LAWRENCE DALLAGLIO fears Guinness Premiership clubs could be sent into football- style financial meltdown if rugby authorities do not keep a tight grip on the salary cap system.

Premier Rugby, the clubs’ umbrella body, will decide next month whether to raise the cap from its current level of £4m for the 2011-12 season and there is significant pressure to do so.

The English clubs are at a financial disadvantage when it comes to competing with their European rivals for the best players.

The new salary cap in the French Top 14 is about £8m, while budgetary constraints mean that many Premiership clubs are having to trim their squads.

The temptations to break the salary cap are clear and Wasps owner Steve Hayes claimed yesterday that one unnamed Premiership club could be charged for doing it.

Dallaglio, a board member at Wasps, feels an increase to the salary cap could be just as dangerous and he urged Premier Rugby to tread carefully, drawing a parallel with topflight football clubs who have over-reached financially.

‘‘We have got to be cautious as a group because we want to maintain competition within the league,’’ said Dallaglio.

‘‘If the salary cap was to be raised today there are clearly one or two clubs that would be able to cope with that very comfortably.

‘‘But there are one or two that would be in danger of pushing themselves to try and keep up with others. We see that in football regularly and it doesn’t make for very good stories.”