Justice Board's (YJB) remit to include young adults.
Youth justice experts had said the move to include young adults would help improve the transition of support offered to young offenders into adulthood.
But in its triennial review of the YJB, the MoJ has said the costs involved would be "prohibitively expensive" as it would take in around a quarter of the adult prison population, aged between 18 and 24.
The government is concerned the widening of its remit would reduce the specialist support the YJB can give to children and teenagers.
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