A looming crisis of children suffering abuse, neglect and poverty has been exposed, with growing numbers of young people taken into care in some of England’s most deprived communities during the pandemic.

A Guardian investigation into the state of children’s services in the last 18 months has revealed a sharp rise in social services referrals during lockdown, plus spiralling costs for mental health support and a bulging backlog in the family courts, with some councils buckling under the weight of the extra work brought by coronavirus.

Some local authorities are expected to overspend by up to GBP12m on children’s services this year, and leaders say they are “down to brass tacks” as they struggle to deal with the increase in demand.

Self-isolation and home schooling has placed families under increased financial pressure through unemployment or lost wages, as well as inflaming mental health problems and addiction problems. Successive lockdowns have increased domestic violence and allowed safeguarding concerns for children and young people to go undetected, because schools and some childcare settings were forced to close.

Research and interviews with directors of children’s services across England have found:

In Middlesbrough, the most income-deprived local authority in England, there has been a 40% rise in children referred to social services in the last year.

Rochdale, in Greater Manchester, ranked 15th on the government’s index of multiple deprivation, received 420 referrals to children’s social care in July this year, 35% more than in July 2019, when there were 310. The town also saw a 35% increase in families at its early help and safeguarding hub, with 1,310 contacts this July.

In Hull, there has been a 19% increase in “troubled families” needing extra support in the last year while the number of children in care has risen 9%. A shortage of foster carers meant 55 looked-after children in the city moved between seven or more placements between June 2020 and June 2021.

Knowsley, in Merseyside, the second most income-deprived local authority in England, last year had a 26% increase in the number of domestic abuse notifications and the number of children and young people identified as being criminally exploited.

In London, there has been a shortage of 500 foster places, forcing councils to compete for placements from private firms, which charge double the local authority rate.

It comes as the body representing directors of children’s services in England urged the government to urgently reform the “unwieldy, fractured and complex system” that is failing some of society’s most vulnerable children, despite private placements for some children now costing almost GBP10,000 a week.

The Association of Directors of Children’s Service told the government-commissioned review of children’s social care that the cost of such placements was “deeply worrying” as well as “financially problematic”. It wants a cap on fees private providers can charge, which it said would save “costs in the millions” and provide “earlier intensive support, closer to the communities in which children grow up”.

In June, Josh MacAlister, who is leading the review into children’s social care, described the children’s services system as a “tower of Jenga held together by Sellotape”.

The deterioration of services has left more children needing highly specialised – and expensive – mental health support. Gateshead, in north-east England, which has had an 8% increase in looked-after children since 2019, is paying GBP9,800 a week each for placements for two children, adding up to more than GBP1m a year for the pair.

Caroline O’Neill, Gateshead’s director of children’s services, said: “The significant and increasing cost of children’s residential care and foster care is placing unsustainable financial pressures on local authorities. Reform is needed in how care is provided, with an urgent need for investment to increase capacity.”

In Birmingham, on top of a 15% increase in caseload year-on-year, the council currently has 35 children needing mental health placements at a cost of more than GBP5,000 a week each, compared with 20 children in June 2020.

Andy Couldrick, the chief executive of Birmingham Children’s Trust, said this cost, at a time when budgets have been diminished by austerity, has meant services that keep children out of care have suffered most. “When they [the services] disappear it’s like knocking a hole in a dam,” he said. “The pressure is colossal.”

North East Lincolnshire council is projecting an GBP11.8m overspend on children’s services, in part blaming the cost of placing children out of the area because of a shortage of local places.

In Liverpool, the number of children entering the care system last year because of parental neglect or alcohol misuse almost doubled, according to Steve Reddy, the city’s director of children’s services. It now has 1,535 looked-after children, a rise of 28% since 2018 – which Reddy said was largely driven by “poverty, deprivation and adverse childhood experiences of parents”.

Jayne Ivory, the director of children’s services at Blackburn with Darwen, said there was a recent trend of “large groups of brothers and sisters needing to be looked after” because of “compromised parenting capacity, maybe substance misuse”.

She said: “With children not being in school as frequently or reliably, even though vulnerable children have attended throughout, it has been harder for those families who maybe don’t have the motivation to get their children to school … we’ve reached the point where we think: enough’s enough, we need to bring them into care.”

She said taking children into care was taking longer than ever because of delays in the court system, with cases now taking 56 weeks instead of 32.

In nearby Manchester, court delays have reached a year, creating more anxiety for children. Paul Marshall, Manchester’s director of children’s services, called on the government to provide more funding to help vulnerable children, noting that Manchester city council had suffered 40% cuts in central government grants since 2010.

“If we don’t get a proper settlement that’s realistic and achievable I don’t know where we’re going to go for savings as a council, because we’re down to the brass tacks, basically,” he said. “The pantry is empty.”

A government spokesperson said: “Throughout the pandemic we have prioritised the safety of vulnerable children by investing in the frontline charities directly supporting them, by providing billions more funding to councils and by keeping schools, nurseries and colleges open to these children.

“We have increased the funding councils can access to deliver services, including children’s services, to more than GBP51bn. Alongside this we’re making GBP24m available for a regional recovery fund for children’s social care, aimed at levelling up outcomes for the most vulnerable children.”