Schools in Oxfordshire could lose out on 872,000 next year if the Government awards teachers a 3.7 per cent pay rise.

The council council only allowed for a three per cent rise for teachers in its draft budget in December.

Now the Government is hinting it may award at least 3.7 per cent leaving the council needing to find another 1m - 872,000 will pay for school teachers and the rest for specialist teachers employed directly by the council.

Members of the county council's education committee are due to discuss today whether to take 872,000 out of the schools' budget.

The Government announced this week it is to give Oxfordshire an extra 100,000, which will be used to help fund the pay award.

Mr Roy Smith, Oxfordshire's deputy chief education officer said: "Whereas schools were expecting extra money they won't be getting it now. Instead of having money to purchase books and materials, they would not have that flexibility."

Mr Mark Forder, chairman of the Oxfordshire branch of the National Union of Teachers said: "Teachers must have this pay rise. Shortages of teachers show that to stand any chance of recruiting and retaining we need to have a minimum of 3.7 per cent. No ifs or buts and the NUT does not think that is enough, especially in Oxfordshire where the cost of living is so high. It is very clear teachers cannot afford to come here.

"Older teachers are leaving, so we need to attract younger teachers and part of the equation has to be salaries.

"The Government can afford to fund this pay rise, so it should give us the money. We deeply regret the impact on schools, if there is one, it is the Government's fault."

Cllr Janet Morgan, Liberal Democrat education spokesman for Oxfordshire said: "If the Government had not put a ceiling on us, we would be getting another 1.4m extra. That would pay for a 3.7 per cent rise or higher. This has to be looked at as part of the whole budget. It may have to come from another committee."

Cllr Shereen Karmali, Labour's education spokesman for Oxfordshire said she thought the education committee would wait until after the pay award had been announced on Friday before making a decision on the budget.