looking at the cost of hiring people in the Book of the Manor I cannot see where the funds are going to come from. If the average manor provides £6 per year income which is used to pay for family horses etc how does this allow for say hiring a doctor at £2 per year even a commoners family is listed as £1 per year where does the other cast come from ?

Short reply: It doesn't. A mere 1-manor knight doesn't have a budget for excess entourage members. He actually has more than his squire, when he is travelling in style, as can be seen in the KAP rulebook, 5.0 edition p. 160.

Longer reply:
1) Book of the Manor also allows you to build investments, which increase the money you have to spend. A couple of those and hey presto, you have +£2 / year excess that you can use to hire the doctor.
2) During Pax Arthuriana you will get to have all sorts of nice deductions to the Weather Roll, which makes Good Harvest the norm for many manors. Thus, the £6 manor suddenly is making £9 / year, even before the investments.
3) Loot. The big battles tend to give good opportunities for looting. This is especially true during Boy King and Conquest periods, which follow the Anarchy, but Uther Period has lots of good looting opportunities too.
4) More manors. If you manage to gain another manor close by (so that it doesn't require its own steward), that is +£2 / year excess right there.