'Federations' to cut school costs; EDUCATION: Government says 3,000 senior jobs may go.

SCHOOLS must not be forced into mergers as part of a pounds 2 billion cost-cutting bid announced by the Government, a teaching union has warned.

Children's Secretary Ed Balls said up to 3,000 senior positions could be axed as part of a massive costcutting exercise. Giving the first indications of where spending cuts could hit, he said new "federations" of schools could shave millions from running costs. He warned teachers they would have to swallow pay curbs but insisted class sizes would not rise and frontline staff would not be affected.

Many of the cuts in "bureaucracy" could be through natural wastage, he said, but the National Union of Teachers said compulsion would be wrong. "Any characterisation of heads, deputy heads or departmental heads as bureaucrats is nonsense.

They are teachers," general secretary Christine Blower said.

"Federations between schools may be a good idea but must not be required as a way to make cuts.. Where we could make savings is to scrap the academies programme with some of its extremely costly buildings and heads who are paid bonuses," she added.

Liberal Democrat leader Nick Clegg branded the proposal "silly" and said it would be "absolute madness" to make any cuts that put young people's futures at risk.

The first indication of where the cuts could fall came amid a political row over claims that Labour was planning an income tax rise.

Shadow chancellor George Osborne said leaked Treasury figures showed a pounds 14.8 bn rise in expected revenues in 2011/12 - the equivalent of a 3p rise in income tax -which could not be explained by an economic recovery.

Ministers said the figures were published at the time of the Budget in April, denied any tax-raising plan and accused the Tories of "the politics of the big lie". Foreign Secretary David Miliband said: "It is simply not serious to take publications made at the time of the Budget, splash them in a press release and pretend they are a revelation.

"It is the politics of the big lie and the big smear and it is very important that they are held to account." Mr Osborne stuck to his claims however, questioning why the receipts from National Insurance and other taxes did not appear to be predicted to rise in line with such a recovery.