A politically charged hand grenade has been thrown into the general election debate on the NHS after the healthcare company Circle said it planned to pull out of its contract to manage Britain’s first privately run hospital, Hinchingbrooke in Cambridgeshire.

The news came as A&E performance across the NHS in England sank to a record low last week with just 79.8% of patients treated within four hours over the new year break. The NHS constitution states that 95% of all A&E patients should be dealt with within four hours.

Circle Holdings issued a statement to the London Stock Exchange blaming funding cuts, a surge in demand for accident and emergency services and a failure to deliver “joined-up” reform between health and social services. It said the company had entered into discussions with the NHS Trust Development Authority “with the view to ensuring an orderly withdrawal from the current contract”.

The company said that funding for Hinchingbrooke Health Care NHS Trust had been cut by about 10% for the current financial year and that the company had spent £4.84m to support the trust. Circle is allowed to withdraw from the contract if it spends more than £5m. Conditions had worsened in recent weeks and that its franchise to operate the trust was not sustainable, it added.