The hospital has seen an increase in emergency admissions

The board of the South Devon Healthcare Trust is being told on Wednesday that savings need to be made at Torbay Hospital between now and the end of the year.

Trust chief executive Tony Parr says they have been in similar positions before and have always managed to break even.

On Tuesday, the trust was named in a list of 32 health organisations selected to become foundation trusts in October.

Independent organisation

Tony Parr said: "This year the position is somewhat tighter than it has been in the past.

"There is an awful lot of demand for our services and our emergency admissions are considerably up from what we had planned.

"That costs money and other resources in order to deal with that."

The announcement the trust is to be in the next round of hospitals to become foundations, came just days after the controversial government policy to give top-rated hospitals more freedom scraped through Parliament.

Borrow money

Under the proposals, hospitals can become independent not-for-profit organisations.

They will be able to borrow money on the private market and have a greater control over their own affairs.

Mr Parr said getting foundation status would have major benefits.

He said: "Basically, it frees up the hospital as it is currently managed, to being managed in directly from the Department of Health.

"It get rids of a level of bureaucracy and allows local people to be elected to the hospital's governing body."