A health minister has condemned the "catastrophic" £28m overspend at NHS Croydon but stopped short of calling for those responsible to be held to account.

Jane Ellison, Parliamentary under-secretary of state for health and MP for Battersea, accepted the need for further investigation into "indefensible" financial mismanagement that led to the primary care trust reporting a £5.4m surplus in its 2010-11 account had actually spent £22.4m more than budgeted.

The minister, speaking on Tuesday in a House of Commons debate secured by Croydon South MP Richard Ottaway, described it as "extraordinary" that neither the trust's internal audit or one conducted by Ernst & Young had uncovered "significant financial irregularities".

But she backed health secretary Jeremy Hunt's decision not to compel Caroline Taylor, chief executive of NHS Croydon at the time of the misreporting, to explain it.

The minister said: "I am not going to try to defend the indefensible. The Government position is clear: overspends are not acceptable and all NHS organisations must live within their means.

"The failings in question, together with substandard financial processes and poor management reporting-and, indeed, poor management-led to an inaccurate picture of the organisation’s financial position."

She added: "We accept that others need further investigation. I am happy to discuss those with [Mr Ottaway] after the debate, so that he can feed through any other questions or concerns."

But while Ms Ellison acknowledged "clearly there were people who performed poorly" at the trust, she defended Mr Hunt's decision not to compel the key figures at fault to give evidence.

The south-west London joint health overview and scrutiny committee that investigated the overspend last year was unable to question Ms Taylor, the trust's finance director Stephen O'Brien or Mark Phillips, former interim deputy director of finance - all considered principally to blame - because all three refused to give evidence.

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Richard Ottaway, Croydon South MP, speaks in the House of Commons

Ms Ellison said: "I know that my right honourable friend is frustrated about the fact that no former officers of NHS Croydon have been held to account, and I understand that."

But she added: "Employees attend before local authorities to answer questions on behalf of the relevant body and not in a personal capacity.

Accordingly, the local authority regulations 2013 do not impose duties on people who are no longer employees of the NHS body in question. Where employees have moved, we would expect the relevant body to have appropriate handover arrangements and to identify another suitable person to attend."

Mr Ottaway said he drew encouragement from the health minister's response and would continue to push for key players in the overspend to be held to account.

He said: "I am encouraged by Ms Ellison’s feedback – she fully admitted this situation was a mess and is obviously taking it very seriously.

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Caroline Taylor refused to be questioned by the scrutiny committee

"Positive changes that have been made to the running of finances across NHS London as a result of the Croydon catastrophe, but we are still no closer to holding anyone in charge at the time to account.

"It is scandalous that people in charge of the PCT’s accounting at the time have moved on to other jobs in the NHS and are immune from being questioned about a £28m misstatement in final accounts.

"Clearly there is a statutory flaw if even a secretary of state can’t force them to give evidence, and I strongly believe something should be done about it."

He added: "I look forward to continuing this debate with the Department of Health and getting justice not just for the people of Croydon, but also for the institution of the NHS as a whole."

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