So exactly how much of a say will Mr Osborne give the public?

What will the voters want – and will the Government listen? Paul Vallely reports

It's going to be such a ticklish business, deciding where the cuts should fall in Britain's public finances, that George Osborne has had another one of his wizard wheezes: he's going to ask me and you to decide.

The Chancellor of the Exchequer yesterday announced the British public are to be given a "once-in-a-generation" opportunity to decide how to reshape the nation's public finance as part of the big shake-up to cut the £170bn deficit.

It won't just be down to me and you, of course. Mr Osborne is setting up a "star chamber" to preside over the slashing and burning.

It will comprise a committee of Whitehall's most senior civil servants who will make recommendations to a group of the most senior ministers who will be guided in the process by senior business figures like the former BP chief executive Lord Browne and the chairman of GlaxoSmithKline, Sir Chris Gent. Then there will be consultations with businesses, trade unions, charities and other groups. And then there is little old me and you.

The strategy is based on one adopted by the Canadian government in its massive deficit reduction programme of the 1990s. While they were still in Opposition Mr Osborne and his Conservative colleagues went out to Canada to find out how it was done. Consulting the public, apparently, was part of the strategy to get "buy-in" to the painful process.

It's not the first time that a government in difficulty has decided that consultation is the answer. When Tony Blair was feeling unpopular he launched something called the Big Conversation.

So what came out of that? Matthew Taylor, who was chief adviser on political strategy in Downing Street at the time, was candid yesterday about its limitations. "You can't really write policy through [such a process] but certain issues became more prominent in the course of that conversation, in particular [that of] family-friendly working and work-family balance."

Such consultations are, he conceded "an attempt to legitimise what the government was doing" rather than an alternative form of decision-making. And he pinpointed the key problem – the lack of coherence in public opinion. "Voters will tell you one thing if you ask them a superficial question," he said, "but they say something very different if they spend time deliberating on it."

For example: "Most people will say that we should devolve more decisions about cuts to the local level. But if you then ask them 'Should services depend on where you live?' and they say 'No, services should be the same everywhere'."

The other problem is that the views you get in are not necessarily very representative. That was clear yesterday as the clatter of hobbyhorses was heard loudly across the internet with ideas in response to Mr Osborne's idea: Axe the legal-aid budget. Make jail inmates grow their own food and make their own clothes. Refuse all benefits to anyone who hasn't worked full time and paid income tax for a minimum of five years. Scrap the Scottish Office. Bin the Trident replacement. Abolish free healthcare for foreigners. End taxpayer insurance to the arms trade. Move almost all the civil service out of London. Scrap our tank regiments. Junk Eurofighter. Abolish the new Office for Budget Responsibility.

Ask the public and they basically say: keep the services I use, and scrap the rest.

That is also pretty much what everyone did in Canada, says Paul Martin, who was the finance minister who oversaw what came to be known as the "bloodbath budget" in 1994. He too criss-crossed the country inviting businessmen, union leaders, teachers and doctors to give their views.

The impact of what he did to move from a deficit which was consuming 35 cents in every dollar raised in government income is still being felt today. Politicians involved used words like "brutal" and "butchery" to describe what happened.

Government spending was slashed by a quarter, and one in four civil servants were sacked. Hospital budgets were reduced by 18 per cent. Thousands of nurses were sacked. Teachers suffered a five per cent cut in salary and class sizes rose to break the 30- pupil barrier. Many hospitals and schools remain shabby today.

But the cuts were not evenly spread. Subsidies to farming, energy and industry were hammered. So were unemployment benefits and international aid. Transport spending was cut by a half. And the Canadian army was reduced to a shadow. The role of government in many sectors was shrunk to policy development and regulation. Services like tourism, crime prevention and job creation for young people were handed over to the private sector and charities. The only retreat the government made was over a plan to cut old-age pensions after a huge protest by outraged senior citizens. That was the only area in which "consultation" proved effective.

The coalition government here is only looking for 10 per cent cuts rather than the 25 per cent Canada needed. Even so the question "what should we preserve" rather than "what should we cut" looks likely to be emulated.

We could – you and I – offer some other ideas, like suggesting that Mr Osborne abandons his idée fixe that 80 per cent of the deficit should be tackled through public-spending cuts, with only the remaining 20 per cent coming from increases in taxes.

But that might not be what he wants to hear. Consultation, after all, is the word politicians use when they want us to feel we've had our say and then go quietly away.

Perhaps he'd be better turning it into a TV game show. He could call it The Axe Factor and charge the public prime-call rates to vote. It would, at least, raise a bit of cash to reduce the national debt.

Vox pop: 'There are too many people taking advantage'

Kezia Marriott, 28, solicitor, Clapham

"In health and the civil service there are certainly inefficiencies that could be addressed. The administration costs seem to be disproportionately high and could possibly be streamlined without touching so-called 'frontline services'."

Hamish Curran, 36, optometrist, west London

"The welfare state is out of hand; there are too many people taking advantage of what is too readily available to them. Those who need help should get it but I like the pledge to make people who can work for their benefits after a certain amount of time.The banks should be taxed more punitively to try to plug the gap a little."

Dionne West, 45, HR assistant, south-east London

"There is no need to be spending so much money on arms. There should be a focus on protecting this country, but we do not need to be involved in the conflict in Afghanistan. I would cut Trident too, in favour of a cheaper alternative. It is not fair simply to say that administration jobs can be cut to save money, either; if we lose that infrastructure, services will suffer as a result."

Michael Murphy, 52, butcher, west London

"We need to cut the fat from Whitehall and increase the amount of money given to those genuinely on benefits because we should not have people in this country living on the breadline. I will not accept cuts in the essential services. Council tax is also too high. I pay council tax and I cannot even park my car outside my own front door. We need a redistribution of the tax burden: the working class needs to bear a smaller burden and those at the higher end of the pay scale a bigger one."

Chris Bellis, 32, primary school teacher, west London

"It is perhaps an easy target – and I think it is an unfair one too – but I think the area most likely to see cuts is the arts. But it is inconceivable for us to start losing teachers and I worry that support staff and teaching assistants will be seen as expendable: they are not. We should try to move people into employment who are making no clear effort to get off benefits."