Up and down the country nurse managers, therapy heads and clinical directors wonder how on earth they'll find another minimum 4% of "efficiencies" – don't ever call them cuts – this year, with yet more to come in 2013. Care is being rushed, treatment rationed, and staff are insecure. One desperate hospital trust in Kent has just offered redundancy terms to its entire 4,000-strong workforce.

So why not fund the wretched "cost improvement" targets with the money saved last year? How can one square the English NHS's £2bn financial "surplus" in 2011-12, confirmed last week by the Audit Commission, with this continuing and near-obsessive pursuit of savings?

It may not appear so in the average hospital, but the NHS is awash with cash. Last year's "surplus" of £1.6bn reported by primary care trusts and strategic health authorities – that's the lion's share of the £2bn total – is no anomaly. Each of the three previous years saw "surpluses" in excess of £1.3bn.

This is not because we are spending excessive amounts on health. France and Germany each spend more than 11.5% of their GDP on healthcare; the UK still spends only 9.6%, and that's despite all the growth of the Blair years. The NHS is not overfunded; rather, much-needed money is being deliberately withheld.

"Surplus" is a misnomer. Trading organisations make surpluses. NHS commissioners and regulatory bodies, however, are an arm of government, prioritising and channelling the resource decided by parliament.

No, they underspend. Their motives may be visionary (strategic change), practical (paying for redundancies arising from PCT abolition) or even craven career preservation: the outcome is the same. In a climate of austerity, not spending money has become virtuous.

The problem is that underspending, year after year, suggests – wrongly – that the NHS didn't need the money in the first place. In 2010-11 the total PCT/SHA underspend was nearly £1.4bn, and George Osborne retrieved £0.5bn of it in the last budget. That's money the NHS will never see again.

Now, with economic recovery a distant dream and the national tax take stalling, the Treasury will be sizing up the £5.1bn cash reserves currently held, unspent, by NHS trusts and foundation trusts. Most of that (£3.9bn) is a by-product of the arcane foundation trust financial regime, which requires "strong" balance sheets. David Bennett, chair of foundation trust regulator Monitor, asserts in a letter to today's Guardian that surpluses can be reinvested in patient care. But they haven't been. For Osborne it looks like another juicy prize.

For two years Westminster observed a growing tension between Andrew Lansley, a secretary of state pursuing deep structural reform, and pragmatists who viewed the resulting instability as a threat to the broader economy. Now, with the act passed and Lansley himself gone, the gloves are off in Whitehall: the focus is once again firmly on savings.

In principle, savings are for reinvestment, especially into three pressing areas: the costs of an ageing population, costs arising from population growth, and better drugs and medical technology. That's reasonable. Together, these need between 4% and 5% per year. With negligible growth funding coming from Whitehall, how else can they be afforded?

But where is the reinvestment? Last year's cuts amounted to £5.1bn, says the Department of Health, plus an additional £0.7bn of "cost avoidance". However, you will labour in vain to trace such sums being channeled back into geriatric medicine, or into GP practice budgets.

The fact is, the coalition has no health priorities: no strategic focus on the health of the nation; no passion for quality of life in old age; no compassion for the mentally ill. Its two overriding aspirations are reducing, in real terms, the amount of public money being spent on the NHS, and reducing government's role as an employer. Healthcare is no different from other areas of public spending. Resources are being hoarded.

Who benefits from such miserliness? The Treasury may be happy. So are the inheritors of the NHS balance sheet, including the large outsourcing companies rapidly expanding their health businesses. But for those who built the NHS, or rely on it for treatment and care, there's no dividend.