The ambulance trust covering south west Hertfordshire is facing an "unsustainable" cash crisis after repeated months of overspending, and a looming penalty of £2million for missing emergency response targets.

A financial report presented to the East of England Ambulance Service Trust’s board said the trust was spending around £700,000 more each month responding to emergency calls this year than during the first half of the year.

It said: "The current levels of expenditure are not sustainable going into the next financial year.

"Whilst these pressures in 2012/13 can be managed by the use of reserves, similar levels if sustained in 2013/14 would lead to a cost pressure of £8m leaving the trust facing a potential deficit of £4m without mitigating actions."

The number of emergency call-outs in February was lower than the trust expected, and lower than recorded last February.

Despite this, the ambulance trust recorded a "significant overspend" of £1,072,000 in emergency operations.

The amount of money the trust spent on private and voluntary ambulance services was also higher than expected, at £926,000, and described as "significantly above" the planned amount.

Ambulance trusts use private contractors when there are sudden spikes in 999 calls or unexpected staff absences, to carry out non life-threatening jobs, freeing up paramedics.

Although the amount spent by the trust on private and voluntary ambulance fluctuates on a monthly basis, the figure has been increasing from £655,240 spent in September, to £1,419,547 in January this year.

Compared to the figures for January 2012, this is an increase of nearly £500,000.

Provisions of £1.9million for "likely" performance penalties have had to be made, levied at the trust for its failure to meet the A8 and A19 emergency response time targets.

Gary Sanderson, from the ambulance trust, said: "Like all ambulance services we have used private resources for a long time.

"In 2011 this practice was formalised with a tender process which resulted in six providers across the region, all of which meet national Care Quality Commission as well as our own accreditation.

"They are only used when safe and appropriate, for either low priority calls, freeing up our crews to go to patients who need them, or to provide basic life support skills while a trust crew is already on its way.

"Naturally their use has increased in line with demand pressures but the trust is actively working on reducing this, with the recruitment of 200 more frontline staff and better deployment of its own vehicles."