Last week’s grim Budget had a useful function. It showed in stark terms what Britain’s future will be if we do not grasp the nettle of the public finances, and grasp it firmly: a never-ending cycle of soaring debt, rising taxes, weakening competitiveness, falling growth and lower tax revenue.

The choice we face is not between Labour growth in public services and Tory “cuts”. It is between taking a grip of the public finances and watching our people’s economic prospects, and our ability to afford decent public services, slowly dribble away.

What can we do? It is clear that the chancellor Alistair Darling’s “efficiency savings” will not do it. With deficits of about £25,000 a household for the next four years, we will not make ends meet by cutting back on paperclips. Two-thirds of the government’s previously claimed savings have proved illusory and the rest will be swamped by the underlying cost increases this year.

While the government’s spectacular incompetence in public spending – doubling the cost of healthcare and education, with only marginal improvements – should, in theory, create great scope for savings, in practice it is tough. Much of the cost increase has been in wages, which are ferociously hard to reverse. The first stages of an austerity regime, involving pay and recruitment freezes for the entire public sector, will be controversial and uncomfortable. But they will not be enough. We are going to have to close all public sector pension schemes to new entrants. Where salaries have really got out of line, as with doctors’ pay, lower starting rates should be introduced.

I would also cancel senior civil service bonuses. It would save only £25m, but the symbolism is important – as it would be with other sensible actions, such as cutbacks in MPs’ expenses and cabinet ministers’ pay.

However, for meaningful savings we are going to have to be more radical – and that means cancelling things. There are some easy hits. I announced that the Conservatives would cancel identity cards some time ago and, as some of the smarter members of the government have now realised, that will save billions. This should be extended to many of the government’s proposed databases, from the £2bn internet scrutiny schemes, down to the silly Contact Point children’s database, whose running costs are £44m a year.

I would also seek to renegotiate every private finance initiative contract. They are coming up for renegotiation in the next five to 10 years anyway. Why wait for the surge in capital costs that will follow quantitative easing in the medium term? We should strike deals now, while money is cheap.

But the big numbers are in the departments, particularly the burgeoning welfare budget, currently heading towards £180bn within two years. Much of this is a direct consequence of Gordon Brown’s badly designed, fraud- and error-prone tax credit system.

Along with a number of his welfare gimmicks, such as winter fuel payments and free television licences for the over-75s, he has created a system of benefits that amount to welfare for the well-off. But to provide welfare for the wealthy, the poor will pay. So we should target child benefit solely on the least well off, and replace winter fuel payments and other gimmicks with targeted help for poor pensioners. After allowing plenty to protect poor parents and pensioners, the savings would be £9bn-£10bn a year.

Another simple abolition is that of regional government. Any remaining functions should either go down to the counties or back to the centre.

We should also, as Conservatives, address some of our own sacred cows. There is no firmer advocate of nuclear deterrence than me, but even I have some difficulty seeing the justification for a wholesale upgrade of Trident. Our system was designed to maintain retaliatory capacity after a full-scale Soviet nuclear onslaught. Now our likeliest nuclear adversary will be a much smaller, less-sophisticated state. Should not the costs reflect that?

Everyone will have their own ideas, and it is good that we are starting to have the debate out in the open. The public are not fools and they are ready for politicians to think the unthinkable – 70 per cent see the need to bring public spending under control. They know that these issues will determine whether we slip unhappily into a miserable future in the economic second division, or find a route back to the vibrant and competitive economy we once were. They do not believe this government has the courage to tell them the truth. They are waiting for one that will.

The writer is an MP and former chairman of the public accounts committee