Spending on older people’s social care in England has fallen by half a billion pounds, according to a new report.

The charity Age UK - combining Age Concern and Help the Aged - said that, in order to maintain the same levels of service before the coalition came to power in 2010, the government needed to increase its spending to £7.8bn.

Councils have only budgeted £7.3bn in the face of substantial reductions in central government funding, the report, Care In Crisis 2012, says.

Age UK said the combined impact of growing demand for services and a £341m reduction in older people’s social care budgets this financial year was equivalent to a 4.5 per cent cut and created a £500m shortfall.

Charity director Michelle Mitchell said: “Our new figures show a funding gap clearly exists, that it currently stands at £500m, and that it is growing bigger all the time.

“We need urgent government action now, otherwise the gap will simply get worse.

“Behind these figures are real older people struggling to cope without the support they need, compromising their dignity and safety on a daily basis.

“Social care is not a nice to have extra - it is the support that helps older people get out of bed, feed themselves, have a wash, live a life that is more than just an existence.

“We urge all parties to engage openly and constructively in the cross-party talks on care to reach a settlement on this issue that guarantees both reform of the legal structure and, most importantly, the funding to make it work.

“The government must not shirk its responsibility to lead the essential reform of the social care system.”

Minister for care services Paul Burstow said: “Local councils are responsible for decisions on how much to spend on social care. The government has provided enough for councils to maintain the current levels of access and eligibility if they work hard and smart, and invest in new ways of working like telecare and reablement.”

The charity has launched a Care In Crisis petition calling on the government to reform the care system for older and disabled people so “that everyone gets the care they need to live with respect and dignity”.

It aims to collect 100,000 signatures and will deliver them to the government ahead of the planned white paper on the future of long-term care.