Unions in the old universities have flatly rejected this year's pay offer to academic and technical staff, saying it amounts to a cut in real terms.

The 2.1 per cent increase proposed by the University and Colleges Employers Association falls far short of the Association of University Teachers' claim for 5 per cent and the technical workers' claim for 8 per cent. It is also below the February inflation rate of 3.6 per cent, and the 2.7 per cent awarded to school-teachers.

The AUT was angry that the rise was based on the average funding increase for universities.

"We asked for 5 per cent which for us is a very modest claim," said AUT general secretary David Triesman.

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He said that the claim was far less ambitious than in previous years, when the AUT has asked for a 25 per cent pay gulf between its members and those in comparable professions to be bridged.

"This year we argued for a token tiny step towards that historical catch-up and they offered a cut in real terms," said Mr Triesman. "We are angry that having made a landmark claim we have not had a more sensible offer. To expect our members to swallow a cut at the time when they have been lauded to the skies for their productivity is preposterous."

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The AUT objected to the linking of the offer to the funding allocations, saying the universities could share money from reserves and other sources, including overseas students.

UCEA chief executive Stephen Rouse said: "We offered 2.1 per cent based on the fact that it is the average increase in funding distributed by the English funding council. The claim is not one the universities can afford to meet in its entirety. Where would we get the rest from?" He said that universities' non-grant income was mainly spent on employing people to earn that money and that funding a greater rise out of reserves would be bad housekeeping.

"In principle, there are few vice chancellors who do not regret that the relative pay of all staff has declined quite markedly over 15 years. But it does not mean they have the means to do something about it.

"The Government is not funding any part of education on the basis that everybody who works in it deserves to be protected from inflation. It is ability to pay, not cost of living, which bears upon the employers."

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He added: "Both sides have to think about the position. We have to consider whether there is some movement possible but equally the unions have to do the same, and frankly their journey is the biggest. I think it is possible, if the unions can come closer to our position, that we can move towards them, but not much."

The technical staff are seeking consolidation of last year's one-off payment of Pounds 60, a reduction in the working week from 37.5 to 35 hours and 8 per cent on pay.

UCEA is also consulting the 54 institutions on a claim from manual workers for an across-the-board rise of Pounds 20 a week.