BOSSES at a cash-strapped hospital trust have been warned that spending cuts on temporary staff have to be speeded up.

The County Durham and Darlington Acute Hospitals NHS Trust is looking to shed 700 jobs over the next three years to adapt to changes in the NHS and reduce costs.

Officials are aiming to cut spending by £40m.

Today's board meeting will be told that too much money is still being spent on employing temporary staff, including nurses.

Despite a drive to reduce agency spending in recent months, trust board members will be told that expenditure on temporary staff is still too high and that a £1m cost reduction target was not achieved. The report, by director of finance Sue Jacques, said: "Financial performance against staff budgets has been disappointing in 05/06, with a significant level of expenditure on bank and agency staff still being incurred."

She warns the board "this position must be addressed quickly in 2006/7".

As part of the report, Ms Jacques warns there is a high risk that the cost reduction targets will not be achieved during the new financial year.

She warns that the cost containment measures previously approved by the trust's board need to be "robustly enforced" and continue to be applied until further notice.

These include:

* A freeze on hiring staff;

* Continued controls on agency nurse spending;

* Halving spending on the trust's nursing cover;

l Termination of temporary contracts where targets have not been met;

l More stringent controls on overtime;

l Review of all non-essential expenditure and cancellation of study leave unless economically justified.

The trust, which runs Darlington Memorial Hospital, Bishop Auckland General Hospital, the University Hospital of North Durham, in Durham, and Shotley Bridge Hospital, near Consett, hopes to avoid compulsory redundancies.

South Tees Hospitals NHS Trust is aiming to reduce its spending by £21m before the end of the new financial year.

North Tees and Hartlepool NHS Trust, which finished the past financial year £13.5m in the red, said 74 jobs were at risk, in addition to 90 jobs that went last year