The idea, mooted by Youth Justice Board (YJB) chair Frances Done, is one of a number of ways budgets could be devolved to local authorities in a bid to reduce the high numbers of young people held in custody.
Done has spoken before of her desire to "incentivise" authorities to tackle the issue but has not previously indicated what shape that may take or how widespread it would be. She conceded the details of such a change would be complicated and may take one of a number of forms.
"We could devolve the whole budget," she said. "We could concentrate on big cities. If it were to take place it would be a very big change. It would push young offenders up the agenda of children's services across the country with those big amounts of money and big bills for custody suddenly appearing on local authority books."
Done, who revealed she has discussed the matter with government ministers, hopes devolving custody costs would lead to authorities looking at different ways of dealing with offenders and those at risk of offending.
Former YJB chair Rod Morgan said he backs the idea of devolving custody costs but feels focusing only on big cities could create problems.
"I can see why it might be done because it is big cities that generate the most cases and the biggest costs but I would have thought there would be huge objections on the grounds it was inequitable," he said.
A spokesman for the Local Government Association said a meeting has been arr-anged with Done in the coming months to discuss the matter further.
He said: "We must look at the entire system, including arrangements for custody as a whole, and what can be done by councils, the police, schools, health services and others to keep young people out of court and out of custody."
Done also defended an announcement last week to cut 28 places in secure children's homes. She said the decision not to renew four contracts was made based on current requirements and quality standards, rather than being a cost-cutting exercise.
