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 efforts to make savings, including a freeze on recruitment, the financial situation appears to be deteriorating.

Today, after repeated warnings from 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 debts within three years.

The situation will raise 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: "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: "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.