THE head of the Royal Cornwall Hospitals Trust has issued a stark warning to its 5,000 staff that it is facing a "make or break year" with the threat of being taken over if it fails to reach its financial objectives.

Chief executive Peter Colclough spelt out the trust's position in a frank weekly bulletin e-mailed to workers across its three sites in Truro, Penzance and Hayle.

He appealed for everyone to show leadership and do their bit to help turn things around as the trust faced having to make savings of £26 million this year to balance its books – of which £10 million is needed to pay its debt.

Last year it saved £16 million.

To save costs it has already introduced a ban on overtime and is shedding about 200 jobs, most through natural wastage – though health unions have warned this figure could be as high as 600. In corporate departments, finance, human resources and technology it is having to make savings of 15 per cent, with a further 10 per cent in clinical divisions.

The trust is midway through a major review of midwifery nursing, theatre and radiography departments and says it wants to cut the number of managers by more than 33 to reduce its wage bill and bring it into line with other trusts which employ more Band 5 nurses, clinical staff who work on wards with no management responsibilities.

In response to the measures, unions Unison and the Society of Radiographers (SOR) have filed collective grievances against the trust claiming it is failing to keep staff fully informed during a "flawed assessment process" which requires staff to apply for less senior roles.

Richard Pembridge of the SOR said: "We suspect people will be downgraded to a Band 6 but still doing the Band 7 role, on less money. They won't provide job descriptions for the Band 6 job so that staff can make an informed decision."

Mr Colclough said he was surprised at the unions' accusation that staff were not kept properly informed, saying managers had worked with staff to ensure they were briefed.

The measures were necessary to ensure the trust reached its objective of becoming financially sound, which was crucial if it was to win Foundation Trust status, he said.

He admitted many staff were "understandably worried about their jobs and income" and that morale was low.

"I know some will say: 'We've heard it all before', but here's why it's different," he said. "If we don't achieve our objectives this year this trust faces the very real possibility of not being in control of our own destiny or the destiny of our patients. I do not believe any of us wants to be in that position."

He described the next 12 months as a turning point when it could finally put its "decade of debt" behind it, if everyone took ownership and showed leadership to do things better.