Mental health chiefs are to sell off NHS buildings to reduce its crippling £6m debt - the grim legacy of paying for patients to be treated in luxurious private hospitals.

The crisis started in 1995 when the Oxfordshire Mental Healthcare NHS Trust agreed to control how and where patients with specialist mental injuries, such as brain damage, were treated.

The trust soon realised it had neither the room nor the know-how to treat them properly in Oxford's NHS hospitals, including Warneford Hospital, Headington, so its bosses paid to have their patients treated privately - often outside the county. The Trust's new chief executive, Julie Waldron, admitted: "A lot of the patients were sent to the private sector. It does cost a lot and it does mean you have not got the continuity of care.

"A lot of the opportunities for providing key patient care are lost if the patient goes out of our services.

"It is not a problem that this trust is dealing with in isolation. There is now a recognition that putting people in the private sector is not the best for the services and not for patients.

"If the trust had the services in place at the time that we have now for the people with mental health problems, it would have been managed very well and there might not have been a budget overspend." Last year, Mrs Waldron's predecessor, Michael Orr, resigned. Now, in a drastic attempt to cut £1.5m by next April, the trust is examining ways to save money, including a ban on most mobile phones for staff, a reduction in business lunches and no more free biscuits at meetings.

Patients were even denied free newspapers but this was stopped after a week because it proved so unpopular.

To recoup a large chunk of the £6m debt, the trust wants to sell Thorncliffe House, an NHS hostel in north Oxford for people discharged from hospital care, and NHS offices in Rectory Road that house drugs and alcohol teams.

Thorncliffe has been empty for many months and recently squatters have lived there. Mrs Waldron added: "We are looking with social services at the possible use of shared facilities, and wherever we can divest ourselves of buildings we will not only benefit from the sale but also reduce our capital charges. Thorncliffe House was going to be sold anyway. We have not lost places, we have got a lot of new facilities which have replaced it."

Mrs Waldron said she was confident the trust could break even by 2001.

Story date: Monday 29 November

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