As it appears this government has recognised, the traditional approach of combining incremental cuts in departments with cancelation of the odd frivolous or ineffectual programme will not yield anything remotely close to 25%. The education cuts of 24th May, which took this approach, are testament to this. Combined cuts of £1.5bn were found across DfE and BIS, but this represents only around 1.3% of the 08/09 total spend for these departments. Just the 23.7% to go then...

So where to start? Firstly, any political change this large needs a philosophical basis on which it can be structured, and I think we have already started to see this develop. George Osborne's speech yesterday spoke of a 'progressive budget', and a 'progressive alliance'. But this 'progressive' politics is tempered by a firm belief in scaling back the role of government (replaced in parts by the 'Big Society'); in fostering a free market approach where possible; and in de-regulation. All of these have the potential to cut central government expenditure markedly.

For education, this philosophy has already manifested itself in emerging policies around free schools, academies, and primary and secondary curricula, all of which have the potential to save significant figures. And we can expect there to be more changes in this vein, all moving towards a large-scale rolling-back of central government's involvement in frontline education – although only once Michael Gove has overcome his instincts to get involved in synthetic phonics, history and whatever else catches his eye.

This redressing of the balance of power between government and education institutions is only part of the picture though. Government administration of education can be pared to the bone and still not come close to total departmental savings of 25%. The planned total schools expenditure for 09/10 was £39bn. £31bn of this was going direct to schools as grants. Despite the coalition government's pledge to protect frontline schools spending for a year, it is clear that if 25% is to be saved over 4 years, most of the savings will have to be made in frontline education institutions.

Some of these savings will be found by schools and colleges cutting the least popular subjects and courses – as these have the greatest unit costs. However, unit costs in schools have risen by 40% in the last 7 years, and a large proportion of this is due to increases in staff numbers, not running courses with low numbers. Without a re-evaluation of the predominance of expensive, traditional face-to-face teaching, it is difficult to see how frontline institutions will come close to offering comparable outcomes for so much less. Technology needs to lie at the heart of this.

Whereas in other industries such as transport and manufacturing, the boundaries of technology are constantly advanced to improve products and services, education has lagged behind, making do with retro-engineered solutions, often clunky and uninspiring. However, the delivery of technology-enabled distance learning alongside traditional face-to-face tuition, can foster development of a wide-range of skills, such as independent enquiry, self management as well as technological awareness and media literacy. The financial benefits of replacing some face-to-face tuition with distance learning are well documented and vast, and largely centred around reductions in staffing costs – one of the key reasons spending is currently so high.

So I'm calling for those in education leadership to drive a technology revolution. Indeed, this could be the only way that state-education can go on delivering results. This technology revolution needs to take into account the complexities of differing learners and courses. It also needs to ensure that the necessary social interaction between young people is not compromised, and that above all, outcomes do not suffer. But changes need to take place in universities, colleges and secondary schools. No longer can technology-enabled distance learning be the preserve of work-based providers and a few HEIs. Above a certain age, it needs to form part of almost every learning experience.

Finally, this technology revolution not only presents an opportunity to drag the nation's education system into the 21st century, but to build British businesses at the forefront of this growing industry – because if there is one thing we can take solace in, it's that there are many other nations facing similar pressures, and many commercial opportunities for world-class British solutions to be sold overseas.

On 5th July, we'll be discussing how education can deliver more for less, at our annual Big Debate, a free event aimed at fostering discussions on this crucial subject. To register click here.

John Stone is chief executive of LSN, the not-for-profit organisation focused on making learning work for further and higher education, local authorities and schools, public services, work-based learning and international organisations