NHS managers have won their fight to get an extra £7m annual funding for research at Oxfordshire's major hospitals.

The Department of Health has agreed to double the Oxford Radcliffe Hospitals NHS Trust's existing £7.5m research budget after it was revealed that the organisation had been underpaid for four years.

The new funding means the trust will not have to subsidise their medical scientists with money which should be spent on patients at Oxford's John Radcliffe Hospital, Churchill Hospital and Radcliffe Infirmary, and The Horton, Banbury.

But MP Tony Baldry said it was a tragedy the trust had already lost £28m, during a time of financial hardship when it was forced to pay off debts from the sale of Oxford's Radcliffe Infirmary.

Trust finance director Chris Hurst said: "This will be used to cover costs that we have already incurred. It won't be extra money for us to spend.

"The problem arose because the income we received for research and development was set on a self-declaration basis in the early 90s, but the amount of research we do has crept up over time.

"We've been successful in terms of research, but because the income was fixed more than 10 years ago, it's brought a big gap in funding." Health Minister Stephen Ladyman admitted last autumn that the ORH research budget had been under-funded, but the ORH had to fight to get the extra cash.

Mr Hurst said: "Last year Thames Valley Health Authority gave us the money because they thought we had a good case.

"The reason it got sticky was because other teaching hospitals heard about our claim and the ante got raised.

"The London hospitals were getting more income than the provincial centres and if the DoH just looked at redistribution, London would have got less.

"The department wanted to wait until 1998, when the new payment by results scheme was fully introduced, but since then they have acknowledged that they will address this now."

Banbury MP Tony Baldry last year condemned the mistake as a "cock-up", because during the last four years, the trust has suffered severe debts which it was forced to plug with cash from the sale of the RI.

He said: "I think the tragedy is that if we hadn't lost the £28m, it wouldn't have been necessary for the sale of the RI to pay off the overdraft.

"The capital receipt could have been used for something else.

"There has been some creative accounting over the last couple of years and it's disappointing that the ORH lost out on money made from the sale of the RI."