Bosses at Stafford Hospital told regulators the trust did not have a problem with death rates — while hundreds of patients were suffering poor care, the ongoing public inquiry into the failures at the hospital has heard.

The inquiry heard evidence that Monitor, the organisation behind the hospital’s Foundation Trust (FT) status, was reassured in 2007 there were no significant problems.

The inquiry heard evidence from David Hill, a senior assessment manager at Monitor, who described how the hospital board members met with the board of Monitor in December 2007.

The inquiry saw notes from the meeting showing former director of nursing Helen Moss telling Monitor: “We do not have a problem with mortality.” In fact the hospital had an abnormally high death rate and it is estimated between 400 and 1,200 people may have died as a result of poor care.

Also in the meeting Helen Moss told Monitor: “Quality is what drives our business and makes people want to come to us.”

Mr Hill accepted Monitor was focussed too heavily on finance at the time but he said now quality and governance came first.

Counsel to the inquiry Tom Kark QC asked whether it was a failure of Monitor to approve the hospitals FT status and not spot the problems. He said the failure “allowed you to come to the conclusion that the trust was financially sound, when fundamentally it wasn’t.”

Mr Hill accepted that, in light of the £4.5 million bail out by the health authority in 2009, that this was a fair comment.

The inquiry also heard evidence from Adrian Masters, director of strategy at Monitor who told the inquiry Monitor wanted FT hospitals to succeed.

He agreed that that could create a conflict of interest as Monitor was supposed to regulate FT hospitals but he said he could not recall an incident where the agency did not highlight problems for fear it would damage the reputation of the FT policy.