The National Union of Students could lose millions in the next three years unless it takes drastic action. It risks accumulating losses of more than ?1.5 million by 2003-04, an internal report reveals.

The union expects to lose ?300,000 in this academic year - ?200,000 from a fall in income and ?100,000 from overspending. Losses could add up to ?1.52 million by 2003-04.

But the leadership's rescue plan has enraged many students. Last week, a group of protesters led by disaffected national executive committee members occupied the NUS's headquarters for 40 hours.

The protesters, who feel that the NUS should have been more open about its troubles, are gathering support from student unions to try to force an emergency conference to discuss the plan.

ÍøÆØÃÅ

Proposals to cut the cumulative deficit to about ?300,000 by 2003-04 include a tighter rein on expenses, a tougher line on affiliation fee collection and fewer mailings to less active unions. The report also suggests that the NUS might have to leave its expensive-to-maintain inner London offices.

Staff in the women's unit will be reorganised to also support the black, disabled and gay student campaigns. And some lay-offs are on the cards, although the report says that "compulsory redundancies are a last resort".

ÍøÆØÃÅ

A change in VAT status and less income from member student unions have contributed to the problem. Another big factor has been the erosion of spending controls, says the report, which was compiled by NUS president Owain James and three executive members. The result was "a culture of unnecessary expenditure".

NEC member Lee Sergent said: "The Labour members on the NEC are asking us to believe that within a fortnight of them telling national conference that the union's losses would be ?29,000, they 'lost' more than ?250,000.

"I'm on the NEC, but they won't even let me look at the books, so God knows what the truth is."

Mr James said the financial problems were not known before the conference and that the situation was under control.

ÍøÆØÃÅ

The predicament follows a period in which the NUS built its commercial income to record levels and appointed new officers. Money from commercial sources has now peaked, the report says.

There are concerns about NEC positions being created without budgets to pay for them. "Constitutional requirements should be examined to ensure that any motions to (national) conference need to be accompanied by costings," the report says.

Student union leaders said they were unaware of the extent of the difficulties. Steve Young, president of Cardiff students' union, said: "We have not had much feedback about the financial situation from the NUS, but I am sure they are working hard to overcome their financial difficulties."

Ruth Hunt, president of Oxford students' union, said she got a summary of the situation from the NUS only after asking for it.

ÍøÆØÃÅ

York University union president Ben Youdan said: "We feel that the proposed cuts are an attack on the NUS membership."

He supported calls for an extraordinary conference: "It would be expensive to call a conference, but the most important thing is to give the unions the opportunity to participate in the discussion."

ÍøÆØÃÅ

Additional reporting by Jann Bettinga