THE cash crisis at debt-ridden Queen Mary's Hospital, Sidcup, has worsened following the announcement of its Government cash settlement for the coming year.

Hospital chief executive Kate Grimes says the gap between the Frognal Avenue hospital's income and expenditure, forecast at £10m, has now risen to £15m. Jobs will also have to go.

She says although inflation in the NHS was forecast at 6.5 per cent for 2006/7, the Government was only allowing hospitals 1.5 per cent, with the remaining five per cent to be found from their own funds.

Another blow has been the decision not to give the Sidcup hospital all the extra money it will earn from carrying out emergency work at a cheaper cost than the national average.

It had hoped to earn an extra £4.5m in the next financial year from its emergency work.

But this has been cut to £2.5m after the Government decided hospitals would only get 50 per cent of the extra income in the first year and 75 per cent the following year, only reaching 100 per cent in the third year.

The Government has also announced it is capping the amount of emergency work hospitals can do set at its workrate for 2004. Any work done above the capping level will only be funded at 50 per cent.

Ms Grimes, together with about 60 other hospital staff, including doctors and nurses, spent the first two days of the week in a workshop looking at ideas for savings.

She said: "We will have to lose some jobs. We hope to do it by redeployment and not filling vacancies but I cannot rule out the possibility of redundancies."

Ms Grimes could not say whether the job losses would be among front-line staff.

She added: "We already have a detailed process in place to plan for next year but this is going to be a bigger task than we had anticipated.

"We will be working through the numbers to see what else we need to do."