How did Jeremy Hunt keep his job? On reshuffle day the BBC reported he was gone, but after an exceptionally long session inside No 10 he saved his skin, emerging with that grin and a tweet saying he was “thrilled”. Junior doctors were less than thrilled, since Hunt’s survival signals no turning back on the dispute he has caused. Full speed ahead to impose a contract, threatening yet more strife.

But here’s the great question: did Hunt tell Theresa May the truth about the NHS? That was the time to warn the new prime minister of just how critical the financial crunch is, building into imminent crisis. He needed to report to her what all the leading health economists say, what Whitehall’s most senior civil servants say and what NHS managers are warning: nine out 10 trusts have deficits from which they can’t escape, with missed cancer waiting times up 56% and no chance of restoring the four-hour A&E waiting time limit. The Department of Health to all intents and purposes busted its budget last year, an extraordinary event only redeemed through one-off wheezes that can’t be repeated.

Simon Stevens, head of NHS England, warns that capital funds needed for “overcrowded and clapped-out buildings in need of a makeover if not a bulldozer” are being diverted to fire-fight day-to-day treatment. His £1.8bn transformation and sustainability money – supposed to be invested in joining up NHS and social care and creating larger conglomerations of care – is being burned up on basic services. That £10bn promised at the general election? Nigel Edwards of the Nuffield Trust says much was Treasury sleight of hand, stolen from other parts of the NHS, and less than half was new money.

Did Hunt tell her? He has never confronted NHS underfunding, preferring to apply his own screws by naming and shaming inadequate care. By talking up the scandal in Mid Staffs he encouraged the Care Quality Commission to set higher nursing and doctor numbers per ward, but that added to the financial pressure he never mentions. He never took up the cudgels over public health and social care cuts in local councils needlessly filling up hospital beds with the frail.

The word is he instead beamed from ear to ear and told May the NHS was safe in his hands, he could fix it, knock sense into the moaners and shroud wavers, just leave it to him. If he failed to warn her that the Treasury must find big sums very soon, she may not thank him for pretending there are magic solutions.

Nearing its 70th birthday, the NHS has the lowest funding increase ever, with worse to come in the next two years. And Brexit voters will be expecting that fantastical £350m a week NHS windfall.

To prove to the Treasury that NHS heads are “getting a grip”, all trusts have been sent a threatening “reset” letter where fines will be imposed on those in debt – a curious perversity. Of the many in deficit, a handful were chosen for “special measures” to frighten the rest. The letter warns that trusts will also lose 30% of promised funds if they fail A&E, cancer and operation waiting times, with a cap on hiring staff or temps. Cut debts and improve quality – or else.

Or else what? All the trusts I’ve spoken to regard this threat as showboating for the Treasury, a bit of play-acting, because nobody – including the NHS England and NHS Improvement heads – can think the deficits will be wrung out, or the old waiting targets resumed. Savings are being made by sharing HR and back offices, buying equipment in bulk and shutting down Andrew Lansley’s wasteful plethora of CCGs, commissioners still wasting money on competitive tendering.

But the big cost is people – and more staff are urgently needed. Failing to train enough, still scouring the globe for nurses and doctors, after Brexit the fear is that many here already may depart. Stevens publicly begs for “early reassurance to international NHS employees about their continued welcome in this country”, but May still refuses.

Take one finance director of a major teaching hospital, anonymous because everyone feels intimidated by this “reset” letter. “NHS funding is back to the year 2000 as a share of GDP, so I say to my consultants, think back to how it was then. What do we do now we didn’t do then?” They say back then, before Labour’s investment, “we had 18-month waits, many fewer nurses and doctors, lower pay, winter crises, no Nice and CQC minimum standards”.

Consider what is expected now on the same funding share, such as state-of-the-art drugs costing up to £100,000 a year per patient. There used to be leeway for cutting corners, but in all hospitals the chief executive must report to the board every month that the correct number of nurses and doctors have staffed every shift. This finance director challenges the government, “Come clean, be honest. You tell us what we should ration.”

So how does the NHS burst at the seams? Chorley hospital in Lancashire abruptly shut its emergency department – downgrading it to urgent care for safety – because it could only fill five of its 14 middle-grade doctor posts. The only applicants were unregistered or struck-off doctors. This was not done to save money: ambulances cost as much to ferry serious cases to Preston hospital, which is already under pressure. What’s more, Chorley’s walk-in patients numbers are still rising fast due to 18 local GP vacancies.

Dewsbury hospital in Yorkshire has just done likewise, with many others in similar staffing straits. But those near to downgrading unsafe emergency units fear suffering Chorley’s fate, where managers are under savage personal attack. The public and local MPs accuse them of a closure plot, when government failure to fund the NHS or train enough clinicians should take the flak.

“Reset” will be nothing of the kind and NHS England knows it, despite rattling sabres at trusts and intimidating managers. Most trusts have signed up to “control totals” pledging deficit reductions they know for certain they can never achieve. There is safety in numbers: they know they are a high-calibre cadre doing an impossible job: they can’t all be put into “special measures”, with no army of ultra super-managers to replace them. They will go on trying to do the impossible. What they all say is the public must be presented with the resoundingly obvious truth: pay more or get less from the NHS, that is the choice.