Local government cuts have hit charities as new figures reveal the charitable sector can expect to see ‘little rise’ in government income.

Data from the National Council for Voluntary Organisations (NCVO) showed the charity sector overall saw modest growth, with total income rising to £45.5bn in 2014/15 from £44.3bn in 2013/14.

However, it said income from government is at best ‘flat-lining’ for most of the sector.

While central Government funding increased around 1% overall to £15.3bn, the NCVO found income from local government, both in contracts and grants, continued to decline from its 2010 level, as local authorities tightened their spending.

The group said that local charities should be helped with money from dormant assets to establish their future sustainability.

Sir Stuart Etherington, chief executive of NCVO, said: ‘Charities have been becoming increasingly entrepreneurial in recent times. ‘

With no realistic prospect of an overall increase in government spending and what look to be tough public fundraising conditions, this is a trend that will have to continue if the sector is to see growth in the next few years.

‘While some charities will doubtless buck these trends the picture for small and medium charities in particular looks challenging.

‘The next government could boost local charities and community groups for a generation by using the money from dormant assets to endow community foundations with investment that can generate returns to support charities for a generation to come.

‘They could also help communities buy assets that are important to them, putting them under the control of local people through charities and community groups.’