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Salford University chiefs are salvaging a tarnished commercial image by raiding money reserved for academic expenses like personal computers and foreign conferences to save a once-profitable university company which has plunged nearly Pounds 2 million into the red.

Salford University Business Services Limited was founded in 1969 to raise non-governmental income and by the early 1980s, when Salford was among the most successful universities in developing closer links with industry, it was earning millions for pump priming a range of academic initiatives. But in the past five years it has suffered substanial losses.

Vice chancellor Tom Husband blames the "unwise" diversification of consultancy interests and unsuccessful joint ventures.

Last year 20 staff were made redundant and stake holdings in half the joint venture companies were sold off. The university senate this week approved the action of the vice chancellor to make good the remaining debt of Pounds 1.7 million by drawing on departmental and research institute discretionary reserves of Pounds 6.5 million. These comprise money from contract payments for professional services undertaken by individual academics. A university spokesman said: "It is very understandable that some academics feel a bit aggrieved."

Professor Husband said that to close the company would have meant sacking 50 people and done "incalculable harm" to the reputation of the university.

jeffrey gettleman