Charities working in areas including homelessness and mental health support are facing increased demand because councils have been forced to cut spending on preventive services, a new report warns.
The report, A Quiet Crisis: Local Government Spending on Disadvantage, by the think tank the New Policy Institute and published by the Lloyds Bank Foundation for England and Wales, calls for additional funding for local authorities to help disadvantaged people.
Researchers examined official data on local government spending in England on a range of services for disadvantaged adults and children, including adult social care, temporary accommodation and substance misuse support.
They found that 97 per cent of total cuts in spending on disadvantage took place on the fifth-most-deprived councils, despite those areas having higher numbers of people in need.
Reduced central government funding in those deprived areas, which were typically northern metropolitan local authorities, had led to spending cuts of 5 per cent or £278m since 2011/12.
Over the same period, councils in the least deprived areas have been able to maintain or even increase spending on services for disadvantaged people, the report says.
It says that reduced spending on preventive services is generating higher costs down the line, in areas including the provision of temporary accommodation for homeless people and children going into care.
"Without such preventive services councils – and charities and other public services – are facing even greater demands for crisis support in the years ahead," the Lloyds Bank Foundation said.
Paul Streets, chief executive of the Lloyds Bank Foundation, warned that the worst for local government finances might be yet to come.
"Councils have been trying to do more with less for some years, but the tipping point is increasingly close, with deprived areas hit hardest," he said.
"It’s a false economy that, in trying to cope, councils are forced to cut the very preventive services that can help people before they get into trouble in the first place.
"Local charities are doing their best to help councils pick up the pieces but, as a country, we can and must do better than this.
"The government needs urgently to look again at how it funds local councils to enable them to provide and fund services for those who need it the most, regardless of where they live."