SOUTH Durham Health Care NHS Trust is likely to overspend by up to £2m in the current financial year.

At the end of May, the trust showed a deficit of £350,000, with significant overspends in clinical directorates, as well as on drugs, medical and surgical equipment, and in some areas on locum staff and nursing.

The chief executive of the trust, John Saxby, said that if it was £350,000 over budget after just two months, it was reasonable to expect to have overspent by about £2m by the end of the financial year.

He said this would be caused by the additional funds that have been allocated being less than the cuts made each financial year.

He also said that the overspend was partly due to the over-performance of the trust.

"Every year we are set targets and given additional money.

"In addition to that, every year there are cuts which are generally greater than the additional money we are given," he said.

"Some of it is over-performance. We are over-performing by seven per cent on our in-patient contracts, and that will undoubtedly have an impact on us, but we have always said that if people are referred to us we will treat them, and we need to sort out the financial support for that to continue.

"We either have to get more money or find ways of spending less in other areas, to get us back on a sound financial footing."

He said that the trust spent £114m a year, and to be £2m over-budget, although significant, was a small percentage.

The trust will now look for ways of reducing expenditure, as well as getting extra funding, Mr Saxby said.