The Royal Free Hospital Trust is struggling to pay staff and suppliers on time, the care watchdog has found, as the healthcare provider is downgraded to “requires improvement”.

The Care Quality Commission's (CQC) report was published this morning, replacing the previous "good" rating.

In the six areas inspected, safety, responsiveness, and use of resources all required improvement, while the trust's effectiveness, caring, and leadership were rated as "good".

At the Royal Free Hospital in Hampstead, surgery, urgent and emergency services and medical care came in for criticism. All three were downgraded to "requires improvement".

The trust, which also runs hospitals at Chase Farm and Barnet, is also not meeting waiting time targets for referrals to treatment, cancer treatment, and accident and emergency.

The report says services didn't always have the right number of qualified staff to keep patients safe, and half of the trust's "never events" - the most severe errors and failings - took place during surgery at the Royal Free.

Inspectors attributed these to "poor behaviours among a few consultant surgeons in the trust". After the events had happened, the CQC wasn't satisfied with evidence that they had been learned from.

It also said it was concerned with a culture of bullying within operating theatres.

There was bad news for the trust's finances. Inspectors found it is due to overshoot its planned deficit by £36million, and there isn't an effective action plan to tackle the hole in the finances.

The report says that the Royal Free was expected to receive £70m from a land sale this year, but this won't take place in time. The Queen Mary's nurses home in East Heath Road has been controversially earmarked for sale amid a row about key worker housing, but it is not known if the £70m figure refers to this.

Inspectors go on to say the trust is "reliant" on short-term loans to keep it in the black. It is forecast to borrow £57m in 2018/2019, with the overall total reaching £170m.

However, the trust was praised as a sector leader. Bosses were given credit for "doing the right thing, even when this had a negative financial impact". Mortality rates at its hospitals are among the lowest in the country.

The last time the trust's sites were inspected was 2016.

Caroline Clarke, chief executive of the trust, said: "While we are obviously disappointed, it was only a fine margin which prevented us from maintaining our 'good' status.

"We recognise we have to improve and will not shy away from the reality that our performance has not been good enough in some areas - for example when it comes to waiting times and stamping out bullying. These are areas on which we were focusing before the CQC's routine inspection and I am confident progress is already being made."