Princess Margaret Hospital in Swindon has hit crisis point as two local councils can no longer afford care for elderly people moving into residential and nursing homes. Swindon and Marlborough trust has been forced to buy in beds it has no money for, to bale out the social services departments.

The hospital currently has 76 patients who no longer need medical care ready for discharge. A spokeperson said it has constantly had between 60 and 80 beds blocked in recent weeks.

Wiltshire health authority agreed in December to transfer an extra£664,000 to the county council to take account of its financial problems. This allowed 54 patients, who had been waiting three months for discharge, to be transferred to residential and nursing homes.

But in a report to the trust at the end of January chief executive Sonia Mills said that, in addition to the problems with the county council, the newly created Swindon borough council, a unitary authority, also faces funding problems.

'Swindon borough council has developed grave concerns at the overspending on the community care budget. The placement rate for people requiring domiciliary care and nursing home or residential care home beds has been reduced since the end of November. The knock-on effect to the hospital has been immediate, ' she said.

Extra nursing home beds had been opened in December, but these were quickly taken up.

'I have purchased a further 10 nursing home beds, with no funding source as yet identified and therefore placing the trust at risk financially, 'Ms Mills said.

Wiltshire county council argues that it has a particularly low level of standard spending assessment, affecting its ability to purchase necessary care. It has£128 per head of population, compared to an average for shire counties of£148 and a national average of£178.

'If Wiltshire was to have the same SSA as the shire counties average this would mean£8. 4m more for social services in Wiltshire next year, ' said a spokesperson.

The council is already overspent on its social services budget by£1. 5m (2. 3 per cent). It argues that while health services are receiving extra money to take account of higher employment costs in the area, the local authority is not.

There is a shortage of suitable nursing and residential home places in the county despite the council paying at least£10 per person more than the government recommends for a placement. Since March 1999, eight residential homes have closed, with a loss of 62 beds. Six nursing homes have closed, with a loss of 247 beds.