Lancashire Teaching Hospitals NHS Foundation Trust is facing regulatory action after forecasting the most extreme deterioration in finances across the sector this year.

Having dipped £2.8 million into the red at the end of the financial year 2014/15, the Trust is now expecting a shortfall of £46.8 million just one year later.

Unsurprisingly, an investigation by watchdog Monitor found the Trust in breach of its licence to provide care, and that it lacked both the robust plans and the financial management needed to address its problems.

“The trust is now on notice to reduce its forecast deficit quickly, and whilst it has our full support as it delivers its recovery plan, we will strengthen our action if necessary to ensure it manages its finances better in future,” said Paul Chandler, Regional Director at Monitor.

The news marks another blow to the ideology behind foundation trusts, which are given certain freedoms to help better match services with local needs, including the ability to keep hold of any surplus cash generated to invest in new services, and borrowing money to support these investments.