Hospitals in Sussex will face multi-million pound fines if they treat too many patients under shock new Government plans.

The Department of Health has launched a tough regime of fines which are designed to stop hospitals carrying out too much treatment, The Argus has learnt. Health bosses say the fines are needed to prevent hospitals "deliberately" carrying out too much work as a way of generating extra cash.

But a Sussex MP yesterday condemned the plans as "utterly absurd".

Hospitals are currently "commissioned" by Primary Care Trusts to carry out an agreed amount of treatment each year.

But it is claimed some hospitals are slashing waiting times in a bid to treat more patients than agreed.

This allows the hospitals to squeeze more money from the PCTs and fuels overspending and deficits.

Now, The Argus has learnt that PCTs will be allowed to fine their local hospitals if they treat too many patients.

They will be able to dish out fines of up to two per cent of the value of the contract they have with the hospital.

A typical contract between a PCT and a hospital is around £100m, which means the hospital could have a staggering £2m penalty slapped on it for over performing. The Argus has also learnt that from 2008 PCTs will be able to hand out the same levels of fines if hospitals miss the Government's latest target of treating patients within 18 weeks of GP referral. Strategic Health Authorities will act as regulators of the new penalty system and intervene if it is thought the fine is unfair.

Charles Hendry, Conservative MP for Wealden, said: "What it shows is this whole process from Government is driven by money and not clinical care.

"To fine hospitals for treating patients is the politics of the madhouse. It is utterly absurd when people are penalised for looking after their patients."

A Department of Health spokesman said: "The PCTs need to manage their resources and this is a way of making sure both the trusts and the PCTs work within their financial means.

"The contract will be agreed at the beginning of the financial year and there shouldn't be any problem with delivering that contract. It's only if something unexpected happened that fines could be used. We want patients to be seen as quickly as possible but we recognise the PCT have to stick within their budgets."

The fines come after East Suffolk Primary Care Trust refused to pay Ipswich Hospital £2.5 million earlier this year because it was treating patients too quickly. The hospital had agreed with the trust that patients should wait at least four months for treatment but doctors breached the agreement.