Cannock and Stafford Hospitals in cash crisis

An independent investigation has found there is also "no credible plan" in place to rescue the trust, which runs Cannock and Stafford Hospitals.

A panel of experts called in last September to review the trust's dire financial state has concluded it will not be able to provide safe care on a sustainable basis in the future.

The number of patients visiting the trust has fallen since it emerged between 400 and 1,200 patients may have died at Stafford Hospital due to failings in standards of care between 2005 and 2009.

Experts also say despite investment in new staff, the trust does not have the level of employees to run a 24/7, consultant-led A&E, emergency surgery and paediatric departments.

Monitor also found that:

• Mid Staffordshire NHS Trust is set to deliver a deficit in 2013 of £15 million

• It would now need to make £53 million of savings in five years simply to break even

• It would also require a £73 million subsidy from the Department of Health over that period

• Once Monitor has received the final report in March, it will decide what action to take and whether to put the trust into “special administration”

The watchdog stressed it was clear that "the trust has made substantial clinical improvements to the quality of care", but that it also lacks both patients and staff.

Monitor's findings have been revealed as the trust waits for the findings of a report into a public inquiry led by Robert Francis QC into the higher-than-expected number of deaths at Stafford Hospital.

Its A&E department has also been closed overnight since December 2011 due to difficulties in recruiting enough staff to keep it open.

Professor Hugo Mascie-Taylor, clinical advisor to the contingency planning team at Monitor, said: "In the past the trust struggled to maintain high quality clinical services at the same time as reaching its financial targets and even now it is struggling to achieve recommended levels of staffing. If the Department removed its financial subsidy it is clear that clinical services would suffer."

The report states that without continuing cash support, the trust is unable to pay its debts as they fall due and would be deemed insolvent. The Department of Health gave the trust £20m last year.

Trust chief executive Lyn Hill-Tout said: "Mid Staffs is not financially sustainable in its current form because, despite all the efforts, not only of the trust, but of the local health service, we do not have a plan which brings us to financial break even by 2015.

"Similar financial challenges are being faced across the country by smaller general hospitals. The board agrees with the Contingency Planning Team's assessment, which we first learnt about in December and is now summarised in their report to Monitor." Cannock Chase MP Aidan Burley said the report raised questions that needed to be answered.

"The last Labour government has to explain why they ever granted foundation trust status to a trust which has lost money every year since 2009 – just one year after it was formed," he said.

Mr Burley said the report also includes a figure of £5.4 million to "increase the rentable value of Cannock Hospital" and called for the trust to reveal its future plans for the Brunswick Road site.

Today's report has also prompted fresh calls for services to be maintained at Cannock Hospital. A campaign was launched last year to safeguard services there amid fears they were being stripped away.

Cannock Chase Council's health chief Muriel Davis said: "Cannock Hospital is very important for what it does now but we need to encourage more services to be provided there."