The Home Office has been accused of making police cuts despite not having a "clear understanding" of the effects they will have on services, according to a report.
The National Audit Office (NAO) said while forces in England and Wales have successfully lowered costs since 2011, the Home Office does not have enough information to work out how to reduce funding further without "degrading services", according to a damming auditor's report.
The Home Office also has "insufficient information" to identify signs of the sector being unable to deliver services and needs to be better informed to make sure forces are providing value for money, according to the report.
Heads of some of the UK's biggest police forces, including Metropolitan and Greater Manchester, have already spoken out about the risk government funding cuts will have on police performance and public safety. Neil Rhodes, head of Lincolnshire police, also warned his force could be the first to effectively go out of business because of cuts.
Between 2010-11 and 2015-16, government funding for forces has been cut by £2.3bn ($3.5bn) – around 25% – with total funding to each of the 43 forces in England and Wales reduced by between 12% and 23%.
Separate figures have shown during this time the number of officers in England and Wales has already fallen by more than 16,000.
The report said forces have reduced costs but do not have a "clear understanding of the demands placed upon them or of the factors that affect their costs".
The report adds police will need to "will need to transform the service they deliver if they are to meet the financial challenge and address the changing nature of crime".
It stated: "The department does not have good enough information to work out by how much it can reduce funding without degrading services, or when it may need to support individual forces. The police sector is currently working to identify information which could give early warning of a force at risk.
"However, despite the reports and data produced by HMIC, there is currently insufficient information to identify signs of the sector being unable to deliver services, there are unclear links between financial reductions and service pressures and limited data on police productivity."
Amyas Morse, the head of the NAO, said: "Without a thorough understanding of demand or the factors that bear on their costs it is difficult for them to transform services intelligently.
"The Home Office also needs to be better informed to discharge its responsibilities. It needs to work with HMIC, the College of Policing and forces to gain a clearer understanding of the health of the service, particularly around demand and on when forces may be at risk of failing to meet the needs of local communities."
Steve White, chairman of the Police Federation of England and Wales, said the report shows the Home Office does not have evidence proving police are "coping adequately" with the cuts.
He added: "Ministers point to falling crime rates as evidence the service is coping, however they are basing this argument on a false premise.
"Crime stats neither take account of all crime – some of which is on the rise – but nor do they take account of all the other vital work that officers do which doesn't fall into bald crime statistics. This includes counter-terrorism, monitoring sex offenders, child protection, policing football matches – the list goes on."
Responding to the report, policing minister Mike Penning insisted police still have the resources "to do their important work".
He added: "Her Majesty's Inspectorate of Constabulary has made clear that the police are successfully meeting the challenge of balancing their books while protecting the frontline and delivering reductions in crime.
"The government has committed to a fundamental review of the police funding formula to ensure that allocations to local forces are fair and appropriate. We will consult police forces fully in due course."