So how much is it going to hurt?

However, the lowest income groups will suffer disproportionately, losing between 250 and 500 annually, the IFS claimed.

Are the cuts fair? Scotland on Sunday takes you through the changes.

Employment and Support Allowance (ESA)

Existing Incapacity Benefit claimants are being rolled onto ESA, with a pilot under way in Aberdeen. The benefit is paid at two levels. Those who the test decides are too ill to ever expect to work receive the "support" allowance, of up to 96.85 weekly. According to the Disability Alliance, a charity helping the disabled, only around 5 per cent of those tested are accepted into this group.

Those with health issues which may not bar them permanently from work may qualify for "work-related" ESA of up to 91.40, which can be paid even where the claimant is working part-time.

This second payment will now be stopped after one year, pushing disabled people back onto Jobseeker's Allowance (JSA), at the lower rate of 65 weekly for the over-25s.

JSA may also be means-tested, so that a married disabled individual may cease to receive any support but be forced to rely on support from a spouse.

A million people claiming disability benefits will be hit, saving the Treasury 2 billion. While it may help crack down on the workshy, it is harsh on the genuinely disabled.

Fairness: 3/10

Residential care

Anyone in residential care who is also receiving a mobility allowance will no longer qualify for the payment, on the grounds that their mobility needs are already being met. This is expected to save 135 million a year by 2014/5, and hit 58,000.

Fairness: 6/10

Welfare payments capped

From 2013, no family will be better off on benefits than in work, so the maximum which can be claimed will be 500 or the equivalent of the average wage. In fact, it will be more generous than the average wage, as it is closer to a 35,000 salary before tax. The disabled and war widows are excluded. The change, estimated to save 270m annually by 2014/15, could cause pain for large families who fall on hard times. But not many in Scotland are expected to be caught.

Fairness: 7/10

Child benefit for wealthy

Households with a higher-rate taxpayer will cease to receive child benefit from 2013, saving 2.5bn. The government says this is a fair way of ensuring those on lower incomes do not subsidise the better off.

Unfortunately, axes are blunt instruments, leading to outrage among those who are only just over the higher-rate threshold. Yet the coalition has ruled out any additional help to iron out the anomalies.

Fairness: 8/10

Benefits for poorest

The least well-off will be squeezed on a number of fronts. The working tax credit, which can be worth up to 1,920 annually, will be frozen for three years, leaving the income of poorer families vulnerable to rapid inflation. To qualify for the credit, a couple must work at least 24 hours a week, rather than 16 hours as at present.

Finally, they will only be able to claim 70 per cent of the cost of childcare, rather than 80 per cent now. Together these measures will save 1.4bn.

Against this, the child element of the tax credit will rise by 30 above indexation, giving back 560m to the least well off, giving a net cut of 840m.

Fairness: 4/10

Housing benefit

Single people under 35 will no longer be able to claim for a self-contained one-bedroom flat but will have to live in a single room in a shared house, saving 215m a year.

Fairness: 7/10

Punishing thrift

Pensioner savings credit will be frozen for four years, affecting 1.8 million over 65-year-olds with savings which might otherwise bar them from receiving means-tested benefits. A single pensioner gets 20.52 annually and a couple receive 27.09.

Fairness: 4/10

State pensions

The state pension age is to rise to 66 from 2018, which will hit middle-aged women hard. They are already suffering an increase from 60 to 65 by 2020. Now this process will be speeded up. A pension will only be paid to women who reach 65 by 2018. These measures will save the Treasury 43bn annually. When you get your pension, it will be bigger, as it will rise annually in line with earnings, rather than prices.

Fairness 4/10

Public sector pensions

Public sector workers will pay on average an additional 3 per cent of their salary in a pension contribution from 2012. The measures, designed to raise 1.8bn by 2014/15, will be phased in with the better paid hardest hit and safeguards for the less well-off. The expectation is that entitlement will in future be based on their average salary throughout their working life rather than their final salary.

Fairness 7/10

Other pensioner perks

As well as bigger increases in their state pensions, they will keep their winter fuel payment, awarding every household with someone over 60 200, with 400 paid to the over-80s at a cost of 2.7bn. Pensioners also keep their free bus passes and eye tests. And they have been told that last year's 25 cold weather addition will be made permanent.

Fairness: 3/10

'Why couldn't pain have been spread across the board?'

THE Bowers family, from Stirling, will be squeezed on several fronts by tax increases and spending cuts, and with three teenage children expect to be noticeably worse off next year. Mum, Gill, a senior lecturer at Stirling University, fears families with children are being unfairly hit.

As dad, John, is a professor at Stirling, they will lose child benefit for Hannah, 14. Eldest son, William, is at Cambridge University, so he can expect to see the cost of his course soar. Middle child Michael, 17, hopes to go to university. Whether he remains in Scotland, or studies elsewhere, the cost of his degree is likely to be higher than it is today.

They will also see their National Insurance contributions rise from April, and be hit by higher VAT from January, at a time when university staff are facing a pay squeeze.

Gill said: "It seems sensible that people who earn more should pay more, but why couldn't the pain have been spread across the board? Why not a tax increase for all the better-paid, rather than focusing on families with children?"

She is worried about unfairness within families, because of uncertainty about further education costs. "The eldest may well come out of university with much lower levels of debt than the youngest. How is this fair?"

But there was good news for the Gill and John. The University Superannuation Scheme is not classed as a public sector pension, and so was excluded in the review conducted by Labour Pensions Secretary John Hutton. As such they will escape the 3 per cent hike in pension contributions, which other state employees face. That said their own pension arrangements are under review, with proposals to raise the retirement age to 65, except for staff already over 55. Contributions would rise more modestly to 7.5 per cent of salary.

A lecturer in management science, Gill will have also to wait until 66 to get her state pension, a prospect she doesn't particularly relish. "There are things I would like to do in retirement, so I don't want to work for ever," she says. "That said, the new pension proposals include the flexibility to wind down before retiring, which I welcome, as I have various interests I enjoy."