A HOSPITAL trust's financial performance has been branded "inadequate" by an independent watchdog because of long-standing, multi-million pound debts.

The Audit Commission findings mean the resources rating for Worcestershire Acute Hospitals NHS Trust for 2006/07 will fall to "poor", provoking a bitter backlash from health chiefs.

Trust bosses have called the report "unfair, damaging and misleading" in a statement released ahead of its official publication on Thursday, October 18.

The chairman and chief executive of the trust, which manages Worcestershire Royal, Kidderminster Hospital and the Alexandra Hospital in Redditch, have voiced their frustration.

Chairman Michael O'Riordan said the decision to downgrade the trust's overall financial rating was "bitterly disappointing".

The trust had a deficit of £31 million but reduced it by £12 million after slashing 500 jobs in April last year to streamline the service. It has also taken out a loan of £25 million from the Department of Health.

Mr O'Riordan said: "To write off the efforts of staff on the basis of debts from years gone by is unfair and damaging to their morale and the reputation of this trust. It paints a misleading picture of where we are and how for we have come."

Chief executive John Rostill said an immediate appeal had been launched by the trust but dismissed by the commission, fuelling "a sense of injustice".

He said: "After everything this trust and our staff have been through, we are finally making real progress towards a secure long-term future. It is difficult for me to understand how the Audit Commission can apparently ignore all that."

The trust was given an overall rating of two out of four for financial reporting, financial management, internal control and value for money but the rating of one for financial standing resulted in the overall position being reduced to one which translates as "poor".

Local auditor Mark Stocks of the Audit Commission said: "It was my decision to award the trust an inadequate' rating for financial standing. In doing so, I took advice from the Audit Commission on other scores awarded to NHS bodies in similar circumstances.

"The trust has made significant steps in delivering financial balance and should be applauded. However, the cumulative deficit of £31 million, which is the legacy of previous management regimes, remains significant and the overall financial standing of the trust remains weak."