OXFORD Radcliffe Hospitals NHS Trust has been reported to the Government after it was accused of failing to come up with a financial plan to break even.

The trust got into debt in 2005-6 and 2006-7 and ran up a £26m deficit.

A report by district auditor Phil Sharman revealed the trust had failed to produce a plan which would claw back the shortfall.

Mr Sharman said in a letter to the trust: “I have a duty under the Audit Commission Act 1998 to refer any matter to the Secretary of State if I have a reason to believe that the trust, or an officer of the trust, is about to make, or has made, a decision involving unlawful expenditure, or is about to take, or has taken, unlawful action likely to cause a loss or deficiency.

“I have referred a matter to the Secretary of State under section 19(b) of the Audit Commission Act 1998 in relation to the forecast failure to achieve the required financial break-even duty over a five-year period.”

The referral comes at a time when top management at the trust is undergoing a major shake-up.

In June, chief executive Trevor Campbell Davis announced he was leaving his £189,000-a-year job after six years to take up a position in international health care.

His departure is to be followed by that of finance director Chris Hurst, who is leaving to become national finance director for health and social care in Wales.

Mr Hurst will be the acting chief executive at the Oxford Radcliffe trust until his departure for Wales in the autumn. An interim finance director, Jo Farrar, has also been appointed from NHS London.

A Department of Healthspokesman said: “We expect a recovery plan to show how they will address the break-even failure.”

The trust has agreed with the Strategic Health Authority to pay back debt accumulated in 2005-6 and 2006-7 over seven years instead of the five required by law.

Mr Hurst denied the trust now ran the risk of being ordered to trim its finances more drastically than it has already in order to meet the break-even deadline, which could spell major cuts in services.

He said: “The Secretary of State, I am sure, has the legal powers, but it won’t happen that way.

“In effect, the South Central Strategic Health Authority is the regional branch of the Department of Health and it has agreed the seven-year plan.

“It’s not that we have been let off anything. We’re having to make large surpluses when the finances were only designed to produce modest ones.”

“We do not expect any further action.”