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A Surrey hospital trust is facing a spending gap of £38m this year which is predicted to get worse, it has emerged.

Epsom and St Helier NHS has balanced its books for the past four years but is facing a future shortfall.

Spokesman Antony Tiernan said the trust was facing two challenges - increased care costs and fewer people being treated in hospital.

The National Audit Office (NAO) has named the trust as one of 20 not able to achieve foundation status.

Mr Tiernan, director of communications and corporate affairs, said: "There is an ageing population. The cost of drugs and technology is increasing and people have more complex conditions so obviously that's increasing the price of NHS care.

"More people are being treated in the community, so out of hospital, in their local GP centres and in local care centres, which means that money isn't coming into the hospital.

"When we looked forward over the next five, 10, 15 years for the future income for Epsom and St Helier hospitals the money wouldn't be there."

Mr Tiernan added: "Our existing situation shows this is the year where it starts.

"The gap between our income and expenditure this year is £38m because of those challenges and that would get worse year on year."

He said the trust had to find "other options" for running its hospitals to meet its financial challenges.

Epsom and St Helier NHS has said it is not viable to become a foundation trust in its present form and is seeking to merge with another trust.

An NAO study has said 80% of trusts in England yet to achieve foundation status are facing financial issues.

The government has scrapped a deadline for trusts to achieve foundation trust status by April 2014, but still expects the majority to become foundation trusts either on their own or through merger "as soon as clinically feasible".