Cuts to children's services budgets for family support and youth work represent a "false economy", simply leading to greater pressure on safeguarding provision, Ofsted has warned.

The inspectorate's annual report noted that while the overall effectiveness of children's services provision is continuing to improve, the impact of ongoing financial restrictions risks jeopardising progress.

Ofsted chief inspector Amanda Spielman said that local authority social care budgets have experienced the most significant reductions across the public sector, although statutory safeguarding and child protection services have, to date, largely been locally protected.

However, she said that reductions in funding in other areas, such as preventative and wider children's services, mean that councils are less able to intervene early, before young people need statutory services.

"The evidence suggests that these cuts to youth and other services are a false economy, simply leading to greater pressures elsewhere," she said.

"More recently, local authority leaders have begun to report unsustainable budget pressures in both adult and children's social care. 

"The recent experience of Northamptonshire should act as a cautionary tale of how the funding situation in local government, coupled with poor management, can lead to a rapid decline in the quality of children's services."

The Local Government Association has previously warned that children could be left in circumstances of risk unless the government acts to plug an estimated £2bn funding facing children's services by 2020.