Speaking at the NHS Alliance's annual conference in Manchester on Tuesday, Mr Nicholson said it was ‘perfectly possible' for clinicians and managers to drive up efficiency and save the NHS from its economic woes.

But the NHS Alliance is calling for an immediate end to Payment by Results and for primary and secondary care to share budgets instead. Liberal Democrat shadow health secretary Norman Lamb agreed and went further, calling for the abolition of strategic health authorities too, while health economist Alan Maynard said PCTs could be abolished instead.

NHS Alliance primary care lead Dr David Jenner told delegates, who agreed unanimously, that Payment by Results was ‘bankrupting the NHS'.

‘We've all agreed Payment by Results isn't working. But the government are already planning next year's tariff. It's like Celine Dion; it just goes on and on,' he said.

Earlier NHS Alliance chairman Dr Michael Dixon attacked senior figures in the NHS as ‘an autocracy of senior managers...a ruling elite from the acute sector' who had neglected primary care.

‘The consequence is all sorts of expensive and ineffective councils, boards and initiatives that do too little to support or meet the concerns of ordinary patients, clinicians and managers at the frontline of primary care.'

On Wednesday health minister Mike O'Brien and Conservative shadow health secretary Andrew Lansley will address the conference.