Children’s services in England are “at breaking point” and need more than £3 billion in additional government funding over the years to 2025, a parliamentary report has warned.

The report also called for reform of the system to make local authority children’s services sustainable in the long term.

The House of Commons Housing, Communities and Local Government Committee blamed “constricted funding and ever increasing demand” for piling pressure on children’s services.

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It called for a review to look into the factors behind a steady increase in demand for children’s social services, which has seen the number of children in care surge from 59,400 to 75,420 between 2008 and 2018.

The report cited high turnover of staff as a sign of “a system that isn’t working well”, warning: “Children pay the price as professional relationships break down. It has a cost for local authorities who resort to filling vacancies with agency.”

The committee called on chancellor Philip Hammond to use this year’s Spending Review to deliver an increase of at least £3.1 billion in core funding for the period to 2025.

It also said the government should announce a successor scheme to the troubled families programme to provide local authorities with certainty about funding streams beyond 2020.

The review should look at options for reducing demand for care services, limiting social workers’ caseloads, reforming commissioning and lifting barriers to creating more residential care placements, said the report.

It said tighter regulations may be needed to rein in prices and called for an investigation of the market by the Competition and Markets Authority.

Committee chairman Clive Betts, a Labour MP, said: “Over the last decade, we have seen a steady increase in the number of children needing support, while at the same time funding has failed to keep up.

“It is clear that this approach cannot be sustained and the government must make serious financial and systemic changes to support local authorities in helping vulnerable children.

“They must understand why demand is increasing and whether it can be reduced. They must ensure that the funding formula actually allows local authorities to meet the obligations for supporting children that the government places on them.

“We have reached a crisis point and action is needed now.”

The chair of the Local Government Association’s children and young people board, Cllr Anntoinette Bramble, welcomed the report.

“Children’s services are at a tipping point as a result of increasingly high levels of demand for support and cuts in central government funding,” she said.

“The fact that nine in 10 councils overspent their budgets on children’s social care in 2017-18 indicates the huge financial pressures councils all over the country are under to support vulnerable children and young people.”

The children’s commissioner for England, Anne Longfield, said: “This hard-hitting report highlights the risks of continuing to starve children’s services of the vital funds they need to protect our most vulnerable children.

“We cannot just continue to cross our fingers and hope that vulnerable children will be alright and this report must be a final wake-up call to the government.

“This year’s Spending Review is the moment to act. Ministers must accept that children’s services are in desperate need of funding to improve what they offer children, rather than just stand still or go backwards, and that some failing authorities need more help.”