National Audit Office warns over prisons savings
The prison service will struggle to meet targets on cuts because a key sentencing change has been ditched, the government's spending watchdog says.
The National Audit Office said the agency responsible for prisoners in England and Wales faced "substantial financial and operational challenges".
Under the sentencing plans, criminals who pleaded guilty at the earliest chance would have had sentences halved.
The Ministry of Justice said officials were still working on future savings.
Meanwhile, a separate report has recommended more criminal cases should be dealt with through restorative justice.
In its report on prisons, the NAO said the National Offender Management Service had met its immediate 2012 cuts target and had successfully saved money by cutting posts and red tape at its headquarters.
But it warned the agency's plan to cut more than £2bn by the end of this Parliament was in doubt because the government had abandoned a proposal by former Justice Secretary Ken Clarke to halve sentences for criminals who pleaded guilty at the earliest opportunity.
Prime Minister David Cameron said the plan would have been too lenient.
The ministry had expected the scheme to save £130m a year because there would have been 6,000 fewer inmates, potentially taking the prison population below 80,000.
The fall in the prison population would have allowed it to close older and more expensive jails. The ministry now projects that the prison population will fall by only 2,000, based on the more limited measures recently passed by Parliament.
Amyas Morse, head of the NAO, said: "The National Offender Management Agency has delivered spending reductions and achieved value for money.
"However, its spending is vulnerable to even slight changes in demand, over which it has no control, and it has very little flexibility to absorb unforeseen costs.
"There are therefore risks to the agency's ability to make sustainable savings over the long term, when the prison population is unlikely to fall significantly and the agency's funding will continue to reduce."
A Ministry of Justice spokesperson said that officials were continuing to work out what savings needed to be made.
"We are pleased this report recognises the good work maintained by [the National Offender Management Agency] in a challenging financial environment. The organisation continued to reduce reoffending while meeting its savings targets for 2011/12.
"We will consider the NAO's recommendations and look at how best to take them forward."
But Margaret Hodge MP, chairwoman of the Commons public accounts committee, said: "I am concerned that the agency has yet to pin down a plan to get back on track.
"The agency's fragile financial outlook is at the mercy of events, such as last August's riots and the sentencing decisions of judges and magistrates over which it has little control."
In a separate report, the chief inspectors of constabulary, probation, prisons and prosecutions said restorative justice programmes were being used inconsistently.
The programmes, which can be used as alternatives to standard sentences for criminals, include allowing the offender to meet the victim to apologise.
The report found that there were good examples of how restorative justice was being used and that informal resolutions were used by police in 12% of cases in 2011, but it said that the take up of programmes was less widespread in prisons and young offender institutions or probation trusts.