Crucial services could be lost at a hospital used by local residents after it was announced that spending cuts need to be made.

Worcestershire Acute Hospitals NHS Trust, which is responsible for Alexandra Hospital, in Redditch, said it will have to make £20m worth of cuts to break even each year. A private consultancy firm has now been hired to find ways of cutting spending or earning cash.

Michael O'Riordan, the trust's chairman, said: "To break even in 2006-07 we either need to obtain extra funding, which we know is not going to be forthcoming, or like any other organisation where costs exceed income steps have to be taken to reduce expenditure.

"Therefore we embarked on a major clinical service review to identify the future size and shape of safe, affordable, high quality secondary care services," said Mr O'Riordan.

Bromsgrove MP, Julie Kirkbride, added: "It is concerning and I think it is very likely to mean the withdrawal of local services from the Alexandra Hospital."

She said: "Services such as maternity and orthopaedics could be in danger. I don't see how the trust could make such cuts without the people of Bromsgrove noticing a change."