Devolving responsibility and funding for the management of low-level offenders could empower local services and agencies to work more effectively to prevent crime and develop alternatives to prison that do more to rehabilitate offenders. This briefing describes how this can be achieved.

England and Wales’s prison system could do better at reducing crime and rehabilitating offenders: it is currently a hugely expensive and highly inefficient arm of the public sector. As the number of prisoners continues to rise, and as the Ministry of Justice budget is faces further cuts, this is clearly unsustainable.

This paper argues that reform is needed to address the inherent flaw in our criminal justice system: that the bodies that could take action to reduce offending have neither the financial power nor the incentive to do so. This is because many of the services and agencies that could act to reduce offending are organised and controlled at the local level, whereas the budget for prison places is held by central government.

The challenge, therefore, is to ‘unfreeze’ the resources that are locked up in the prison system, and ensure that local services and agencies are enabled and incentivised to use those resources to both prevent crime and develop alternatives to custody. At the moment, incentives work in precisely the wrong direction: if a local authority invests in high-quality services that keep people out of prison, the financial benefits accrue to the Ministry of Justice (as it spends less on prisons as a result) rather than the local authority, which ends up meeting the costs of ever more people using their community services

The recent drive to devolve power and resources to groups of local authorities and city mayors could hold the answer to this problem. The government has already successfully experimented with devolving elements of the youth justice system to local authorities, as well as granting greater powers over transport, skills and health services to some of England’s major cities and counties. In this report We propose that this approach be extended to the management of low-level adult offenders, who make up the bulk of ‘churn’ within the prison system. This would involve giving city mayors or combined authorities a budget to cover the costs of these offenders, but charging them for each night that an offender from their area is held in prison. This would give local authorities resources to invest in preventative services and alternatives to custody, and give them a strong financial incentive to ensure that these investments deliver results, while also ensuring that money and responsibility for the reduction of reoffending is located where it can best be exercised.

This report presents case studies of a number of youth justice programmes in the US and England that have proven effective at reducing pressure on prisons and reoffending, drawing from them eight principles that should underpin the reform and devolution of the adult offenders budget. Bearing these principles in mind, it sets out detailed recommendations for the timings and mechanisms by which the government should pursue these reforms – which bodies should be allowed to bid for control of the custody budget, how targets should be set and oversight and accountability ensured, how funding and savings should be managed and how, in time, funding for probation services for low-level offenders should also be devolved.