THE chairman of an NHS trust has accused health bosses of wasting money on building a "white elephant" hospital.

Kevin Earley, head of the trust that runs the new £97m University Hospital of North Durham, said that the neighbouring South Durham trust's plan to redevelop Bishop Auckland General Hospital, due for completion next year, was over-ambitious.

The North Durham chairman was clearing his desk yesterday after the NHS Appointments Commission indicated it was not reappointing him.

He said the redevelopment plan would tie up badly-needed funds for years to come, and that County Durham and Darlington Health Authority made a mistake in agreeing to the ambitious £67m private finance initiative (PFI) scheme.

Cash which will go on service charges to the private consortium building the hospital would have been better used to improve facilities at the Durham hospital, and at Darlington Memorial Hospital, and developing health services across County Durham, Mr Earley said.

One of the reasons behind his outspoken comments is his frustration that the new North Durham hospital is struggling to hit waiting list targets because it has fewer beds than Dryburn Hospital, which it replaced.

The trust chairman said Bishop Auckland should have been reclassified as a more basic community hospital, in the same way as Shotley Bridge General Hospital was downgraded in the mid-1990s.

He said: "It is a white elephant. It is not going to be a district general hospital. Too many services are being taken away."

Both hospitals are regarded as showpiece examples of the Government's controversial PFI initiative, which has allowed NHS hospitals to be built at record speed. Once hospitals are built, trusts, health authorities and primary care groups have to pay hefty annual service charges to the private consortia.

Critics, including health union Unison, have warned that paying service charges on PFI hospitals will place a heavy burden on trusts.

"It is £67m of investment which you have to pay for over the next 27 years," said Mr Earley.

But Bishop Auckland MP Derek Foster said: "To say Bishop Auckland hospital should become a community hospital seems to be a nonsense.

"If one of the three hospitals were removed, the other two would find the task totally impossible."

John Saxby, chief executive of South Durham Health Care NHS Trust, said the criticism was "extremely disappointing".

He said people should not have to travel outside of their area for basic local treatment.

A spokesman for County Durham and Darlington Health Authority said it was "committed" to the new hospital.