Mid and South Essex Trust last month issued plans to cut 600 posts and close 67 beds in a bid to reduce its deficit to £85 million.

Major hospitals, including Guys and St Thomas’ Foundation Trust and Nottingham University Hospitals NHS Trust, have had their budgets cut under new NHS rules that introduce penalties for overspending.

Papers seen by Health Service Journal show some parts of the country trying to trim a fifth of their agency workers during the current financial year as part of efforts to balance the books.

A workforce plan for the Midlands shows the loss of 6,000 temporary posts, with Leicester, Leicestershire and Rutland, Lincolnshire, Hereford and Worcestershire, Nottingham and Nottinghamshire and Black Country among the areas which began drawing up plans in April.

In addition, hospitals have a £12 billion maintenance backlog, with concerns that building programmes have fallen well behind.

Unprecedented challenges 

The NAO report said the NHS was now facing challenges “on an unprecedented scale”, warning that spending increases had not been matched by rises in productivity.

On Tuesday in the Commons, the Health Secretary said officials had been asked to examine the funding and timetable for 40 new hospitals, promised by the last government.

He accused the Tories of handing over “an entirely fictional timetable and an unfunded programme”.

Julian Hartley, chief executive of NHS Providers, which represents hospitals, said the challenge faced by NHS trusts this year was “one of the toughest I have ever seen”.

He said forecasts suggest a deficit of at least £2.2 billion in the current financial year, despite efforts in recent weeks to find more savings.

“We understand that following the final planning round there is still a net deficit of around £2.2 billion, there are different factors to take into account but it looks to be somewhere in the region of between £2 billion and £3 billion,” he said.

Within an hour of being appointed as Health Secretary, Mr Streeting declared that “the policy of this department is that the NHS is broken”, as he pledged to build a health service fit for the future.

Elaine Kelly, head of economics research at the Health Foundation, said the NAO report “paints a picture of systemic failures and inefficient decision-making – including low spending growth, chronic under-investment in capital, and a culture of agreeing to unrealistic targets.

“For patients, this has contributed to longer waits and reduced satisfaction with the health service,” she said.

Siva Anandaciva, chief analyst at the King’s Fund think tank, said the NAO report “comprehensively shows the desperate state of NHS finances that the new Government has inherited”.

“It should act as a warning to politicians of the tough decisions yet to come,” he said.

“Deep financial deficits have now spread widely across the NHS and are having a substantial impact on patients.

“Some NHS trusts have been forced to reduce staffing or delay transformation plans that could give patients faster access and higher quality of care when they need it.”