The National Union of Teachers said on Thursday that schools were facing a £1 billion shortfall in funding over the next three years.

Its warning was based on its own calculations, using evidence gathered by the consultants PricewaterhouseCoopers in six local authority areas.

A spokeswoman for the DfES said: "The NUT appears to be asking for more money to implement a workforce reform agreement with which it disagrees and which it refuses to sign.

"Moreover the evidence they cite is based on just 36 selected schools within only 6 LEAs and as such does not paint a representative national figure.

"Under this government spending is up by nearly £800 per pupil since 1997, and will be up by more than £1000 per pupil by 2005/06. In addition to this record investment we have set out a funding framework for the next two years to build confidence in the funding system and are putting in an extra £400 million to reverse planned cuts in standard fund grant in each of the next two years.

"We are determined to give head teachers more stability and predictability in planning their budgets and are working hard with them and local education authority representatives on arrangements for 2004/05."

Forum Response: National Union of Teachers

Doug McAvoy, general secretary of the NUT, said: "The underlying assumptions on pay and price increases used by PWC are extremely cautious. Yet the evidence points to a dramatic problem arising from a massive shortfall in funding for our schools.

"The government tries to claim that falling rolls are at the root of this year's problems. But PWC looked at schools with stable rolls.

"The government has urged raiding other areas of school funds to deal with this year's problems. That only deepens the difficulties for the future. Some schools have set deficit budgets but those debts have to be repaid.

"Our schools cannot afford to live on borrowed money. There can be no borrowed time for children's education. Much work is done for the government by PWC. If the problem can be identified for the NUT, it can also be identified for the government."

Forum Response: Professional Association of Teachers

Jean Gemmell, general secretary of PAT, said: "It is imperative that there is no repetition of this year's funding debacle or further staff redundancies. We need to be recruiting and retaining more teachers and support staff - not making them redundant.

"Resolving the funding crisis is essential because it could adversely affect the implementation of the National Workload Agreement. That would be disastrous as the agreement is our future and its success is vital for the resolution of the teacher workload issue. The DfES is fully aware of this fact.

"If the funding situation in the coming years is as described in this survey, then it is tragic as it threatens the way forward and that to me is the biggest tragedy of all.

"However, we mustn't forget that the union that commissioned this survey, and is criticising the government's failure to accurately estimate the costs of implementing the Workload Agreement, did not sign the Agreement and has continued to oppose it. It is a great pity that union didn't sign.

"I cannot understand, how not participating in the workload agreement is actually helping any of its members' workload."