THE financial crisis facing a North-East hospital group will be revealed today when a damning report is published into its deficit.

South Tees Hospitals NHS Trust, which runs the 1,000-bed James Cook University Hospital, in Middlesbrough, has been struggling to claw back a £10m overspend in the last financial year, on top of outstanding debts of £12m.

It is understood that the trust, which also runs the Friarage Hospital in Northallerton, North Yorkshire, finished the last financial year £9m in the red - leaving it facing the prospect of cumulative debts reaching more than £30m.

In spite of strenuous efforts across the trust to make savings, including a freeze on staff recruitment, the financial situation appears to be deteriorating.

Today, after repeated warnings to the trust from the district auditor, Lynn Snowball, about the need to balance its books, it is expected that a rare public interest report will be issued by her office.

The district auditor is legally required to issue a report in the public interest on any significant matter coming to his or her notice in the course of an audit.

While details of the warning will not be revealed until after today's trust board crisis meeting, it is believed that managers are being told they must make even deeper cuts to wipe out the trust's cumulative debts within three years.

Part of the reason for the financial crisis has been the rapid expansion of James Cook hospital in recent years, combined with a shortfall in expected funding.

The situation will raise new concerns about the future of patient services at the Friarage Hospital and the recently re-opened Guisborough Maternity Hospital.

Ashok Kumar, MP for Middlesbrough South, said: "I know the trust is making enormous efforts to the to balance the books.

"They are certainly in a serious difficulty, but they are trying to put it right and I think they are going about it in the right fashion."

Richmond MP William Hague said: "I am concerned about the financial position of the trust, but recognise that the management are working hard to bring the deficit under control.

"Whatever happens, it is vital that in rural North Yorkshire, where people already live up to an hour's journey from the Friarage Hospital, current services, including an A&E department and maternity ward, are maintained."

Liz Twist, regional health spokeswoman for the Unison trade union, said there were real concerns about jobs and patient services."

She added: "We are concerned about the impact on staff and the future of patient care.

"We will be watching to make sure the trust managers have robust plans which address the problem which don't reduce patient services."