Croydon's entire health service has been placed under new special measures designed to "restore financial discipline" to troubled parts of the NHS.

The borough's NHS trust and clinical commissioning group (CCG) are among 14 providers forecasting "significant deficits" for 2016/17 that have been chosen by NHS England and regulator NHS Improvement to fall under the new regime.

Five NHS trusts and nine CCGs across England today entered the financial special measures, which require them to agree an intensive recovery plan overseen by specialist teams.

Croydon Health Services was forced to borrow £26.4m from the Department for Health earlier this year after posting a deficit of £36.4m in 2015/16, more than £10m worse than it had forecast, and expects that to rise to £39.8m by the end of the current financial year.

The trust spent £8m more on temporary staff than planned last year, which it blamed in part on difficulties recruiting doctors and nurses.

Croydon CCG, which has been historically underfunded, recorded a deficit of £10.8m and its financial performance has deteriorated in the first quarter of this financial year.

NHS Improvement, which is responsible for overseeing and holding to account health trusts, said special measures were being introduced "where there is a failure to meet the financial discipline expected".

Senior health service managers will be parachuted into the trust to inspect financial, clinical and staffing arrangements and agree a detailed strategic plan.

The team will have the power to withdraw key spending decisions from the trust and remove directors from their positions.

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John Goulston, chief executive of Croydon Health Services

To break free of the special measures, providers must demonstrate a "robust recovery plan" approved by its own board and NHS Improvement, as well as evidence of significant progress within two months of agreeing the strategy.

John Goulston, chief executive of Croydon Health Services, said the trust faced "long-standing financial challenges".

He added: “Balancing our books remains our greatest challenge, as we have continued to spend more than we earn to deliver the services required for London’s largest borough.

“We welcome this extra support to help us make every penny spent count, to increase our efficiency whilst maintaining our care. 

"Funding in Croydon is particularly tight, and both the trust and Croydon CCG are among a number of NHS organisations where additional support has been identified as needed.

“We want to reassure our local community that we will continue with our ongoing improvements in care, which has seen a step-change in our A&E performance and waiting times for cancer and planned care."

Croydon is the only of the nine CCGs placed under special measures today that was not rated 'inadequate' by the Care Quality Commission in 2015/16. It was rated 'requires improvement' by the watchdog.

But it was selected for the regime "in in the light of its deteriorating financial position in quarter 1 2016/17," said NHS England.

The CCG will be ordered to produce and implement a financial recovery plan and improve its governance.

Dr Anthony Brzezicki, clinical chair of Croydon CCG, decribed the group's financial position as its "greatest challenge yet".

He said: "Since Croydon CCG was established, we have been working to turn around the hugely challenging deficit we inherited.  The local health service has been historically underfunded which has also contributed to our financial position.

"We have clinically led savings of £72m over the last five years and consistently met our financial targets whilst improving quality and performance each year.

"We know even more needs to be done and we welcome NHS England’s continued support.  We have had independent assurance of our financial plans every year and we are under no illusions that this year will be our greatest challenge yet. 

"We have the full support of our GP membership and we are committed to finding new ways to make savings and efficiencies to deliver our statutory requirement to live within our means.  We need to focus our resources where we can have the biggest impact on people’s health and well-being whilst continuing to improve the quality of local services.”