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IFS forecasts further welfare cuts

More welfare cuts will be needed to make £27bn savings in the next eight years, new analysis from the Institute for Fiscal Studies (IFS) shows.

Some areas of the public sector will be faced with “inconceivable cuts”, the IFS found, to protect Whitehall departments during the next phase of austerity measures.

The analysis also showed that the poorest 20% of the population would see their incomes cut by more than 1.5% as a result of the Autumn Statement, while the richest 10% would see a 0.5% reduction, despite Chancellor George Osborne’s assertion that the cuts were fair.

In the event that the chancellor again decided to spare the NHS, schools and international aid from cuts after 2014, the IFS calculated that every other area of spending would have to fall by 16% in inflation-adjusted terms in the three years after the 2015 election.

Paul Johnson, the IFS’s director, said: “On top of what has happened in this spending review period, that would take cuts in unprotected departments to an average of over 30%. That looks close to inconceivable. There are big choices on health and welfare, crucially surely including benefits for pensioners, still to be made. And it is hard to believe that there won't be more tax rises to come.”

Rachel Reeves, shadow chief secretary to the Treasury, commenting on the IFS analysis of the autumn statement, said: “The IFS has exposed who is paying the price for George Osborne's economic failure. Their figures show that middle and low earners lost out from the autumn statement, with the poorest 40% losing more than the richest tenth.”

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