Improving hospital efficiency will free up cash for mental health, maternity and 'all the Herceptins that medical science can make available', the health secretary has pledged.

Speaking to a conference last week run by the New Health Network, Patricia Hewitt warned that the NHS will be 'overwhelmed' by the demands of an ageing population, patient choice, and the obesity epidemic unless all hospitals match the efficiency of the top 25 per cent.

Doing so would 'save the NHS£2bn that could be reinvested in better healthcare, particularly in mental health, and maternity services, that both need more improvement, and all the Herceptins that medical science can make available to us' she said.

During her speech, Ms Hewitt said that reform was unpopular, with ministers accused of 'talking like accountants', but said the NHS was currently subject to 'unacceptable variations' in areas like length of stay, which 'failed' the patients served.

Taking questions, she accepted that staff often felt threatened by reconfiguration plans. But the need to make short-term savings had highlighted the fact that the old 'district general hospital model of 40 years ago' could not deliver modern medical care closer to patients.

'That is difficult for hospitals [to accept], but also for the public who don't see the advantages of one to one healthcare provided by community matrons.'

Ms Hewitt said she hoped 30 demonstration sites across England would show innovative ways of providing hospital care closer to home.

'GPs need to talk to the public about this - it comes much more powerfully from clinicians themselves. We need more of you telling the public about how these changes are saving people's lives.'