Teachers are set for a pay rise of up to 3.5 per cent from September, the government has announced.

Those on the main pay scale will get 3.5 per cent, while those on the upper ranges will get 2 per cent and leaders will receive 1.5 per cent.

The School Teachers' Review Body (STRB), in a report published today, recommended that school leaders, as well as teachers, received a 3.5 per cent rise.

The Consumer Prices Index – the headline measure of inflation – currently stands at 2.4 per cent.

The Department for Education said teachers could see their salaries rise by between £1,184 and £1,366, while salaries for new teachers will increase by between £802 and £1,003.

Teacher pay: 'A competitively rewarded career'

Education secretary Damian Hinds said: “This will mean that teaching continues to be a competitively rewarded career, and I will continue to work with the profession, Ofsted and the unions on issues like excessive workload, professional development and flexible working, to make sure teaching remains an attractive, fulfilling profession.”

The decision, finally announced after weeks of delay, will cost £508 million over two years, but this will not be funded from new money from the Treasury.

However, it is understood that schools will not be expected to pay for all of this out of their existing budgets.

Instead, the DfE has assumed schools have budgeted for a 1 per cent rise. The DfE is funding the difference from savings from elsewhere in its budget.

Teaching unions have clamoured for a significant rise to reward teachers and address the recruitment and retention crisis in the profession.

The rises announced today lift the 1 per cent cap that has been in place since 2013, following a two-year pay freeze.

The threat of industrial action

The increases fall short of the 5 per cent fully-funded pay rise demanded in a joint submission by five education unions representing teachers and school leaders in England and Wales.

The joint claim by the Association of School and College Leaders, the NAHT, the NEU, Voice and Undeb Cenedlaethol Athrawon Cymr called for a fully-funded “restorative pay rise” of 5 per cent for teachers and school leaders in England and Wales.

This was to provide both a cost-of-living increase and act as a first step towards restoring “the real value of teaching salaries to 2010 levels".

The decision comes after the vast majority of schools have broken up for the summer.

Rumours that the pay offer was unlikely to be funded had already sparked talks about potential industrial action in September.

Recent analysis by the Institute of Fiscal Studies showed that school funding has been cut by 8 per cent since the Conservatives came to power.