The cash-strapped trust which runs Watford General Hospital has had a historic weakness in balancing its books, a Government report said this week.

In response to the concerns about the financial position of West Hertfordshire Hospitals NHS Trust which serves a third of Hertsmere residents the Audit Commission stated that a detailed inspection last year showed that the trust's financial leadership was insufficient' and ineffective'.

It also said its savings plans were unrealistic' and insufficiently robust'.

Since then, the trust has drawn up a financial recovery plan which includes cutting 500 frontline jobs, such as doctors, nurses and midwives, in a bid to claw back its £28.6 million overspend.

The cuts will affect Watford General, as well St Albans, Mount Vernon and Hemel Hempstread hospitals.

David Law, the trust's chief executive said: "Whilst the auditor's report presents an accurate picture of the trust, it's important to note the improvements that we have made over the last 12 months. The report recognises that we have made significant improvements in respect of how we report the overall financial position and how we have identified individuals with responsibility for taking forward all actions agreed by the board.

"I'm confident that the trust will make significant improvements in the overall financial position this year, enabling us to achieve operational balance by 2007/8 and then move forward to repay the cumulative deficit."