SALISBURY District Hospital looks set to end the financial year £2million in the red — the first end-of-year deficit in a generation.

And finance director Malcolm Cassells warned the trust was planning for a deficit of £6million next year, the first time hospital bosses have ever planned for an end-of-year overspend.

Mr Cassells told board members the trust's financial situation could be worse still by April 2016.

He said ending next year £6illion in the red depended on making "really good savings of £8million pounds".

"We haven't made £8million savings for a very long time and as you know we struggle on making savings," Mr Cassells told a meeting of the Salisbury NHS Foundation Trust board on Monday.

"It is probably our biggest financial risk going forward.

"For us as a board, this is a really really serious matter.

"We need to think very, very carefully whether we can deliver that sum."

Non-executive director Andrew Freemantle said: "We are going to need to do something sooner rather than later, either to manage, reduce or, ideally, eliminate the deficit. Now where have I heard that before?"

A major reason for this deficit is that NHS bosses have been cutting how much they pay hospitals for treating patients, under what is known as the tariff system.

And while funding is being cut, the hospital's costs are rising.

The increased cost of specialist nursing staff, a heavier reliance on expensive locum doctors and agency staff, the rising price of drugs, and "colossal" pressures on the trust's IT systems are all adding to the burden.

Mr Cassells said it was "probably the most difficult budget-setting process for many years".

"Overall the cut in tariff is 3.5 per cent, so that's a combination of a cash reduction and no money for inflation in real terms," he said.