The NHS trust that runs Croydon University Hospital has revealed a £36 million deficit, more than £10 million more than it had forecast.

Croydon Health Services NHS Trust’s financial position is so dire it has built up a backlog of creditors and been forced to borrow £26.4 million from the Department of Health to pay them back.

The trust had expected to post a deficit of £25.7 million but budget papers submitted to this month’s board meeting revealed the true figure to be £36.4 million.

The papers reveal that in December Croydon Health Services asked NHS England to pay its bills early to cover “cash-flow problems”, which by the end of January had left £9.8 million of its £15.8 million trades payable account overdue.

In February, it asked the same of Croydon Clinical Commissioning Group (CCG) and is currently in talks with the CCG about payments for monthly services being made the month they are provided, rather than a month later.

Azara Mukhtar, the trust’s director of finance, said borrowing money from the department was “common practice”.

She added: “Overall, the trust spends its money efficiently, but across the health service we have to make the funding we have go much further. We are working hard to make sure everything we do is the best value for money, and meets the highest standards that we are determined to deliver.

“It is also important to note that Croydon CCG is currently funded to a lower level than it should be, which means that money for healthcare in Croydon is particularly tight until the funding reaches its correct level in five or more years’ time.

“We must maintain our quality of care whilst working to clear this deficit, so our plans have to be realistic and measured.”

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The trust is looking to negotiate lower rates of agency pay to cut its spending. It spent £18.7 million on agency staff last year, 48 per cent more than the £12.7 millionper cent in 2014/15.

Ms Mukhtar said: “Our spending on agency staff demonstrates that we always ensure we have safe staffing levels, even if that comes at a cost.”

Croydon’s Council leader Tony Newman said the trust’s financial pressures highlighted serious concerns about the underfunding of Croydon’s health services.

He said: “I think the deficit shows, first and foremost, the ongoing pressure on public services in Croydon and the historical underfunding of the NHS in Croydon.

“It is part of the wider debate that Croydon doesn’t get its fair share of public resources compared to other places in London.”