The Schools Secretary Ed Balls prompted fury among heads and teachers yesterday as he outlined surprise plans to save £2bn by axeing 3,000 senior staff posts, most of them deputy heads.
Mr Balls made the announcement as it emerged that civil servants across Whitehall have been instructed to be ruthless in cutting budgets. Sources at No 10 said all departments have been ordered to look again, with "laser-like" precision, at their spending plans and have been given licence to suggest shelving ministerial pet projects.
The rethink comes as mandarins are being forced to deal with Government demands to halve the record levels of public debt – alongside its pledge somehow not to damage frontline services. Departments are working on new plans in the run-up to the Pre-Budget Report (PBR), which the Chancellor delivers in the autumn.
"Civil servants are drawing up options, but everything will have to be signed off by ministers," said a Downing St source. "If something is going to hit frontline services that people rely on, they will have to think again."
Doomsday scenarios have been drawn up in several departments. The Department for Transport is vulnerable as it is planning big infrastructure projects, such as Crossrail and a new high-speed rail network. However, Lord Adonis remains committed to both projects and will fight to keep them.
Defence could also be hit hard. Both the Home Secretary, Alan Johnson, and the Health Secretary, Andy Burnham, have already been summoned to Downing St to discuss their department's spending plans. Ed Balls must meet the Prime Minster this week, although No 10 sources said the meetings were a normal part of planning in the run-up to a PBR.
Mr Balls was accused of making an extraordinary U-turn after saying just six months ago that education spending would be ring-fenced against cuts.
He said the £2bn could be achieved through merging comprehensive schools into "federations", with one overall head taking charge of up to six secondaries. Cutting the cost of heating, lighting and repairs to schools by 10 per cent could also save up to £800m a year, he said. Squeezing teachers' pay from 2011, and forcing schools to spend money in reserve are also part of the cost-cutting plan.
The outcry against his proposals was led by John Dunford, general secretary of the Association of School and College Leaders.
Mr Dunford spoke of anger among heads that senior positions within schools were being confused with bureaucrats: "Strong leadership has been one of the key contributors to raising standards in schools," he said.
Christina McAnea, national secretary of Unison, said: "One person's bureaucrat is another's invaluable administrator, even more so in schools. Heads often say they couldn't do their job without fantastic administrators, be they school bursars, secretaries or whatever."
The Tories said that Mr Balls, a key adviser to the Prime Minister on combating the Tories, had undergone "an amazing turn-around" in backing difficult cuts to school staff. "This is the man that just a couple of weeks ago was central to the 'Tory cuts/Labour investment' strategy," the source said. "Then Mr Brown gives a speech on cuts and it's all change."
David Laws, the Liberal Democrats' education spokesman, echoed that sentiment: He [Balls] "was saying there was a different line between his party and the other parties. They wouldn't make cuts and he was confident they could ring-fence his particular budget even though the Chancellor didn't agree with him." The Lib Dem leader, Nick Clegg, went further, describing the plan as "absolute madness".
Mr Balls responded yesterday by saying that it would still be possible to have a "modest growth" in the education budget, though he conceded that any growth would have to be much smaller than in previous years.
"I have said I would like to see real-terms rises for schools, but we are not going to see the 4 per cent-plus real-terms increases we have seen in the past," he told BBC1's Politics Show. "What we can do is pool leadership ... and that can free up resources."
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