A Welsh health authority has launched a recovery plan to tackle a £20m deficit in funding for the local health service.

The Dyfed Powys HA plan, Effective Care and Healthy People - developing the strategic direction 1998-2002, identifies savings of just over£2m among its five home trusts in 1998-99 and£9.5m over five years. But it acknowledges this will leave a 'substantial gap' of£8.9m a year in 2002.

'This is a good first step, but more work needs to be done, ' said HA chief executive Peter Stansbie, who used the launch to point out that an extra£4.5m a year would wipe out the deficit within five years.

Dyfed Powys HA was criticised last year when it put another version of Effective Care and Healthy People out to public consultation in the face of an£11m deficit.

Unison called it a 'farce' for suggesting trusts should consider closing eight out of 19 community hospitals, but not saying where.

Wales Unison head of health Dave Galligan said: 'This new plan is more subtle in that it moves away from an all out attack on community hospitals, but the threat is still there.

'The savings identified in this document are minimal and there will have to be major service reconfiguration to make up the bulk of the money - unless the new Welsh Assembly decides to take a different view on more cash.'

Llanelli-Dinefwr community health council chief officer Martin Morris said:

'This document says the situation is much worse than a year ago, but nobody is taking responsibility for it. It seems they are going to wait for the local health groups to kick in and leave the difficult decisions to them.'

But Chris Lines, spokesperson for Powys Health Care trust, which will 'review' its community hospitals this year, said the process would be 'objective'.