Debts at Oxfordshire's major hospitals will top last year's £20m overspend within a year if managers do not keep to strict budgets.

The Oxford Radcliffe Hospitals NHS Trust, responsible for the city's John Radcliffe, Churchill and Radcliffe Infirmary, and The Horton, Banbury, has warned that it will remain in debt for the next three years if cost-cutting measures are ignored.

But doctors have warned they will not be able to keep to targets, such as reducing cancelled operations and long waiting times, if they are forced to adhere to stringent financial allocations.

In a trust board meeting, Dr John Reynolds, clinical chairman for cardiac and medical services, expressed concern.

Speaking about his own division, he said: "I could live within a strict budget, but no targets would be met.

"We're setting ourselves up for a fall with these budgets. It's really difficult to get people to understand that this is all they have got and what they have to live by."

The ORH launched a three-year recovery plan in the wake of soaring debts at the end of the last financial year.

But chief executive Mike Williams warned that without further savings the trust could reach a new overspend of £28.3m by March next year, and instead of recovering from the deficit, it could still be in the red by March 2006, with debts of £12.7m.

Mr Williams said that although he was drawing up strict budgets for managers, to make sure the trust spent no more than its £371m allocation, there were no plans to cut patient services.

He said: "Our aim is to get the £28.3m down, but safeguard care.

"I'm not going to slash and burn."

Mr Williams said he had appealed to the Department of Health for a one-off payment to help clear the mounting debts.

But he denied that the financial problems were caused by lack of Government funding.

He added: "We're perhaps in a more difficult position because we had an overspend last year, which has compounded our difficulties."

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