Despite teachers’ fears, founded on gloomy predictions by ministers, the headline pay deal is not as miserly as they had expected.

The 2.3 per cent-a-year pay rise, topped up to 2.45 per cent in the first year to allow for high inflation, has bust the Treasury’s doom-laden attempts to cap public sector pay.

Teachers in London received the most heartening news. From September, the recruitment drive will be aided by a boost in the starting salary from pound;24,168 to pound;25,000 for teachers working in the inner city.

And senior classroom teachers will be rewarded with 3.45 per cent for taking hard-to-fill jobs in London - those in outer-London will get a 3.98 per cent rise.

A strike now looks less likely, though the National Union of Teachers will decide on Thursday whether to ballot for action.

Chris Keates, general secretary of the NASUWT union, said teachers had fared well compared with others in the public sector.

Ralph Surman, a primary teacher at Cantrell School in Nottingham, said the rise was not as low as he had feared and should avert strike action. “It is about the minimum teachers would have accepted to stay in the classroom,” he said.

Teachers’ pay is the first major public sector settlement for the 2008-2011 pay period, and will set a precedent. School support staff are now demanding a 6 per cent rise from April. And doctors, nurses and police officers will also increase their aspirations.

Mary Bousted, general secretary of the Association of Teachers and Lecturers, said the three-year award should allow schools to plan their budgets, while still helping recruit and retain of teachers.

Teachers’ personal grocery budgets will still be tight - but not as tight as school budgets.

To fund the rise, heads and governors fear they may have to make redundancies because the Department for Children, Schools and Families has only increased funding for many schools by 2.1 per cent.

Andy Inett, head of negotiations for Local Government Employers, said: “We don’t want to make teaching assistants redundant to pay for salary increases for teachers. We will want any staffing reductions as a result of this to be kept to a minimum because that would compromise our shared goal of raising standards.”

At Newbridge High School in Coalville, a former pit town in Leicestershire, Pat Young is already struggling to balance her budget.

Her school’s funding will increase by only 2.1 per cent a year until 2011. She has already cut teacher numbers from 33 to 26.5 in the past five years and may have to look at further cuts if the school cannot refinance its deficit. She already needs to find the money for back pay for support staff in the county’s equal pay settlement, the school’s heating bills are rising, and now she must fund an unexpectedly high teachers’ pay settlement.

“This is a devastating blow,” she said. “It is good news for teachers, and they need recognition for the effort and commitment they’re putting into raising standards. But it will hit schools such as ours hard.”

Jim Knight, schools minister, told The TES the settlement would be affordable once schools had made savings in areas such as procurement and energy-efficiency.

An added complication for headteachers and bursars is the decision to review the proposed 2009 and 2010 pay rises at the end of this year. If the economy changes dramatically, those 2.3 per cent rises could be increased or, in extreme circumstances, reduced.

Retail price index inflation dropped slightly, to 4 per cent, according to figures published this week, but teachers’ costs will continue to rise faster than their wages.

The cost of housing has risen by 8.8 per cent. Rents have gone up only 3.6 per cent, but mortgage interest payments have gone up by 19.8 per cent in the past 12 months.

Food prices have climbed by 6.1 per cent: butter has gone up 35.1 per cent, and eggs by almost as much. Fortunately, the cost of a pint of beer has risen only 3.5 per cent, and off-licence prices have actually dropped slightly.

At a glance

- 2.45 per cent in September 2008; 2.3 per cent in 20092010

- pound;25,000 starting salary in inner London; pound;24,000 in outer London

- 3.45 per cent for senior inner-London staff; 3.98 in outer-London

- review of London pay bands to consider local shortages

- unqualified teachers could be renamed “associate teachers” and enjoy fairer progress up pay scale

- pay review before Christmas.