The inspectors' report, based on visits to more than 300 schools, says that only four of those linked pay with appraisal. It points out that in only 20 per cent of schools is there any sign that appraisal, introduced five years ago by the Government, improves teaching.
Mr Woodhead's Office for Standards in Education is reviewing teacher appraisal with the Teacher Training Agency and their recommendations will be sent to Gillian Shephard, the Secretary of State for Education.
At present, government guidance says that there should be no automatic link between appraisal and promotion and pay but that heads and governors may legitimately take it into account. Under existing rules agreed by teacher unions, appraisal reports cannot be used to sack a teacher. Mr Woodhead believes both principles should be re-examined.
The report argues that appraisal needs to focus more sharply on raising standards and should be less secretive. One teacher described in the report refused to let an appraisal report be used as a reason for in-service training.
Mr Woodhead said: "That is nonsensical ... The culture within education at present is not one which welcomes the notion of performance pay." He said that the confidentiality surrounding appraisal was excessive. "If appraisal is to have the impact it should, then it must be open to a wider range of uses than at present."
Excellent and outstanding teachers should be identified and their performance should be rewarded. Those who were in difficulties should be offered support but action must be taken if they did not improve.
Mr Woodhead, who earns pounds 82,000 a year, said he personally supported performance- related pay, and was himself due to be appraised under the Civil Service scheme on Friday.
Appraisal involves interviews and observation by senior colleagues followed by the setting of targets for action. All teachers are supposed to have been appraised by this year but the reduction of special government grants for the programme has led to some delays, the report says. Nearly half the schools reported difficulties in completing their appraisal programmes.
David Blunkett, Labour's education spokesman, said: "Chris Woodhead has admitted that the Government has sidelined appraisal. Support for the scheme has been dropped by ministers."
Nigel de Gruchy, general secretary of the National Association of Schoolmasters/ Union of Women Teachers, said his union would be prepared to look at linking pay with teaching quality provided the general level of pay was high.
Should he get a bonus?
Chris Woodhead (salary pounds 82,000), Chief Inspector of Schools, and enthusiast for performance-related pay, will be appraised on Friday by Michael Bichard, permanent secretary at the Department for Education and Employment. Should he get a bonus?
Sir Rhodes Boyson, former education minister: "He's excellent. Whether you agree with him or not ... he is good news. I would definitely give him an alpha."
Professor Ted Wragg, of Exeter University's department of education:"His bonus should be minus pounds 50,000 in view of the mayhem he has caused in education and the lack of substance to the political slant he puts on things."
Sheila Lawlor, director of the think-tank Politeia: "I'm not sure whether public servants should get bonuses. But he should be commended to the skies. He is one of the first heads of inspection to be detached from schools ... outstanding in being so impartial."
Nigel de Gruchy, general secretary of the NASUWT: "Withold the bonus but no sanctions ... he should stop continually raising the subject of the 4 per cent of incompetent teachers knowing it will be hyped up by the media."Reuse content