A FINANCIALLY troubled hospital trust has warned that staff might be laid off unless losses are reduced.

South Tees Hospitals NHS Trust, which runs the 1,000-bed James Cook University Hospital in Middlesbrough, as well as the smaller Friarage Hospital, in North-allerton, North Yorkshire, is forecasting a £13m overspend by the end of the financial year.

The trust has also had to ask regional NHS officials to provide a loan of £12m to help meet other costs.

In December, officials imposed a selective recruitment freeze in some areas and announced they were looking for savings.

Yesterday, the response to the financial crisis hardened with the trust board approving a tough savings package.

A significant element of the plan involves a five per cent reduction in staffing costs across the trust.

This will mean that a complete recruitment freeze will be introduced, other than in very exceptional circumstances.

Chief executive Simon Pleydell said: "I appreciate that many colleagues across the trust are worried about redundancies. While we cannot rule this out, mak-ing people redundant will be an absolute last resort."

The fact that staff turnover is about 12 per cent a year, should help the trust to make progress towards a reduction in staffing costs, he added.

Mr Pleydell said the trust was also looking at different working practices.

"It could be that we can provide a service with fewer staff working differently," he said.

Earlier this year, the City Hospitals Sunderland NHS Trust laid off 71 part-time support staff.

Liz Twist, the regional spokesman for health workers' union Unison, said: "We are really concerned about the pres- sures this will place on staff who are still work- ing and on patient services."

"The NHS needs more resources," she added.