A CASH-STRAPPED hospital trust has outlined how it intends to save millions of pounds in the next few years.

Rising costs at the South Tees Hospitals NHS Trust, which includes the James Cook University Hospital, in Middlesbrough, have forced bosses to impose severe spending cuts.

The trust, which also runs The Friarage Hospital, in Northallerton, North Yorkshire, has an underlying deficit of £35m.

Yesterday, the trust's director of finance, Wendy Hull, said measures to cut £19.8m from the deficit in this financial year have been successful, as were measures to save £3m with more efficiency.

An additional effort to increase income by £2m this year is said to be on target.

The trust board also agreed to continue a freeze on appointing staff and measures that include transferring capital to revenue budgets.

Mrs Hull told the trust board that to get rid of the remaining estimated £15m deficit by the end of the 2006-2007 financial year would involve making additional savings of £15m.

This would involve increasing income, reviewing ways of working, more efficiency and reviewing clinical services.

Mrs Hull said the opening of two operating theatres and an additional ward was central to the savings plan because the facilities would allow the trust to expand planned operations and increase income from primary care trusts in South Durham, Teesside and North Yorkshire.