NHS chief executive Sir David Nicholson's challenge to the Service to find efficiency savings totalling £20 billion by 2015 is more important than management change, and can only be achieved by making fundamental changes in the way care is delivered, says the House of Commons Health Committee.

"The Nicholson Challenge is the key issue facing the health and care system," said Health Committee chairman Stephen Dorrell, as the Committee reported on its review of public expenditure in health and social care.

"The fact that there is another bill going through Parliament changing the management structure of the NHS means there is a tendency for every comment about the NHS to be framed by the debate about the bill, but the NHS is well used to management change. In reality, the key pressures which are building in the system arise from the fact that demand is continuing to grow at a time when health and social care budgets have stopped growing," said Mr Dorrell, Conservative MP for Charnwood.

Nevertheless, the Committee report says that the NHS reorganisation process is continuing to "complicate" the push for efficiency gains. Although the process may have facilitated savings in some cases, the review had heard that, more often, it "creates disruption and distraction that hinders the ability of organisations to consider truly effective ways of reforming service delivery and releasing savings."

Discussing the evidence presented to the review, the MPs warn that the magnitude of the Nicholson Challenge may not have been fully grasped. Their inquiry had found "disturbing evidence that the measures currently being used to try to control the financial situation could fairly be described as 'short-term expedients' or 'salami-slicing'," they say, adding: "we are not persuaded that the actions currently being planned will allow the situation to be sustainable over the four years of the Spending Review."

They also describe the distinction between healthcare and social care as "a major cause of inefficiency  and service breakdown." Acknowledging that the separate governance and funding systems for health and social care make full-scale integration "a challenging prospect," they emphasise that, nevertheless, these must be seen as two aspects of the same service and planned together in every area for there to be any chance of a high-quality and efficient service being provided which meets the needs of the local population, within the funding available.

"It is neither possible nor desirable to achieve the required levels of efficiency gain through existing structures, and any attempt to do so would result in a combination of inefficiency and poor quality which would (rightly) undermine public confidence in the system and represent an indefensible use of taxpayers' funds," the Committee states.

"We would like to see best practice in this rolled out across the Health Service, and underperforming commissioners held to account for failure to engage in this necessary process of change," the MPs write.

It is also "deeply concerning," they say, that £116 million of the £648 million intended to be spent through the NHS on improving the interface between health and social care is being spent on sustaining existing eligibility criteria. "This suggests that this money, which was intended to support greater integration of services, is in fact being used to maintain the existing system," they say.

The review found that both the NHS and local authorities are struggling to meet current targets in a sustainable, long-term manner that will maintain high-quality, efficient care in the future, but the need to do so "must be addressed as a matter of urgency," Mr Dorrell stressed.

"This requirement underlies the importance of developing new structures which deliver genuinely integrated services," he added.