Staff who have offered 5 cent of their salary to help bail out their university are setting a dangerous precedent, the Association of University Teachers has warned.

Some 131 staff at Lancaster University out of a possible 1,000 or so have joined the scheme, scheduled to start later this month following fine tuning. It involves staff agreeing to provide an interest-free loan of about Pounds 200,000 for a year.

But Brian Everett, assistant general secretary of the AUT, said it was unlikely to raise more than Pounds 10,000 for Lancaster. This would hardly dent the university's net liabilities of Pounds 5.8 million.

"You cannot manage a problem by token gestures," he said. "We aren't saying they shouldn't be doing it because we can see they want to help the university. Obviously it creates a precedent that we don't want to be created."

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He said the union was negotiating to find a way out of the crisis without compulsory redundancies. A voluntary redundancy and early retirement programme has already been taken up by 140 staff, including 45 academics.

Other measures to save money include blocking all discretionary spending, disposing of assets such as farmland, and transferring the Charlotte Mason teacher training college to the nearby St Martin's College.

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A university spokesman said the halt on discretionary spending was set to end, with priority given to teaching, research and student welfare. The loan idea was a "totally ad hoc initiative" from academics who wanted to show support.