The government says schools have had 66% more since 1997

Head teachers are to face below-cost increases in the funds they have allocated for each pupil between 2008 and 2011, the government has said.

Schools minister Jim Knight said he was expecting a "substantial improvement in efficiency from schools".

Head of the Association of School and College Leaders John Dunford said it was a worrying time for schools.

"We will have to wait and see what the bottom line will be for school budgets."

He acknowledged unprecedented government investment in the nation's schools, but added: "It's very difficult to define efficiency savings in school - it's not the same as in a sausage factory."

Schools will need to think carefully about how they use the funding we make available to them Jim Knight Schools minister

The warning comes as Mr Knight sets out changes to local authority grants for day-to-day spending on education.

He said the government had increased investment in schools by 66% in real terms over the past 10 years.

Over the next three years, he said, schools funding would continue to increase but not at the high levels seen in recent years.

And he stressed there would be a sharper focus on value for money.

Mr Knight said in a ministerial statement: "Schools will need to think carefully about how they use the funding we make available to them, and we will work closely with them and their local authorities to ensure they have the tools they need to plan and use their resources most efficiently and effectively."

Migrant grant

There would be a minimum increase in the core "per pupil" funding in each of the next three years, he said.

But the assessment of cost pressures on schools would reflect expectations of "a substantial improvement in efficiency from schools".

General secretary of the NASUWT teaching union Chris Keates said: "Notwithstanding the very real increased investment in schools over the past decade, it is essential that the pressure for substantial efficiency savings do not act as a brake on further improvements across the school system.

"Today's announcement that schools will be expected to deliver substantial improvements in efficiency will raise concerns amongst many."

But Mr Knight also announced plans to give schools emergency funding to help deal with the pressure of a sudden influx of foreign migrants.

Surpluses

Schools would be able to apply through their local authorities for an Exceptional Circumstances Grant to help them foot the extra costs of unexpected arrivals of large numbers of non-English speaking pupils.

He also announced plans for a funding formula which more accurately reflected the social make-up of local council areas by taking a closer look at the take-up of means-tested benefits by postcode.

This would enable extra funds to be targeted to schools serving pockets of deprivation within more affluent areas, a Department for Education and Skills spokesman said.