The School Teachers' Review Body - a team of nine chaired by Bill Cockburn - says in its report that it was asked to consider a much wider range of issues this year.

These fell into pressing and longer-term matters, so the team decided to report on the longer-term ones in January 2004.

For this year, it felt there had recently been "a substantial improvement in teachers' pay".

It gives examples showing, for instance, that a typical 33-year-old teacher with performance bonuses and extra allowances for management responsibilities would have been earning 30% more in September last year than in 1998.

Devolution

The efforts underway to reduce teachers' workloads meant there should be "a substantial improvement in teachers' overall conditions" in the coming years.

So taking everything into account - including the general economic outlook - it recommended a 2.9% general rise, which would add 3.25% to the overall teachers' pay bill of �17bn.

It said it would be "premature" to go for more than a one-year award.

The review body flagged up an increasing problem due to devolution, saying "the divergence on policies and practices between England and Wales is likely to become more marked in areas such as local approaches to pay and pay linked to performance".

On the government's desire to see more localised pay, the review body said it supported the broad principle.

London

It noted everyone's views and concludes that "the spread and severity of the inner London position requires urgent attention".

To encourage high-quality teachers to stay - something which the inspectorate Oftsed said this week was crucial to raising standards - the review body decided there should be "a substantial step in salary".

It adds: "We are aware that problems exist in other parts of London and elsewhere and we will cover these matters when we report in January 2004."

In the meantime, allowances for those areas should go up 10%.

Maths and science

The team had no doubt there were "serious shortages" of mathematics and science teachers "across many regions".

There were also "substantial shortages" in other subject areas.

But it felt the recruitment incentives introduced recently "should be allowed to bed in" and be properly assessed.

It says the government and the Teacher Training Agency should do more "to market and package" them.

Working hours

The review body says it was "disappointed" that its previous recommendation of a move to a 45-hour limit on the school week had not been accepted by the government.

Ministers have always refused to put an upper limit on teachers' hours.

The review body says this would have given "clear, timetabled targets at which to aim in the drive to reduce excessive hours in support of a reduction in teacher workload - which remains the greatest area of concern to the teaching profession".

So it says the campaign to reduce hours progressively up to the year 2006 is "vital" and it will be monitoring its progress.