HOSPITAL bosses have not ruled out job cuts as they struggle to balance the books.

Colchester Hospital University NHS Foundation Trust has announced a five-step plan to reduce spending by £7.7million in the next ten months.

Directors say action is needed after the trust made a loss of £547,000 in April, the first month of the 2010/11 financial year.

Staff have been sent an e-mail warning of the financial “squeeze” and the need to save about 3.5 per cent of the hospital’s annual turnover by March next year.

The trust, which runs Colchester General Hospital and Essex County Hospital, aims to concentrate on staffing costs, its second biggest area of its £218million expenditure.

It hopes to reduce staff expenditure by £5million – the equivalent of the cost of about 140 posts.

Bosses say they will work hard to avoid compulsory redundancies, but say they cannot rule out the “possibility of a small number of non-clinical posts being affected”.

Bill Craig, non-executive director of the trust, said: “It is very, very serious and we have to take control of the situation now.

“The bottom line is we can’t wait and we need to take immediate action.

“So we have reviewed a number of actions with the intention of reducing our costs during the rest of the financial year.”

Isaac Ferneyhough, Unison branch manager at the hospital, said he was working closely with the trust to ensure there were no compulsory redundancies as a result of the drive to save money.

He said: “The trust has a policy of not making compulsory redundancies.

“The last time we went through this level of financial difficulty was about four years ago and there were only two compulsory redundancies made, so they are hoping they will be able to achieve the same sort of thing this time, but they can’t make any promises.

“We are at a difficult time at the moment, but we will be fighting for every job.”