3.18 Over the first four years of the contract, the Trust expects a deficit totalling £2.1 million, until the new hospital buildings and refurbishment are complete and the estimated savings begin to be realised. The LRO will receive revenues from the sales of surplus land, and will use these receipts to provide transitional funding to cover the temporary deficit up to an amount of £2.8 million.
3.19 The Trust's budgets have been calculated on the basis of achieving the £1.6 million annual savings, following the period of transitional funding to 2004/05, needed for the deal to remain affordable. Annual savings of £600,000 were achieved and incorporated in the Trust's budgets from 2000/01 onwards. As noted in paragraph 1.12, the Trust has plans for how the further required increase in annual savings will be achieved, but may need to reconsider these in the light of current changes in clinical practice.