The NHS has been making “short-term” and “salami slicing” spending cuts and will not make required efficiency savings if the current approach continues, the House of Commons health committee has said.

The committee, chaired by Conservative former health secretary Stephen Dorrell, publishes its annual report on health and social care spending today.

It says making the required £20bn efficiency savings by 2015 – dubbed the “Nicholson challenge” by Mr Dorrell – can “only be achieved by making fundamental changes to the way care is delivered”. He named it after the NHS chief executive Sir David Nicholson who first put a figure on the required reduction.

The report says there is “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’”.

It says: “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.”

The report questions the approach of the Department of Health’s quality, innovation productivity and prevention programme, saying too many of the savings are expected to be made by reducing tariff payments to hospitals, rather than major service redesigns.

It says: “The Nicholson challenge can only be achieved through a wide process of service redesign… These changes should not be deferred… they must happen early in the process if they are to release the recurring savings that will be vital.”

The committee calls on the DH to be clearer about how it is promoting service and commissioning integration, particularly between health and social care.

It says the DH has shown “precious little evidence of the urgency which it believes this issue [integration] demands” and calls for “as a matter of urgency, the DH [to] investigate the practicalities of greater passporting of NHS funding to social care”.

It calls for “underperforming commissioners [to be] held to account for failure to engage” in pursuing integration.

In relation to the government’s reorganisation of the NHS – under which primary care trusts and strategic health authorities will be abolished next year – the committee says: “The reorganisation process continues to complicate the push for efficiency gains.

“Although it may have facilitated savings in some cases, we heard that it more often creates disruption and distraction.”

However, Mr Dorrell said: “It is not a report about the bill. By far the biggest concern is not to do with the bill, it’s the ability of the system to get on and deliver the efficiency gain.” He said the government and DH should be “making it clear the priority facing the system is to change the way care is delivered, to deliver more integrated care”, rather than to implement the reorganisation.

Responding to the report, NHS Confederation chief executive Mike Farrar said: “This report starkly highlights the weight of financial pressure that is bearing down on the NHS. It shows the uncertainty people are working with and how dangerous it could be for short-termism to dominate the response.

“I would urge all MPs to take on board the findings of their own committee’s report and to back NHS leaders as they seek to drive the necessary changes. It is not always right to lead the protest march. MPs should back change where there is a persuasive case that it will deliver higher quality and sustainable services for patients.”

King’s Fund chief economist John Appleby said: “The report should serve as a wake up call for ministers and the NHS about the magnitude of the task ahead.

“If delivering the productivity improvements required is challenging now, it will only get more difficult during a financial squeeze that is set to last several years.”