It is “unrealistic” for schools to pay for a hike in teacher pension contributions themselves, an education minister has warned.

Lord Agnew was speaking ahead of the government spending review, which is expected to set the Department for Education’s funding levels for the following three years.

His comments at the Festival of Education at Wellington College today came after the DfE announced a 43 per cent increase in the contributions schools have to make to teachers’ pensions.

The government has said it will cover the increased costs for the first year, while decisions afterwards would be made as part of the spending review.

Lord Agnew raised the issue as one of four areas where he believes schools need extra funding.

He said: “It is an enormous amount of money, on an annual run rate basis about £1.4 billion and it is unrealistic to expect schools to be able to fund that themselves.”

He listed the other three areas as high needs, post-16 provision and rural primary schools.

The minister also raised the prospect of making unspecified reforms to teacher pay.

He talked about taking a long-term view about attracting more high calibre teachers into the profession.

He added: “We won’t get the teachers we need unless we focus on creating the right conditions for them to excel. There is clearly a strong case to explore the reform of teacher pay to ensure the money schools spend on pay is targeted where it will have the biggest impact on recruitment and retention.”

Lord Agnew told the festival that the DfE would “shortly” launch a fund to “boost the growth of our strongest trusts, allowing them to support a greater number of schools across the country.

“The fund will increase the capacity of academy trusts to grow partnerships and support the development of teachers and leaders and the education of children.”

He added it would help smaller school trusts that wish to merge.