London Metropolitan University is to pay its staff the 5 per cent October pay rise in full and on time, but it has said "permanent reductions" in staffing may have to be considered. In an internal newsletter, the university said it had budgeted for a 3.5 per cent rise. "In view of the possible shortfall in the university's ability to fund a pay increase greater than 3.5 per cent, it will be necessary to consider permanently reducing staffing levels and/or other means of effecting cost-savings in order to achieve a balanced budget," it said. Any losses caused by the pay deal, it added, would be in addition to cuts resulting from the clawback of teaching grant funds by the Higher Education Funding Council for England. The pay rise "will inevitably impact on future national pay negotiations when they begin next year", the university warned.