Tip-offs from public-sector staff lift the lid on wasted billions

George Osborne has ordered Whitehall departments to take on scores of cost-cutting ideas suggested by the public, in an effort to help slash Britain's multibillion-pound national deficit.

A huge number of tip-offs from public-sector staff about where the bodies are buried when it comes to wasting taxpayers' money are already being used by the Treasury to draw up its deficit-reduction plans.

The Treasury has received tens of thousands of suggestions about how to reduce a deficit that stood at £156bn in the last financial year – two-thirds of them from public servants.

And The Independent on Sunday has learned that, even before the Treasury has officially closed its "spending challenge" exercise, at least two large government departments have been ordered to take many ideas on board for serious study.

The ideas constitute by far the biggest and most detailed exercise in public consultation in Whitehall history. More than 100,000 submissions were received, whittled down by moderators to around 45,000 which are now available on the Treasury's Spending Challenge website.

They range from abolishing the monarchy to making prisoners pay for their upkeep behind bars. Many detail the experiences of waste, or lost revenue opportunities, which central and local government officials, teachers, police officers, and other public servants have experienced. The thousands of public servants' suggestions, which amount to almost two-thirds of the submissions on the site, include charging for Freedom of Information requests, doctor's appointments and visas, and cutting the use of bottled water in the Pension Service.

"I work for the Pension Service," one explained, "and the one thing that angers me more than anything else is the bottled water supplied throughout my department when it costs less than 0.05p per litre out of the tap."

The public can now vote on which ideas they most favour, but it is the seriousness with which some of them are now being acted upon within Whitehall that matters most. Most departments face cuts of at least a quarter – and some may have to reduce spending by up to 40 per cent.

It has now emerged that the Chancellor, who will be looking to finalise savings in a Whitehall spending review this autumn, has passed the most attractive ideas on to cabinet ministers in charge of some of the most high-spending departments.

A spokeswoman for the Department for Business, Innovation and Skills last night confirmed: "The Treasury has asked us to look at a number of the ideas which have been suggested on the website."

The IoS has established that the department, led by the Liberal Democrat Vince Cable, has had forwarded to it in excess of 40 ideas, covering key spending areas including further and higher education, student loans and grants to business. "This is being taken very seriously," one source said.

The Ministry of Defence, which has an annual budget of over £40bn, also confirmed that it is looking at ideas received from the public. The department faces significant cuts to its equipment programme, including the loss of at least one of the two supercarriers presently on order, but an MoD spokesman would confirm only that an increase in recycling and the use of green energy were being examined.

The appeal for cuts ideas mimics the strategies used by the Canadian Liberals in the 1990s, when the government brought borrowing under control within three years with spending cuts of 20 per cent. Mr Osborne and the Prime Minister have enthusiastically embraced this "once-in-a-generation" revolution in public spending – with public engagement in the process seen as key to success.

Mr Osborne's decision to invite public participation underlined his repeated assertion that "we are all in this together"; and his officials confirm that his own department will seriously consider all proposals to shave spending from their budgets.

Labour's shadow Treasury secretary, Angela Eagle, has complained about the website continuing to publish "offensive and outrageous suggestions, such as sterilising the poor, reopening the workhouses and the forced repatriation of immigrants".

But Mr Cameron has already hailed the series of "great ideas – some big, some quite small" as significant contributions to the cuts programme.

He said: "If you work in the health service, every time you go to a different hospital you have to have a new Criminal Records Bureau check. Why? And someone in the immigration system said it is mad when people appeal against a visa decision, even though it may cost £10,000, that appeal is free."