A major hospital is operating with a budget deficit for the first time in its history.

The James Paget University Hospitals Foundation Trust will have a funding gap of £5m for the year 2015/16.

The trust's chief executive, Christine Allen, said: 'We are taking this situation extremely seriously. Trusts across the country are experiencing financial pressures and this trust is no exception.

'I am confident that we will meet this challenge as we have outstanding staff who have shown time and time again how proud they are to work for the organisation.

'And to be clear, our current financial outlook will have no bearing on the quality of care at our hospitals. Compassionate and safe patient care is, and will remain, our priority.'

Peter Hargrave, non-executive director for the trust, said: 'I feel that we are doing everything that we can to live within the budget that we have and also we are beginning to plan our way to the future to bring ourselves back into viability.'

A funding contract agreed in April 2014 led to an income position for James Paget of £127.9m last year from the Great Yarmouth and Waveney CCG but the CCG has proposed funding for 2015/16 to be £119.6m, which is £8.3m less than last year.

This is despite emergency medical admissions rising 1.8pc in a year at the hospital.

Andy Evans, chief executive of the Great Yarmouth and Waveney CCG, said: 'We always negotiate financial settlements with all of our providers on an annual basis, and are currently in the process of finalising the 2015/16 agreement with James Paget. Both ourselves and JPH have jointly requested independent arbitration so that we can reach a resolution in the near future.

'Although it is unfortunate that we have reached this stage in the year without agreeing a settlement, it demonstrates the immense financial pressure which all parts of the NHS are currently facing.'

The funding negotiation started in January and a legal process, known as expert determination, will decide the outcome in the next few weeks.

Do you have a health story? Email nicholas.carding@archant.co.uk