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Six million nurses, police officers and other public sector workers have been asked to suggest options for cuts as Budget debate has intensified.
David Cameron and Nick Clegg contacted staff to ask them to find "fair" cuts, a move condemned by unions.
Meanwhile senior Lib Dem Simon Hughes warned coalition colleagues against making cuts to benefits for pensioners.
But he backed away from earlier suggestions that he might seek to change the Budget to make it "fairer".
Mr Hughes, the party's deputy leader, said there would be "trouble" if the government sought to "unpick" aspects of the coalition agreement between the Conservatives and Lib Dems - such as guarantees to protect the winter fuel allowance.
And Labour leadership contender Ed Balls told the BBC's Question Time programme, to be broadcast later on Thursday, this was the "most unpleasant Budget for a very long time".
Labour say proposed 25% average cuts in departmental budgets, which will be determined in an spending review in October, are reckless and will hurt vital services.
As part of the spending review process, ministers are asking public sector workers to suggest services they believe are non-essential, how services can be better targeted or provided more effectively by private and voluntary groups.
'Serious' ideas
Deputy PM Nick Clegg said the coalition government was "prepared to look at any innovative idea, however bold, however radical, however off the wall it might seem to people" if it could save money in a way that was fair and protected "frontline services".
He said that all "serious" ideas would be passed on to officials for consideration and that workers would be invited to discuss their suggestions face-to-face with civil servants.
In their letter, Mr Cameron and Mr Clegg say they want workers "to help us find those savings so we can cut public spending in a way which is fair and responsible".
But Mr Kenny, general secretary of the GMB union, said: "Cameron and Clegg have a damned cheek in asking public sector workers to co-operate in sacking thousands of them. It is an utter outrage."
He said unions were "perfectly capable of speaking up on their behalf" and would be resisting "savage cuts in public services".
'Big differences'
Meanwhile research by the respected economic think tank the Institute for Fiscal Studies which said "progressive" reforms in the Budget had largely been announced by the previous Labour government and the new tax and benefit changes were "regressive overall".
But Mr Clegg said that excluded measures that were being introduced. He told BBC Radio 4's Today programme: "The top earners make a much bigger contribution than anybody else."
He said "very exceptional measures" were being taken to instil "fairness" into the Budget - pointing to the raising of the income tax personal allowance, which is estimated to take 800,000 low paid people out of income tax altogether, and a £150 increase in child tax credits for 1m low income families.
"These are big measurable differences which will help people who are on low pay."
Critics have questioned whether cuts of the scale outlined in the Budget are achievable.
Chancellor George Osborne is already coming under pressure to find more savings from the welfare budget, in addition to the £11bn earmarked in his Budget statement, to minimise the impact on budgets for the police and schools.
Mr Clegg said the number of people on disability benefit had tripled and added: "I think there are some areas of welfare where it is totally right to ask ourselves whether we can spend money more effectively to help people most in need."
Fairness agenda
Amid talk of Lib Dem dissent over the Budget, Simon Hughes - the most senior Lib Dem MP who is not a member of the government - said he backed the Budget but suggested he might seek to table amendments to make it "fairer".
Speaking in Parliament, he warned ministers against any further cuts which would breach the coalition agreement between the two parties.
"There cannot be any unpicking of items in that deal," he said. "Otherwise the whole thing risks falling apart.
Although there was "no suggestion" this was the case, he added: "The deal has to be that we go down the committed road we have signed up to... And if there is any suggestion that it changes there clearly would be trouble."
Mr Hughes later issued a "clarifying" statement, saying that he had "no plans" to try and amend the Budget while stressing the public spending review must be "driven by fairness".
'Economic madness'
The BBC's Deputy Political Editor James Landale said Mr Hughes' comments were a warning that although Lib Dem MPs were on board at the moment, their support could not be taken for granted.
Shadow Business Secretary Vince Cable said the coalition would "stick together" in the face of criticism over the Budget. He said the cuts were "tough and unpleasant" but defended them.
"We have a economic emergency," he told the BBC's Question Time. "It is very, very serious. It has had a massive impact on the public finances which have to be sorted out."
Labour say the cuts are based on an ideological desire to reduce the scope of the state, rather than sound economic reasons, and have challenged uneasy Lib Dem MPs to vote against it.
"Cutting spending now, and this deeply, while raising taxes will lead to more unemployment, slower growth and higher borrowing," Ed Balls said.
"It is back to the 1930s, back to Thatcherism for the 1980s and I can't understand why progressive Liberal Democrats can go along with this economic and social madness."
We asked those of you working in the public sector for suggestions on how to cut costs. Please find a selection of your comments below.
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I am a midwife working on the front line in clinical practice and one of the biggest costs is the rise in recent years of caesarean sections and the implications of this. There are the costs of extra time and staff and longer stays in hospital. As for the structure of the NHS itself, it is extremely heavy with hierarchical management and has far too many layers in most areas. I don't wish anyone to lose their jobs especially in the economic crisis that continues to face us all, but the general structure of the NHS does need reviewing. Whilst I may not agree with all that the government is suggesting, I do respect them for sticking to their guns and doing what is extremely difficult and unpopular. All working within the NHS are equally responsible in reducing costs and wastage where possible.
