Iain Duncan Smith, who established the think tank, said councils currently had a financial incentive for their vulnerable young people to enter the criminal justice system.
He said at a fringe event that “focusing local authorities to account for the management of youth custody” would compel them to “sharpen up” efforts to resolve social problems rather than criminalise young people.
The policy review will be unveiled early next year. Jonathan Aitken, the disgraced former minister who is chairing the review, offered up a “trailer” of its likely recommendations.
He promised the review would make a “clean break from the centralising, bureaucratic system of national prison governance” and focus on rehabilitating offenders.
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