THE NHS is facing an unprecedented financial meltdown in England and has no convincing plan to close a £22bn "black hole" in its accounts by 2020-21, according to a damning report by MPs.

In a grim appraisal of the financial health of the NHS, the influential Public Accounts Committee (PAC) said:

• A significant number of acute hospital trusts are in "serious and persistent financial distress";

• There is a "spiralling" trend of increased deficits;

• The current payment system is "not fit for purpose";

• Hospitals are at the mercy of agencies which charge 'rip-off' fees to supply doctors and nurses.

In the North-East, the County Durham and Darlington NHS Trust expects to be £14.7m in deficit by the end of the 2015/16 financial year; South Tees expects to be £2.8m in the red; and North Tees and Hartlepool expects to be running a £7.4m deficit.

The PAC said difficulties have been compounded because trusts are trying to meet unrealistic savings targets. The NHS is expected to find £22bn in efficiency savings by 2020-21, but the MPs were not convinced that would be possible.

They said that the cash balance of NHS trusts and NHS foundation trusts has "significantly worsened in the last three financial years".

They also criticised the NHS and ministers for failures in workforce planning, contributing to a 24 per cent increase in spending on agency staff by acute trusts between 2012-13 and 2014-15.

NHS England told the committee that spending on temporary staff was the largest driver behind trusts' increasing deficits and described how some agencies providing temporary staff had taken advantage of the situation to charge 'rip-off' fees.

The Department of Health argued that "no one had foreseen the scale of 'exploitation' by agencies" and NHS Improvement suggested that the £4bn cost of agency staff in 2015-16 could be reduced by £880m without excessive agency charges.

The MPs said: "We accept that the cost of agency staff may be excessive, but we also note that the use of agency staff in the NHS is nothing new and that the opportunity for agencies to take advantage of staff supply shortages was predictable.

"Yet the Department, NHS England and NHS Improvement are only recently making serious attempts to control agency spending.

Meg Hillier, the committee's chairwoman, described the use of agencies as “a sticking-plaster solution to deep-rooted problems with NHS workforce planning."

She added: "Acute hospital trusts are at crisis point. Central government has done too little to support trusts facing financial problems with the result that overall deficits are growing at a truly alarming rate. Crude efficiency targets have made matters worse.

"Without urgent action to put struggling trusts on a firmer financial footing there is further serious risk."

Helen Goodman, MP for Bishop Auckland and Teesdale, said: “The Government says it has protected the NHS budgets but £22bn efficiency savings is another word for cuts. We see it in our area with the closure of a ward at the Richardson in Barnard Castle and proposals to cut the Urgent Care Centre in Bishop Auckland.”

Pat Glass, MP for North West Durham, added: “The Government keeps telling us that it is are putting more money into the NHS but it is failing to cover inflation or the costs associated with an ageing population and social care. Less, not more, money is going into NHS services."

The news comes as Doncaster-based Danum Medical Services Ltd (DMSL) announced that the company has gone into administration less than a year after taking over the running of Marske Medical Centre, east Cleveland, last April.

Redcar MP Anna Turley warned that the closure could be devastating for residents.