Nestor Healthcare, the UK’s largest listed health recruitment company, has pulled out of a £1m medical staffing contract that it won in September, citing problems in handing over control.

The contract, which would have lasted for three years, was to supply nurses, care assistants and clinical staff to Leeds NHS Teaching Hospitals Trust, said chief executive Justin Jewitt.

Nestor would have taken over the staffing services formerly provided by West Yorkshire Medical Ambulance Service, which tried to create an in-house recruitment agency and was the pilot scheme for the NHS Professionals programme. But the scheme left the trust £10m in debt when it was rolled out nationally.

NHS Professionals will now provide the services to the trust. Nestor warned in December that it may struggle to secure similar deals in the future because of the revival of NHS Professionals.