RED-FACED health bosses have been forced to cut their budget after a £1.2 million book-keeping blunder.

Bury and Rochdale Health Authority spent the cash but finance staff failed to notice until they were alerted by regional health chiefs.

Those responsible have been carpeted by senior management and a rescue package to pay back the money has been hurriedly agreed.

But the massive belt-tightening exercise is certain to put a strain on local services.

Voluntary organisations will be among those hit as grants are slashed.

The mistake, which was missed by authority staff, was discovered by the Regional Health Executive.

A strongly-worded memo, sent to staff at the Silver Street office, said: "The position of the individuals responsible will need to be carefully considered". A spokesman added: "They have been dealt with by the chairman and chief executive."

Mr Paul Reynolds, chief officer at Bury's health watchdog, the Community Health Council (CHC), this week described the error as "a totally inexplicable mistake by a pompous organisation".

Mr Eddie Jones, director of Primary Care at Bury and Rochdale Health Authority, explained that the mistake occurred in the planning of budgets by finance officials. "It meant that we spent £1.2 million that we didn't have," he said. "The money will be recovered from expected expenditure which we have to reduce. We will have to tighten the budgets and manage them more carefully."

Government changes in health accounting rules will allow the health authority to make some savings, but a plunge into the red seems inevitable.

Their rescue package targets around £1.6 million of savings over the next two years. It includes around £500,000 from GPs who don't spend all the money they are allocated, and a £15,000 cut in grants to voluntary organisations.

Figures will also be juggled to spread payments over coming years.

However, CHC chief Mr Reynolds dismissed the cash-saving plans as "fantasy land". "They won't be able to stick to these plans and there is sure to be a knock-on effect on the patients," he added.

Mr Alan Maden, chairman of Bury and Rochdale Health Authority, described the mix-up as "regrettable".

"Financial aspects of the health authority are complex," he said. "Nevertheless it is essential that accuracy is maintained. Everything possible is being done to avoid a similar situation arising again."

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