THE Government’s flagship policy to create foundation trusts, granting the best hospitals financial independence, was dealt a serious blow last night after it emerged that a leading trust has slid into a £5 million spending deficit in just three months.

A team of American accountants has been called into Bradford Teaching Hospital NHS Trust to draw up an emergency finance plan just six months after it became one of the first hospitals to be awarded foundation status.

When Bradford was vetted by the Government and an independent regulator before its appointment in April, hospital chiefs forecast a £1 million budget surplus by the end of the financial year. By July this had been revised to a £4 million deficit, The Times has learnt.

Politicians and health leaders last night gave warning that many more hospitals would face similar problems because the Government had not foreseen the consequences of imposing numerous new finance schemes on the NHS. They expressed concerns that the debts would impact heavily on patient care as trusts fought to recoup their funds.

Of the 20 hospitals that have been granted foundation status to date, four have already dropped from three to two stars in the performance ratings. The government-appointed regulator originally said that any hospital that lost a star would lose its foundation status, but it has yet to act on the pledge.

Monitor, the independent regulator of foundation trusts, announced yesterday that Alvarez and Marsal, a firm of financial recovery experts, was being called in to avoid Bradford plunging further into the red. The regulator said that the company, which helped to wind down the bankrupt accountancy giant Arthur Andersen, would work with the trust’s board of directors to assess the current financial position and develop future plans. Alvarez and Marsal’s fee will also be paid by the trust, the regulator said.

Frank Dobson, the Labour MP and former Health Secretary, described the move as a very worrying development and an ill omen of the financial problems to come. He said that it revealed serious shortcomings in the way that hospitals were being vetted to become foundation trusts.

“Even I never imagined things would get in a mess this quickly. If we lived in a rational world, it might make the Prime Minister pause for thought,” he said. “It may be necessary to spend money on financial consultants now to rescue the situation at Bradford, but perhaps there should be experts looking at the regulator who gave them a clean bill of health just six months ago.”

Andrew Lansley, the Conservative health spokesman, said: “What this illustrates is that the whole sector is going to face real turbulence. The Government is trying to impose very large changes all at once, and all of them have significant financial consequences which will combine in ways that are very difficult for hospitals to manage.”

The move by Monitor is the first time that the regulator has used powers under Section 23 of the Health and Social Care (Community Health and Standards) Act 2003 to intervene in foundation trust finances.

Bradford was made a foundation trust in April in the first wave of the Government’s controversial scheme for high-flying hospitals. Foundation trusts remain part of the NHS but are given more control over how they spend their money, are able to borrow capital to fund projects and give local people a say on their governing bodies.

But critics of the scheme claim it creates a “two-tier” NHS with greater divisions between the best and worst hospitals.

Bradford’s board of directors has agreed to work with the regulator and the external advisers to identify the causes of its underperformance and implement actions to tackle them. Paul Earp, its finance director, resigned two weeks ago. It is understood that, after seven successful years at the trust, he became exasperated at the financial problems it now faced.

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