NA senior finance manager at a London teaching hospital has been suspended after auditors found the trust board had been 'misled' over the scale of its deficit.

St Mary's Hospital is drawing up a recovery plan involving cuts of£4.5m.

Its main commissioner has warned that non-clinical services would have to be 'squeezed so hard that the pips squeak'.

Trust finance director Julie Armstrong has been ordered to produce detailed reports for a special one issue meeting of the board in August.

She told HSJ the trust faced a deficit of 3 per cent on an annual turnover of£135m.

The board was at first told it was heading for a deficit of£1.5m in 199798. But it was later found to be£5.9m overspent, including non-recurring costs.

No evidence of fraud has been identified and the suspension of the senior manager - who has not been named - is said by the trust not to imply guilt.

Peter Stewart, commissioning manager of Kensington & Chelsea and Westminster health authority, said last week that St Mary's faced a 'very serious financial position'.

But he added: 'We would want to be sure that before clinical services are impacted on, non-clinical services have been squeezed so hard that the pips squeak.'

North Thames region said it was looking to St Mary's to produce a 'viable recovery plan that has the least effect on patient services'.