Richmond taxpayers have indirectly paid the price for NHS Croydon’s “deliberate cover-up” of a £28m budget black hole.

Croydon Primary Care Trust reported a £5.54m surplus in its 2010/11 budget but was actually £22.4m in debt, a joint health overview and scrutiny committee (JHOSC) said on Monday.

The committee, formed by six south-west London councils including Richmond, criticised the NHS for failing to hold individuals to account for the large-scale financial mismanagement.

Croydon Councillor Jason Cummings, chairman of JHOSC, said money to plug the gap came from Croydon’s internal savings and a fund contributed to by London primary care trusts – although the exact breakdown has not yet been revealed.

Councillor Tony Arbour, Richmond’s cabinet member for performance, said: “This joint borough committee has exposed a lack of transparency and accountability in the NHS.

“The lack of the co-operation from the NHS is not acceptable and still no one has come forward to justify and explain where the missing funding has gone.

“All I do know is that it wasn’t in Richmond. As a local authority we are the guardians of public money and taxpayers have the right to know where their money has been spent.”

The damning report by JHOSC branded senior managers incompetent and said their actions would have a detrimental impact on health services in Croydon.

It disputed NHS London’s claims that the misstatement of accounts arose from system failures alone and called on the NHS to investigate officers whose “action or inaction” had been the root cause of the overspend, and the subsequent cover-up.

JHOSC urged the secretary of state for health to compel Caroline Taylor, former NHS Croydon chief executive who refused to appear before the committee, to answer crucial unanswered questions.

The committee said there was significant motivation for senior officers to disguise the extent of the financial incompetence at NHS Croydon to safeguard their own positions.

Clinical commissioning groups in south-west London have been recommended to review the qualifications of staff with responsibilities for budgets.