angry about it.”

The cuts pose wide-ranging problems for Ms Lauder, a single parent who faces having to sell her house and move into a flat with her two teenagers.

“Financially, I’m scuppered and my children are going to suffer.” Although she will continue to work part-time at Broadwater, her professional confidence - high in the wake of Ofsted commendations - has collapsed. “My self-esteem’s in pieces and I’m constantly tired because I lie awake thinking about it.”

At 26, NQT Beth Wooldridge might be considered young and resilient, and she has no major family commitments. But she too has been traumatised by being on the list of potential redundancies. With two degrees, and life experiences that include travel to, and writing guides on, India, she is the very stuff of Teacher Training Agency advertisements. She joined the school after doing her teaching practice here, and has responsibility for Year 5. But teaching almost lost her this spring.

“The Government put us on this pedestal, telling us we were gold dust and so fantastic. You go in with high ideals and, despite the vertical learning curve, you retain them. You take the jobs, and suddenly they take the carpet out from under your feet. After the redundancy nomination, I lost all motivation. I love my kids but I thought, ‘what’s the point of all this?’

“When I look at my friends, I don’t think any of them could be teachers. I could sit in front of a computer and learn office skills, but how many of them could stand up in front of 30 children, deal with child protection, bullying, moments of complete success, and still retain control? On Tuesday nights, I have 180 books to mark.”

Ms Lauder’s job represents 0.5 of the 1.7 posts Broadwater school needs to lose. The Emag team members have decided to carry the loss of one full post between them, each taking a reduction in hours. The final 0.2 post is another teacher losing a one day per week commitment. The effect on the children in this multicultural, inner-city school will be profound, all agree. Ms Wooldridge has speakers of 12 languages in her class, and three of them are new to English. From next September, they will be lucky to see a specialist Emag teacher once a week, says Ms Lauder.

A small windfall, thanks to school achievement grants, announced by the Government last week as a reward for improving results, will do little to sweeten the pill. Broadwater is one of the 20 per cent of schools to benefit. But the cash - about pound;12,800 in Broadwater’s case, to be shared between about 45-50 people - is a one-off pay bonus, and cannot be put into the school budget. “I think in this school it will be received with some hollow laughter,” says Mr Shepheard.

There is an Alice in Wonderland quality to the chasm between this government’s professed respect and need for teachers and the message being received in staffrooms. There, the impression is that dedicated inner-city heads, highly experienced teachers and enthusiastic NQTs are all expendable.

Where the money’s gone

Costs at Broadwater have risen substantially this year, partly because the school has a higher than average staffing ratio, with many experienced teachers. Eighty four per cent of the budget is spent on personnel.

* The increase in employers’ National Insurance contributions - from 18 per cent to 23 per cent - is substantial.

* Seven people at the school have gone through in the last year to upper pay spine 2, at a cost of pound;1,671 each, plus on-costs; at Broadwater, only 62 per cent of this has been funded by central government, says Denzil Shepheard.

* The 4 per cent pay increase for London teachers has been funded by Wandsworth on an “average” basis - so staff-rich schools lose out.

* The new “fair share” funding from central government - which takes into account factors such as social deprivation, special educational needs and area, has been capped. Whereas the formula would have given each Broadwater child pound;2,923, the actual figure is pound;2,883.