The map that shows what austerity has done to NHS hospital deficits

Deficits have spread across the country over the last few years (The Health Foundation)

The financial position of the National Health Service has “substantially deteriorated” in recent years, a new analysis has found.

Research by the Health Foundation found that every area of the country had hospitals and other providers with struggling finances.

A striking map drawn up by the Foundation shows that all regions of the English NHS have gone from a surplus in 2012/13 to all but one being in overall deficit in 2014/5.

The problems are principally the fault of Government policies leading to an increased reliance on expensive agency workers, with funding failing to keep pace, the report says.

Jeremy Hunt has been Health Secretary since 2012 (PA)

Anita Charlesworth, Director of Research and Economics at the Health Foundation said the poor state of finances was unprecedented, the result of “unrealistic” expectations by the Government, and that another five years of austerity would make things worse.

“NHS providers’ finances are in a shocking state with an unprecedented number of hospitals reporting deficits. The situation is particularly bad for acute hospitals, with 95 per cent in the red,” she said.

“Many of the factors linked to the deficit result from system-wide problems. The UK is half way through a decade of austerity and policy decisions have been made which mean that health spending per head of population has remained broadly constant in real terms.

“At the same time it has risen for many countries in Europe, albeit at a lower rate than before the economic crisis of 2008.

“The financial challenges facing our hospitals are not the result of weaknesses in the management of individual organisations. They stem from poor workforce planning and fundamentally an unrealistic expectation of efficiency improvement in the NHS. “

The report found that nationwide, the cost of providing healthcare was growing at 2.2 per cent a year, while funding was growing at only 2 per cent a year.

Productivity in the NHS also grew at an average of 0.1 per cent a year in the last five years – but ministers have budgeted for increases of two to three per cent.

The report says the key drive of the poor financial situation is the high cost of agency workers and poor staffing decisions leading to an increase in their use. 27 per cent more was spent on agency staff in 2014/15 as compared with 2013/14

The warning comes ahead of a further strike by junior doctors over Jeremy Hunt's plans to force a new contract on them.

Doctors say the contract will incentivise unsafe staffing rosters and that patient care will deteriorate, while Mr Hunt says the contract will move towards a "seven day NHS".

The Royal College of GPs warned last month that the new contract would likely make it more difficult to recruit NHS doctors – potentially increasing the reliance on agency staff and increasing costs further.