The Home Office has "insufficient information" on how much further it can cut police funding in England and Wales without "degrading services", the National Audit Office (NAO) has said.

It said ministers lacked information to know when a police force was at risk of being "unable to deliver services".

Police funding was cut by 18% in real terms from 2010-16, and "significant" further cuts are expected, it added.

Minister Mike Penning said forces still had funds "to do their important work".

The NAO report said central government funding to police and crime commissioners - who receive and allocate police funds - was reduced by £2.3bn between 2010-11 and 2015-16.

It said this was a real-terms reduction of 25% - or an 18% cut once local council tax funding was taken into account.

The police forces most affected by the cuts are those which rely most heavily on central government funding, with smaller incomes from council tax.

The report claimed Northumbria Police would be the worst hit this year, given that 85% of its funding is due to come from central government. This compares with Surrey Police, for example, which only relies on central government for 46% of its funding.

Elsewhere, the drop in government funding will be felt most by forces in the West Midlands, Merseyside, Greater Manchester and Durham.

The report also said:

police forces "successfully reduced costs" since 2010-11 and crime fell - but this was an "incomplete picture" because statistics do not capture all crime and there is limited information on "financial or service stress"

forces have "insufficient understanding of the demand" for their services, and it is therefore "difficult for them to transform services intelligently"

much cost-cutting so far has been "efficiency savings rather than service transformation"

the total police workforce dropped by 36,3672 (15%) between March 2010 and September 2014, and officer numbers dropped by 16,659 (12%) to 127,075

The NAO said the Home Office needed to be "better informed" to properly oversee forces and distribute funding.

"The department has insufficient information to determine how much further it can reduce funding without degrading services, or when it may need to support individual forces," the report said.

But it said new assessments by Her Majesty's Inspectorate of Constabulary (HMIC) should give "assurance on the financial sustainability and the performance of forces".

'False premise'

Chief Constable of Lancashire Steve Finnigan, the lead for performance management at the National Police Chiefs' Council, said the report highlighted the fact that while crime has fallen in recent years, the nature of crime has changed and therefore so have the demands on the police.

He told BBC Radio 4's Today programme: "I think there is undoubtedly a gap around our knowledge and indeed the Home Office's knowledge of the demand that we face."

"This report quite properly says we need more clarity on that."

He pointed out that the digital world that we now live in presents the police with many new crimes, such as online fraud and child grooming.

Police Federation chairman Steve White said the report showed the Home Office "does not have the evidence to claim that policing is coping adequately with the cuts of the last five years".

"Ministers point to falling crime rates as evidence the service is coping, however they are basing this argument on a false premise," he said.

"Crime stats neither take account of all crime - some of which is on the rise - but nor do they take account of all the other vital work that officers do which doesn't fall into bald crime statistics."

Image copyright PA Image caption Steve White said the Home Office lacked evidence to show police forces were "coping"

Alex Marshall, chief executive of the College of Policing, said its analysis showed that "while the number of crimes may have fallen, the level of demand has not reduced in the same way".

"Investigating and preventing crime has become more complex, particularly in areas such as child abuse and domestic abuse, and the costs of crime have not fallen as much as overall numbers of crime," he said.

Policing Minister Mr Penning said: "There is no question that the police still have the resources to do their important work.

"HMIC has made clear that the police are successfully meeting the challenge of balancing their books while protecting the frontline and delivering reductions in crime."