Royal Cornwall hospitals trust is facing public protests and threats of strike action as it takes steps to deal with a projected £31m deficit.

Royal Cornwall hospitals trust is facing public protests and threats of strike action as it takes steps to deal with a projected£31m deficit.

The trust became the latest subject of an Audit Commission public interest report this week, warning that its board 'should not underestimate the magnitude of the challenge' to return to financial balance.

The report from the district auditor Lee Budge says the trust has exceeded its income for several years, but that its position 'deteriorated significantly' last year. The trust ended 2005-06 with a deficit of£15.6m, having received£12m in non-recurring financial support.

Further pressures mean its projected deficit is now£31m. However, it has agreed a 'control deficit' of£20m with South West strategic health authority, leaving it to find savings of around£10m this year.

The trust has developed a turnaround plan to achieve these savings, which includes the loss of about 300 posts with up to 100 redundancies. Unison has balloted some staff groups on strike action over the plans, which include an option to use typing services based overseas.

However, a trust spokesperson said this week that it was still considering the 'very constructive' responses to a staff consultation on this aspect of the plans and no decisions about using foreign typists had been taken.

The trust is also working on a second turnaround plan for the longer term that will include service reconfiguration. It hopes to have outline proposals for discussion by the end of the month.

About 27,000 people took part in a march through Hayle at the end of last month to protest about possible hospital and ward closures.

Campaign organisers said senior mangers at the trust should be 'held accountable' for the financial problems, but also called for 'unfair' funding formulas to be changed to bring more money into the county.