Drastic measures are needed to prevent the trust which runs Whipps Cross University Hospital going into financial meltdown, it is claimed.

Barts Health is said to be nearly £16m in the red just two months into the financial year, falling well short of a reported savings target of £77.5m by April.

The trust, the largest in England, is preparing wide-ranging measures to prevent being placed into administration and Dr John Lister, of pressure group London  Health Emergency, fears devastating consequences for services at Whipps.

He blames the flagship Private Finance Initiatives (PFI) undertaken by the trust at the Royal London Hospital in Whitechapel and St Bartholomew's in the City for the ongoing problems.

He said: "Everyone is pretending it’s not there, but PFI remains the smelly white elephant in the room. We have warned since the 1990s that the Barts & London hospital plan was unaffordable.

"PFI is the reason why – no matter how many management consultants are paid thousands of pounds a day, or what horrific plans an administrator might hatch up – there is no solution to the financial problem within the Bart’s Trust without wholesale cuts in services and staffing that would potentially put patient care and safety at risk.

"The special administrator for South London Healthcare effectively recognised this: he could not solve that problem within the Trust itself. In fact his package will cost the taxpayer upwards of £750 million over 20 years. It rescues the two PFI hospitals and guarantees payments to the PFI shareholders – but savages services in the neighbouring Lewisham Hospital and inflicts cuts elsewhere in south east London.

"The financial problems at Barts Health are much bigger even than South London: so any ‘solution’ will be more drastic. And since PFI contracts are seen as inviolable, this is almost certain to mean massive cuts in Newham and or Whipps Cross.

"PFI has always been an extremely a costly way of building new hospitals, at the expense of other services. It is destabilising trusts and services across England. If ministers don’t act on this and go to the root of the problem, Bart’s will be the latest and the biggest in what will be a series of massive financial disasters in which the only beneficiaries will be bankers, management consultants and lawyers."

Barts Heath NHS Trust runs Mile End Hospital, the London Chest Hospital, Newham University Hospital, The Royal London and Bart’s.