Whitehall’s spending watchdog has accused the Home Office of being ignorant of the strain that police officers are under after funding cuts led to 45,000 job losses.

The report from the National Audit Office comes as a debate rages over why crime is rising. Suppressed government research has suggested cuts have played a part though ministers deny this.

The NAO found there had been a 19% drop in funding for police since the Conservatives took power in 2010, and officers were struggling to maintain an effective service.

It said the number of police employees had fallen from 244,497 in 2010 to 199,752, and the proportion of reported crimes resulting in a charge or summons had fallen from 15% in 2015 to 9%.

Since the funding squeeze began in 2010, ministers have rejected police complaints that it has been too severe. Theresa May insisted when she was home secretary that police could face cuts and crime would still fall.

The NAO said: “The Home Office’s light-touch approach to overseeing police forces means it does not know if the police system is financially sustainable. It lacks a long-term plan for policing and significant gaps remain in its understanding of demand for police services and their costs.

“The way the department chooses to distribute funding has been ineffective and detached from the changing nature of policing for too long, and it cannot be sure overall funding is being directed to the right places.

“With plans to reform the funding formula on hold and no systematic approach to ensuring forces are financially sustainable, we cannot conclude that the Home Office’s oversight of the police system is value for money.”

Amyas Morse, the head of the NAO, said: “The financial sustainability of police forces and their ability to deliver effective services is reliant on the Home Office understanding national and local demands and allocating funds fairly.

“There are signs that forces are already experiencing financial strain and struggling to deliver effective services to the public. If the Home Office does not understand what is going on, it will not be able to direct resources to where they are needed, with the risk that the situation could get worse.”

Meg Hillier, the chair of the public accounts committee, said: “Sustained funding cuts have resulted in almost a fifth fewer police officers and staff than eight years ago, yet the government does not seem to understand the impact of this on local policing.

“The Home Office needs to get a grip on police funding to make sure it is not only sustainable but also that funding is getting to where it is most needed.”

On Tuesday the home secretary, Sajid Javid, will tell the conference of the Police Superintendents Association that he stands with them, but the NAO’s findings may undermine that message. Javid has set up a review of frontline policing, which he says will boost the case made to the Treasury that policing needs more money.

Labour’s Louise Haigh told the conference on Monday that the government was exploiting officers’ sense of public service. “I know that for too long now government has exploited that sense of duty and that what we are asking you to do in 2018 is unreasonable and unsustainable. We cannot expect you to be auxiliary social workers, paramedics, mental health workers,” she said.

A Home Office spokesperson said: “Our decision to empower locally accountable police and crime commissioners [PCCs] to make decisions using their local expertise does not mean that we do not understand the demands on police forces.

“In addition, the report does not recognise the strengths of PCCs and chief constables leading on day-to-day policing matters, including on financial sustainability.”

David Jamieson, the police and crime commissioner for the West Midlands, one of the hardest-hit areas, said: “This is one of the most damning reports I have ever read. It shows the government are in denial over the impact of their own cuts to police funding.

“The independent National Audit Office have now confirmed that urban forces like West Midlands police are being hit more than twice as hard as the likes of leafy Surrey. This confirms what we have known for a long time. High-demand areas like the West Midlands have had their budgets disproportionately cut compared to low-crime areas.”