Jackie Reszko, Deeping St Nicholas
So let's get this right - they're cutting my pay for two years, taking away a pension I have paid 11% of my wages into for 26 years, cutting 25% of my employers' budget and now they want me to tell them which colleagues I recommend they sack?!
Mike , Nottingham
I work in the NHS and the amount of waste that I see is criminal. There are also plenty of perfectly decent people working here who, for all they do, are frankly a waste of taxpayers' money. There is too much pointless form filling. Trying to get anything done is like wading through treacle. This has mostly come about under the last government. If the NHS was run properly, it could probably have its budget slashed without affecting frontline services. I'm pretty sure the organisation could manage perfectly well without me!
Andrew, Lancashire
It is very, very wrong in my opinion for the government to ask public sector workers where they think cuts should happen. Not only does this reek of deferral of government responsibility - as it is they who should decide where the cuts will occur since they have been charged by the people of the country to do so - but it is like asking someone what they would like to have amputated, an arm or a leg? Very, very wrong.
Roy , UK
I have worked across a number of public sector bodies as a senior interim manager and it strikes me that there is incredible amount of money wasted operating the procurement process. Quite often the internal cost of operating the procurement process is far higher than the cost of the items procured. Items and services that are procured often cost more than buying off the shelf and also take significantly longer to procure wasting both time and money. Often the end product that is procured doesn't meet the actual business requirement of the organisation ending up with the procured item/service not being used. I can list examples of all of these elements that run into many millions of pounds, that I have seen within multiple public sector organisations.
Allan Hinchliffe, Chelmsford
As an NHS employee, I would say that communication needs to be improved first and foremost, closely followed by greater scrutiny of the decisions made about contracting out third parties for services. We see departments and the "higher ups" making decisions independently, which don't always knit together very well and lead to problems. The wrong equipment is bought, or it's fitted in the wrong place, or an IT department is moved into a refurbished office before the network points are set up and lose a day of productivity. More care needs to be taken about the prices paid to contractors and the backhanders and nepotism that is no doubt involved. These decisions should be audited with sound justification for the decisions made. I'd like to see more stuff done in-house - the NHS is big enough after all.
Laura , Birmingham
I am an ICT teacher in a community secondary school. I find it staggering how much money is wasted on LEA Advisors - basically former teachers who now work for the LEA and go into schools to advise teachers and organise local meetings. They get paid a hell of a lot and also get the same holidays as teachers. Considering what I get paid and the amount of money spent on my training, surely I can now be expected to be able to decide what to teach and how to teach it without these advisors? Every single local authority has these advisors and there are quite a few of them, including some that specialise just in Assessment for Learning or Behaviour. They spend their days popping into schools offering their advice and if no one wants it they basically sit about for a few hours drinking tea and having a chat. The subject advisors get to spend their time creating resources and teaching materials, reading about new initiatives and preparing themselves for a return to teaching, which they are all after doing and hope for a position higher than they were in before. It's an absolute joke. If we have them, why on earth do we now have Advanced Skills teachers and Excellent Teachers?
Vikki Dodd, Chorley, Lancashire
I work in a local doctor's surgery and the amount of drugs that are requested but not needed by people who do not pay for these items, usually on a repeat prescription, is unbelievable. I know some elderly people, instead of checking what they need, just tick all the boxes and end up stockpiling these drugs. It goes on all over the country, wasting thousands of pounds. I would suggest a nominal amount per item for everyone right across the board. This would mean low paid and part time workers, who actually pay into the system, do not have to pay so much and it would be fairer for all.
Brenda Jameson, Sunderland, Tyne and Wear
I work for a company that supplies the government. The amount of waste on stupid things like food, drinks, entertaining, travel and hotels is scandalous. But if they all made an effort to treat government resources as they do their own money, looking for the best travel deal for example, they would save billions overnight. And what about sourcing hospital food locally? In Nottingham, it saved the NHS Trust £6m a year - think of the savings if that were replicated nationally?
Anon, UK
As a low paid council worker who has already taken an 8.5% pay cut this year due to "job evaluation", placing my salary on just £14,500 PA, my view is that councils are top heavy with management, all earning far more than they are worth. Councils should be looking at cutting back on the number of management jobs instead of frontline staff, many of whom like myself work hard and are on very low salaries.
Graham , Ayrshire
I work in an office for the NHS and we have several people undertaking a professional qualification that is costing £10,000+ per person. Whilst the person is attending college and not in the office, they are paid. Other staff at the same level do not get these benefits as it is not offered to everyone, and now those staff who have not been given the opportunity are being redeployed. If you ask me, people shouldn't be paid for the days they are not in work - why should the rest of us suffer so they can get ahead?
Anon, Merseyside
As a police officer, I have made financial sacrifices to pay 11% into my pension, increased the size of my mortgage and put in place all manner of savings plans to ensure that, on retirement, I can clear my mortgage and assist both my children with further education. This has been financial prudence, yet the government now want me to sacrifice that for a worldwide banking crisis that happened due to the USA sub-prime mortgage fiasco. It beggars belief and is simply unfair.
Tony Abigail, Norwich
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