The full extent of the crisis facing social care is revealed by an Observer investigation which demonstrates the government’s flagship policy to keep elderly people out of hospital is failing in most parts of the country.

The findings – amid claims from senior NHS figures that “we are going backwards in many places” – come as ministers face calls to provide an urgent injection of extra cash to local councils to avoid services buckling under increasing financial pressure.

The Tory chair of the Commons select committee on health, Sarah Wollaston, said ministers should act immediately to prevent more suffering for elderly people, their families and other patients.

She also demanded all-party talks on the future of the NHS and social care. “We are at a tipping point,” she said. “We are seeing indications of the great stresses in the system and these need addressing now.”

The Observer’s investigation reveals that the landmark government scheme designed to relieve the strain on overcrowded hospitals – the Better Care Fund – is failing to deliver its aims of keeping older people healthy at home and so cutting “bedblocking”, despite £4bn a year being poured into it.

Theresa May and the health secretary, Jeremy Hunt, have repeatedly claimed that the fund, and a separate policy of allowing councils to raise more money for social care by increasing council tax, are jointly addressing the spiralling problems in social care.

Responses to freedom of information requests submitted to 151 local councils reveal that in England 58% of targets for improving care in people’s homes and local communities were missed.

In another blow to ministers, new figures from the King’s Fund thinktank show English councils will raise just a fraction of the sums required to plug gaps in their budgets by increasing council tax bills.

Better care at home is universally accepted as the way to keep people out of hospital and free pressure on beds. With so many elderly people and others having no alternative but hospital, services suffer a chain reaction of lengthening waiting lists and cancelled operations for other patients.

Data from 98 of the 151 local authorities in England with statutory responsibility for social care show that they met only 218 (42%) of 515 targets to improve social care in their area and missed the other 297 (58%).

Under the Better Care Fund councils receive money, mainly from the NHS budget, in return for introducing schemes to reduce demand for hospital care. This is done, for example, by providing better care for people in their own home or in care homes. But the FoI responses reveal that councils met barely a quarter of their targets in 2015-16 for reducing non-elective (emergency) admissions to hospital.

One senior NHS boss, speaking on condition of anonymity, said the disclosures raised the possibility that the fund was turning out to be “a waste of money”.

Chris Hopson, chief executive of NHS Providers, which represents hospitals, said efforts to improve out-of-hospital care were “going backwards in many places”. He added: “These findings show that the Better Care Fund – a key government scheme to increase out-of-hospital care – is not delivering as intended.

The findings are echoed in the fact that more than 50% of NHS trusts told us in a survey conducted last week that reductions in care facilities beyond hospitals have made it more difficult for the NHS to meet the demand it faces.

“Just at the point when the NHS desperately needs more out of hospital care, we seem to be going backwards in many places. That can’t be right,” Hopson said.

Stephen Dalton, chief executive of the NHS Confederation, said: “These figures are very worrying as we head into what could be a very tough winter for the NHS. We only need a significant dip in the weather, which has been mild so far, and people would become more vulnerable and we would see a big spike in demand. We have a perfect storm going on at the moment of unprecedented demand for care, the fact that we have reached a tipping point in terms of the demographics, and cuts to local councils that are among the biggest in their history.”

Oxfordshire council performed worse than in 2014-15 against all six targets, while Bracknell Forest, Wolverhampton and North Yorkshire each did worse against five of the targets.

The new data from the King’s Fund shows councils across England will raise £382m a year as a result of their ability to increase council tax to pay for social care in 2016-17, a fraction of the funding gap they face this year.

The social care “precept” allows councils to charge up to an extra 2% on council tax bills from this year in order to fund social care services. But King’s Fund analysis shows it will raise less than 3% of what councils will spend on social care, which does not even cover the extra £612m cost they face as a result of the “national living wage”.

The King’s Fund figures also show the social care precept will widen inequalities in access to care services, contributing further to fears of a developing two-tier system.

The 10 most affluent areas will raise more than two and a half times (£41m) the amount of the 10 areas with the greatest level of pensioner need (£17m). Tower Hamlets, the council with the highest level of pensioner need as measured by pensioner income deprivation, will raise just £7 per head of its adult population, compared with the £13 per head that will be raised by Wokingham, with the lowest level of pensioner need in England.

This week ministers are rumoured to be preparing to increase further the amount that councils can raise to pay for social care. But the Tory chairman of the Local Government Association’s community wellbeing board, Izzi Seccombe, said this would not be an adequate response, as she warned that the country was facing the “worst ever funding crisis” in social care.

“Extra council tax-raising powers will not bring in enough money to alleviate the pressure on social care and councils will not receive the vast majority of new funding in the Better Care Fund at the end of the decade,” she said. “Even with this extra money, we have estimated the funding gap amounts to at least £2.6bn. This includes £1.3bn needed right now to stabilise the provider market and a further £1.3bn by 2019-20.”

A Department of Health spokesperson said: “We are giving local areas access to up to £3.5bn extra for social care by 2020. While many areas are already providing high quality services within existing budgets, the Better Care Fund, which brings together health and social care provision locally for the first time ever, will get additional funding in the next few months to raise standards further. This government is committed to ensuring those in old age throughout the country can get affordable and dignified care.

