Video: IFS: further welfare cuts and tax rises 'must be on the cards' If the Chancellor continues to protect spending in the NHS and schools, then budgets in "unprotected" areas like police, local government and defence, environment and transport will face cumulative cuts of 16 per cent in the three years to 2017/18, in the absence of welfare reductions or tax rises. Further welfare cuts and tax rises must be on the cards; £27 billion worth would be required to protect other spending in real terms entirely. He added: "The effects of yesterday's announcements will be to reduce incomes in the bottom half of the distribution, slightly increase them in the upper-middle - among workers on modest salaries and among pensioners - and to reduce incomes for the best-off."