Justice Secretary promises 'rehabilitation revolution' as part of reforms to justice system

In his first major speech since returning to office, Clarke emphasised that it costs more to put someone in prison for a year than send a boy to Eton – on average £38,000.

Announcing reforms to the justice system, Clarke said he wanted to see a move towards more rigorous community sentences, with the voluntary and private sectors playing a greater role.

"It is virtually impossible to do anything productive with offenders on short sentences," he said. "We want a far more constructive approach, what my party in opposition called a ‘rehabilitation revolution’. This means prisons that are places of punishment, but also of education, hard work and change. It means rigorously enforced community sentences that punish offenders, but also get them off drugs and alcohol and into employment."

Clarke added that the "most radical" part of the government’s reforms involves paying independent organisations by results in reducing reoffending.

The Howard League for Penal Reform praised Clarke’s speech, describing it as "mature and frank". Howard League director Frances Crook said: "Reoffending rates for those serving short prison sentences are double that of those on community orders, which cost a tenth of the price and tackle the underlying causes of crime."

Joyce Moseley, chief executive of charity Catch22, also welcomed the move, but said she hoped the reforms would not lead to longer sentences for young people.

"The revolving-door cycle of reoffending can be stopped by offering young offenders the chance to access training and rehabilitation programmes," she said. "But what we would not want to see is young people receiving longer sentences as an alternative option."

She added that running schemes on a payment-by-results basis is a positive step, saying: "Financial and social returns go hand in hand and if we believe our interventions can change young people’s lives, then we ought to be ready to accept payment for our services based on their results."

But Bob Reitemeier, chief executive of the Children's Society, criticised Clarke for not making enough specific mention of young people. "Unfortunately, young people have been skipped over in today’s announcement," he said. "Too many young people are being locked up and the Children’s Society has been campaigning for decades to only use custodial sentences as a last resort for children. We are calling on the new government to support the Youth Justice Board in promoting a dedicated youth justice strategy for children and young people that takes into account their special developmental needs and circumstances. We have particular concerns about cuts in local government spending which could lead to the closure of innovative community schemes aimed at reducing youth offending."