IPPR Scotland said £500 million would be cut from those on benefits by 2020 as a result of decisions made by Chancellor George Osborne – and it would take the equivalent of a 1p rise in income tax by Holyrood to reverse it.
Ahead of the Scottish Budget tomorrow, the independent think-tank looked at the impact of tax, spending and welfare decisions made by the UK government in its summer Budget and last month’s autumn statement.
The poorest households could lose £580 a year, while those who have their benefits cut will be on average more than £800 a year worse off by 2020, it said.
Overall, the think-tank suggested the bottom 60 per cent of households could lose out, while in contrast the richest third will benefit from the changes.
Scottish Government departments whose spending is not protected – such as local government and justice – could see their budgets fall by 2.9 per cent in 2016-17, IPPR Scotland said.
But it warned that by 2020, spending on these departments could be reduced by just over a tenth (10.7 per cent).
Russell Gunson, director of IPPR Scotland, cautioned: “The poorest households in Scotland are facing a double whammy of cuts to benefits and potential cuts to public services in Scotland.”
However, A UK government spokesman said: “In cash terms next year, there will be £390m more spending available to the Scottish Government. This is not including its underspend, which brings the total to around £750m.
“There are also new tax-raising powers available to the Scottish Government – with the Scottish Rate of Income Tax coming into force in April 2016.