Council cuts to local charity spending ends up costing local authorities almost three times as much, a report is warning.

Social enterprise Works4U has issued the warning in a report that analyses council spending on their local charities, and the early help they provide to stop people reaching crisis point.

Its analysis claims that a 10% cut over five years to a hypothetical council’s £3m annual VCS budget would save £1.5m but increase the local authorities costs by £4.3m over this period.

This equates to an almost £3 cost to councils for every £1 it cuts from VCS spending.

Local health services and charities also face additional costs through spending cuts by local authorities.

Works4U estimates that using the same hypothetical councils, this level of cuts would create additional costs to the NHS locally of £3.1m and reduce further investment in charities and community groups by £5.8m

There would also be an estimated reduction of £163m of volunteering over five years, found the social enterprise.

“It is believed this is the first time that a report has been produced that directly analyses local authority investment in the VCS and its longer-term impact on local authority and NHS expenditure,” said Works4U.

It hopes “this report will enable local authorities to think about the wider preventative and knock on impact of expenditure in the voluntary and community sector rather than simply as discretionary or service provision spending”.

Councils are also urged to “apply local data using its model to gain more accurate results”.

They should “stress-test proposed savings against your own authority’s figures before decisions are taken”, said Works4U.

“Following this model and approach will save Councils and NHS potentially tens of millions of pounds, perhaps more, across the country where local authorities are considering reducing their VCS expenditure,” it added.

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