Kingston's cash-strapped Primary Care Trust (PCT) has paid more than £2million in interest to the Government at a rate of 10 per cent.

It is almost twice that charged by commercial lenders and has helped nudge the PCT's debt towards an estimated £22million by next April.

The PCT's solution is to arrange a £12million loan, which means a further £1.2million in interest payments will be lost to the NHS in Kingston.

The revelation has angered trade unionists, coming at the same time as massive spending cuts by the PCT which will result in bed closures at Tolworth Hospital and up to 20 redundancies at Kingston Hospital.

Kingston Unison representative Michael Walker said: "The Department of Health (DoH) should not be making a profit out of them - it is robbing Peter to pay Paul. It might help Patricia Hewitt's job but it doesn't help the staff at our hospitals who are very concerned about job losses and services."

Kingston PCT's latest figures reveal that a £10million debt from last year has combined with a £3million overspend this year on hospital care and other patient treatment. Another £7million "top slice" payment has been made to NHS London to help even worse financial crises in other parts of London.

The latest loan will create interest of £1.2million a year, to add to further payments on this year's debt of up to £22million. PCTs are not allowed to borrow from anyone but the DoH, and the rate of interest is there to discourage financial deficit.

Kingston and Surbiton MP Edward Davey said he was appalled by the interest rates being served to PCTs.

He said: "NHS cuts are bad enough without measures like this making budget problems worse.

"To levy a penal interest rate of 10 per cent on Kingston health services is a scandal and I will be raising it with the minister for health."

"Mr Davey added: "When the Labour party is paying an interest rate of six per cent on an unsecured loan it is an outrage that the Labour Government is demanding interest payments from our NHS at 10 per cent.

"They are trying to get their house in order, they do not need a ten per cent interest rate to teach them that."

The PCT is banned from borrowing money from other sources.

A DoH spokeswoman said that disincentives for PCTs in deficit are there so that rewards can be offered to the successful parts of the NHS which contribute surpluses to struggling areas.

She said: "This is about good management and encouraging the NHS to bring its books into balance."