In 2009 NHS chief executive David Nicholson claimed the NHS would have to save �15bn to �20bn by 2014.

The time-scale has been pushed back to 2015 and beyond, but the �20bn 'Nicholson Challenge' remains no less demanding.

Rising demand, a growing elderly population and ever more expensive equipment and drugs means that just to continue providing services, the NHS would need to make the efficiency savings.

While the NHS, unlike other areas of public spending, has seen its budget ring-fenced rather than slashed, those in the health economy argue that many factors means this actually feels like a funding cut.

And now the funding problems are really beginning to bite, and the latest NHS trust to unveil its plan to tackle this issue is the Norfolk and Suffolk NHS Foundation Trust.

The mental health trust is proposing to shed 502 front-line jobs over the next four years through a radical redesign which it says is being led by clinicians.

The trust is hopeful it will not have to make any compulsory redundancies and says inpatient beds will only be axed when there is evidence they are no longer needed.

Beds are also proposed to be reduced, from 225 to 172 in Norfolk and Waveney and from 150 to 117 in Suffolk.

However, some of the remaining beds will be changed from inpatient beds on wards to what are called 'alternative admission' beds. These are beds in houses or bungalows in the community that are staffed 24 hours a day and which the trust says are preferable for many patients as they offer the support needed in a more natural setting without the need to be admitted to a psychiatric ward.

Former Waveney MP Bob Blizzard said he campaigned hard when he was in office to get the number of inpatient mental health beds in the area increased, which is why he was so concerned that they were facing a hefty cut - from 40 adult acute beds to 20 in Great Yarmouth and Waveney, with alternative admission beds rising from six to 11 and two substance misuse beds being moved to the west of Norfolk.

He said: 'In-patient beds are already over subscribed. Staff have given me examples of patients sent to out of area beds, of patients accommodated in expensive private beds at �500 plus per day, of the existence of a waiting list for in-patient beds, of cases where new patients have been accommodated in the beds of patients out on leave (who may need to return urgently) - contrary to clinical advice. It's hard to see how we can make do with fewer in-patient beds, when we already have a shortage.'

He added that community mental health teams had been cut in Waveney, so it was hard to see how more care could be provided in the community.

Mental health trust chief executive Aidan Thomas admitted that patients are having to be sent out of Norfolk and Suffolk on occasions, but said clinicians were confident they could reduce pressure on beds by following practices already being used by other trusts.

Monitoring arrangements are also being put in place to check on the quality and safety of services throughout the process, for example questionnaires for patients, ensuring that staff case loads do not fall to unsafe levels and keeping a close check on any incidents or increase in incidents.

Mr Thomas said many of the 250 clinicians who had helped to shape the radical redesign were keen on looking at how preventative measures could be put in place to stop patients from becoming very ill or getting to a point of crisis, as well as using treatments which give patients more choice and control over their life.

He said too many patients were being admitted to wards when in fact they could have been treated in the community, which is often what they would prefer and which would be better for them.

Mr Thomas said: 'One way we could save more is by centralising our inpatient beds but we are not doing that. We are making sure that every locality - West Norfolk, Central Norfolk, Yarmouth and Waveney, East Suffolk and West Suffolk - has inpatient services for all ages of adult.'

The service redesign also comes at a time when instead of receiving block payments, the trust will in future receive payments for individual patients and the results or outcomes achieved.

But not all areas of mental health will be subject to this funding change, which is why certain departments at the trust are not part of this radical redesign and proposed job and bed cuts.

The trust has around 4,100 whole-time equivalent staff, of which 3,333 are involved in providing direct care services and another 807 work in corporate and support service.

However, the cuts are planned to come from a pool of just 2,130 staff.

Those departments which are not included are its wellbeing services, secure (forensic) services such as Norwich's Norvic Clinic, drug and alcohol service and continuing care.

They will, however, be subject to cost improvement targets and to further plans for change in the coming months.

Corporate services underwent cuts and redundancies when the previous Norfolk and Waveney and Suffolk mental health trusts merged at the start of this year.

However, concerned staff said they were worried the number of consultant psychiatrist posts were being reduced from 99.7 to 66.70, a reduction of 33pc, while SAS grade medics, for example staff grade doctors, are being reduced from 9.5 to 3.8, a reduction of 60pc.

They also point out that band six staff, which could include senior nurses, are being reduced from 589 to 384.7, a reduction of almost 35pc.

And they say the 20pc increase in band three staff, for example health care assistants, from 364.9 to 439.5, is symptomatic of what is happening across the NHS as many highly-qualified roles are replaced with lower paid and lower skilled positions.