Blunkett and Brown argue over cash for prison reform

A new spending row has broken out between David Blunkett and Gordon Brown over the Home Secretary's plans to squeeze more money out of the Treasury for Britain's overcrowded prisons.

Mr Blunkett has defied the Chancellor by ordering an independent inquiry into the prison, probation and youth justice services that is designed to strengthen his hand in his battle for extra money.

Mr Brown was furious at the way Mr Blunkett originally set up the value-for-money prisons inquiry in his spending review. According to Brown allies, Mr Blunkett agreed with the Chancellor not to go ahead with the inquiry without his backing. But the Home Secretary then added the plan to his Home Office White Paper at the last minute without telling Mr Brown, it has been revealed.

The Chancellor clashed with Mr Blunkett over the Home Secretary's bid for extra money before the Budget in April and gave the Home Office a less generous cash boost than health or education in his July spending blueprint. Mr Brown has warned that he will not reopen the decision he took on the Home Office's budget when he set out his three-year public spending programme in July.

Mr Brown is also irritated that Home Office sources have compared the prisons review to the Treasury-ordered inquiry into the National Health Service by Derek Wanless, a former NatWest chief executive, which paved the way for a £40bn injection into the health budget over the next five years.

One Brown ally said: "This is not another Wanless inquiry. If the Home Secretary wants to look into the Prison Service, that is a matter for him, but it is nothing to do with us."

He added: "The budget for the Home Office for the next three years, including the Prison Service, was set out in the comprehensive spending review. It would be unusual to reopen it."

Home Office ministers hope the investigation will strengthen the case for alternatives to prison, including offenders serving "weekend" sentences so they can hold down a job during the week. They are worried that the prison population has soared to a record 71,000, one of the highest in western Europe, even though crime has fallen overall. Half of all prisoners discharged in 1997 were reconvicted within two years.

Mr Blunkett said in his White Paper: "Many prisoners get short custodial sentences that do not help with effective rehabilitation and resettlement. Short spells in prison also increase the chances of reoffending and these prisoners are reconvicted at a higher rate than those who serve longer sentences."

Although the performance of the Prison Service had improved in recent years, the Home Office conceded that some prisons were still not doing well enough, he said. "Where prisons fail to demonstrate they can reach the necessary standards in performance and cost,they will be closed or contracted out to the private sector," the White Paper said. "We are interested in decent and effective prisons, whether publicly or privately run."

Mr Blunkett wants to refocus the prison system on "those who really need to be there" and make sure sentencing policy is based on what reduces reoffending. He has won extra money for 2,300 more prison places, including 600 for juveniles, and for prison education, which he hopes will equip offenders to lead law-abiding lives after their release.